Greater software house collaboration could reap benefits for commercial lines eTrading

Although eTrading has been available for a couple of decades now, the capabilities it offers for commercial lines products are still under debate.

The complexity of commercial lines has so far prevented the gains that have made in personal lines eTrading from being repeated, with brokers and MGAs not always able to secure commercial lines insurance products in a digital, touch-free way.

These challenges are not new, however, and some sector commentators are asking whether the time has come for greater cooperation between software houses in order to agree on a communication standard for commercial eTraded products.

Christian Wright, head of market development at SSP Broker, told Insurance Times: “Personal lines really does flow from software [house] to [the] customer buying the [product] really cleanly – it’s a great system, one of the best in the world.

“Commercial lines has been clunkier for a long time. There have been different approaches to this [challenge], but none have really fitted the bill of what insurers and brokers want and what is good for the policyholder.

“There have been some improvements – there’s more auto rating than there ever has been before, which is great – but the mechanism by which ratings are produced is still really clunky.

“There’s no real coherence. Stuff is happening in pockets – it is not unified.”

A joined up approach

Industry owned digital trading technology firm Polaris, however, has seen sector-wide teamwork when it comes to the online trading of commercial lines products.

For example, its commercial lines gateway – called Imarket – is now 20 years old. This platform, which the company believes will write almost half a million policies and around £450m of premiums this year, enables brokers to get quotations from a range of insurers.

Polaris also offers a live chat function, which connects brokers and insurers when complex risks require further discussion as well as a Standards product that strives to “create consistent digital communication between trading partners”.

According to the Polaris website, Standards aims “to help participants build and distribute insurance products efficiently and effectively, by providing them with all the elements and information needed for a faster build and consistent trading between multiple systems”.

Vivek Banga, managing director at Polaris, said: “Standards is an area where we see software houses working together and working with us.

“In the context of digital trading, we see software houses collaborating with us, working with our standards, connecting to our Imarket systems and giving advice to the advisory groups. These are all areas where we see collaboration and they are all areas that are for the common good of the industry.

“We’re helping the entire industry to progress with digital trading. We are looking at standards that can be used by everyone in the industry and doesn’t give anyone a competitive advantage.”

Broking trade body Biba also engages with software houses, brokers and insurers for the enhancement of online trading through UKGI’s two Electronic Trading Practices Groups (ETPGs) – one for personal lines and one for commercial lines.

These two forums meet on a regular basis to resolve industry-wide issues that impact digital trading.

Graeme Trudgill, chief executive at Biba, explained: “Software houses are essential for many brokers and insurers to arrange and administer customer policies. [The ETPGs], facilitated by Polaris, actively drive digital trading standards and can improve customer outcomes.

“Biba’s own Insurance Technology and Innovation Committee includes the majority of the main software houses and representation from each area of Biba membership, to ensure we cover interests on technology, innovation in insurance and relevant issues.

“The committee discusses innovation among traditional and new entrants and is also used as a sounding board [for] the Biba executive team.”

Biba’s Insurance Technology and Innovation Committee was founded in July 2021.

Benefiting from technology

Although bodies such as the ETPGs and Biba’s committee are effective, there is still room for improvement around the way that these groups bring the UKGI community together, according to Ben Legg, chief product officer at Open GI.

Legg feels that there is more to do around setting an eTrading agenda that’s representative of the whole industry, not just small segments of the market.

He admitted that although this is “difficult to do in practice”, with some groups becoming “too big and too unwieldy to manage”, the end goal is worth the hard work.

Legg continued: “The industry recognises the benefit of eTrading – SME products have started to be much more online traded. That creates operational efficiencies. It creates lower risk because there’s less manual information being passed around.

“It allows us to benefit from technology.”

Collaboration focus

The key areas for eTrading collaboration between software houses are around distribution, moving books of business and integration with specialist software providers, noted Tom Needs, chief executive at Applied Systems.

He added: “The end goal for broker management software (BMS) providers must be the ability to provide the broking community with the tools they need to deliver an efficient but high level of service to customers, improving product choice, speed to market and reducing complexity. This is not just about collaborating with other BMS providers, but with the wider insurtech community.”

This type of collaboration can benefit brokers through the potential delivery of new services and products that software houses may not have been able to access or develop individually.

Wright explained: “From a [broker] purchase perspective, they want [eTrading] to be as quick as possible.

“If they’re in a digital front end process, they want to wrap it up [in] one go. If they’re in a referral process, they want to make sure it’s really clean to get notifications of why it has been referred [so they can get] back to customers.

“Behind the scenes, after the first part payment, pay by link. Payments are a bit meatier on commercial lines with lots of protocols – we should be able to simplify that.

“We have lots of really good payment technology in personal lines and there’s no real limit on what that can achieve – it comes down to the appetite of the bank or the vendor in question.”

Importance of cooperation

If successful, software house collaboration has the potential to enable insurers greater market penetration and product innovation in commercial lines, as well as benefiting the end customer due to the availability of better product choice and pricing.

Needs said: “The flipside of course is that [while] competition is good for innovation, it must not go too far as this could have a detrimental effect on brokers and, ultimately, end customers.

“Software houses must continue to be supportive and cooperative when it comes to the movement of a broker’s or insurer’s business from one provider to another and resist the temptation to put on the brakes or be generally uncooperative in that process.”