Simon Bloomfield: ‘As digital trading continues to evolve, a clear division is emerging’

By Simon Bloomfield 

The Insurance Times eTrading databook provides valuable insight for insurers evaluating their digital distribution strategies and considering where to place their next big bets.

Across the surveys and verbatim comments, there are some clear trends on why brokers use extranets or broker systems and what they want from them.

Here are some of the key takeaways for everyone looking to improve the attractiveness of digital trading.

Service model

The most mentioned themes in the what does great service look like section are, in order:

• Fast Response
• Underwriter and live-chat availability
• Easy to use system
• Ability to interact with a person where helpful
• Document accuracy

This tells us that brokers’ focus is on ensuring that the service remains available, works properly and that there are people available in insurers’ operations to help where there is a referral or a clarification required.

And as digital trading continues to evolve, a clear division is 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.

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.

For the highly automated products, the winners will be those who can offer cover that matches customer needs effectively, a competitive price and a claims service that delivers when needed.

For the less automated risks, the prompt availability of insurers, either through phone calls, or increasingly live-chat, is likely to be far more important.

Insurers who get this right might be able to win, even if their product is less comprehensive or competitive, as they are able to offer the broker the service they need.

Polaris provide the live-chat solution used by many of the commercial insurers in the broker channel and we see the level of chats growing at a far faster rate than the growth in policies, suggesting this is becoming a more dominant service model for brokers.

The trade-off between manual intervention and competitive pricing especially will be interesting to follow, as insurers may look to target their product pricing around the level of intervention (and therefore cost) that they require.

Products

Many of the products brokers are looking to access are already available on most broker platforms and extranets. Certainly, that is the case for the top four products requested.

The interesting ones are Contractors Combined and Combined Liability.

Insurers have not historically looked to deploy these as digital products.

With insurers needing to make the business case on why they should invest in one area over another, brokers have a chance to influence where the next bets are placed.

I would encourage brokers to make their cases to the relevant insurer(s) on what revenue is available for the relevant product class and then vote with their feet by placing business with the carriers who have delivered.

The list below is the requests, in order, that brokers had for different products (with anything with less than 10 requests dropped off).

• Commercial Combined
• Property Owners
• Fleet / Mini Fleet
• Professional Indemnity
• Contractors Combined
• Combined Liability
• Cyber
• Directors and Officers

Platform choice

Once again, the key reason for using a broker system for digital trading is the ability to enter all the risk data once into their platform, compare policies effectively and the support to generate their own documentation for customers.

For insurer extranets the reasons are different. Here it is about a customer journey and maybe product differentials.

This is the nub of the issue for a broker – do you save time (and money) by using a comparative integrated system, which by its nature needs to compromise on differentiation of insurers to allow comparison, or do you get a differentiated proposition from an insurer by going directly to their extranet?

Comparative broker systems appear to have the edge.

This is backed up by another question about which solution brokers expect to be the dominant channel in three-five years, where three times the number of brokers (33% of those surveyed) said broker systems will be dominant versus extranets being dominant (11%).

Brokers do feel there is room for both, though, with 55% saying both will be dominant.

As more products are traded online and the appetite to do so continues to grow, it makes sense that brokers would prefer to start in one place and keep it within their own system, as is evidenced by over half a million policies being written annually via imarket, which connects broker systems to insurer systems for commercial digital trading.

For more information on how to acquire the 2023 Insurance Times eTrading Data Insight Book please contact aisha.roberts@insurancetimes.co.uk