Concerns raised that risks placed on eTrading platforms could ‘go too far’

In recent years, the insurance industry has been investing in eTrading solutions and claims portal technologies to reduce the cost of handling standard business and free up time for underwriters.

However, while eTrading has become more popular – especially when it comes to some of the smaller end products – there are now “far too many technical risks” that can end up going through some models.

That was according to John Batty, technical director at Bridge Insurance Brokers, who was among experts to discuss the development of eTrading during an Insurance Times webinar in association with Markel.

The digital trading method has become more widely used since the impact of the Covid-19 pandemic, with insurers having naturally started to become more digitised.

Back in June 2023, Simon Bloomfield, head of imarket at digital trading focused software firm Polaris, highlighted that as digital trading continued to evolve, a clear division was emerging.

“There are the highly automated products, which include many of the digital products that have been available to brokers for typically more than 10 years,” he said.

“Then there are more complex or bespoke products that had previously been entirely manually underwritten – they are becoming digital but some manual intervention is often required.”

Batty raised concerns as to whether eTrading could “go too far” with some of the larger commercial combined risks being pushed through some insurer platforms in the industry.

“The worry I have is what sort of risks are being put through that eTrade route – are they forcing things through but changing the odd answer to make it fit [for example]?,” he said during the webinar.

“That’s always my concern around the use of eTrade and it could go too far.

“It’s great for some of the smaller end products, but there’s now far too many technical risks that are now going through an eTrade model.”

Service

These comments came off the back of discussing service within the eTrade space, which is a key priority for brokers.

Essentially, brokers’ focus is on ensuring service remains available and that there are people available in insurers’ operations to help where there is a referral or a clarification required.

“We very much go on the broker preference in terms of how they want to communicate,” Jo Sykes, divisional director of UK broker channel for Markel, said.

“From what we have seen to date, even in our eTrade environment, brokers will refer on the telephone.

“[We] are very much led by the broker demand.”

Batty went onto say that Markel “got the balance right” when it came to blending technology and human contact, before raising service concerns about eTrading in other areas of the insurance industry post Covid.

“They [insurers] were celebrating their increased use of eTrade, to the point where they were talking about a 70% or 80% increased use of eTrade models post Covid, which in some ways you can say is a success,” he said.

“But actually, on another hand, you could say is that because the brokers cannot get hold of you and are having to go down that route.

“And is it a sad indictment of our industry that they can’t get hold of you and they’re having to use those eTrade routes?”

Future role

Despite some of the criticisms about eTrading in general, experts agreed during the webinar that the trading method was still important for the insurance industry.

Tom Florence, managing director of Pollensa Insurance Services, felt this was especially the case when it came to SME products.

“There is, without a doubt, a use there for them,” he said.

Batty added: “eTrade does have its place no question.

“I’ve got facilities and schemes in retail, for example, where it works superbly well. In financial lines and directors and officers insurance it works particularly well. I’ve seen some great cyber products where its worked really well.”

And Sykes added that while eTrading was key, concerns raised should form as an education piece for the industry.

“I think eTrade plays a really critical part of the future of our industry,” Sykes said.

“There’s an education piece as well – some of the products that are trading electronically, they have to be fit for purpose for the customer.

“So, there’s work for us to do as an industry to make sure that those products are fit for purpose and then people have the confidence and are trained to place those risks, where its relevant.”