Disruption was once a word used to describe unruly behaviour in the classroom. Today however, it is more synonymous with the revolutionary changes in the way business is conducted the world over. The insurance sector is by no means immune to this disruption with the industry experiencing a clear shift from traditional insurance models towards newer, more evolved methods that are necessary for maintaining pace in a fast changing, always-on and connected world.
The squeeze on brokers’ top lines is already intense and set to tighten significantly with research from Accenture predicting that that disruptive models and digital platforms could account for as much as 15 to 20 percent of the P&C SME market by 2020. In addition, revenues from brokers with midsized and large customers could erode by up to 20 percent, as savings from digital improvements and automation are transferred to customers in the form of lower commissions and fees.
To overcome these challenges, the importance of brokers adopting radically different business strategies that address the changing demands of the market and harness the potential of digital technologies has never been greater.
To date, one of the main tools for doing this has been mobile applications and digital management systems and they have both undoubtedly made a broker’s job much easier. A good example is the recently launched smartphone app by The British Insurance Brokers’ Association (BIBA) called ‘Claims Made Easy’. Available to BIBA members at discounted rates, the app allows for a motor claim to be reported in less than 10 minutes by instantly submitting to the driver’s head office and their insurance broker. Its main aim is to reduce the average claims reporting time of 23 days by up to 90 percent as well as significantly reducing claims costs and thus provides an ideal solution for brokers to tackle late and inaccurate reporting of commercial motor and fleet claims.
Other insurers such as Aviva in the UK and Lemonade in the USA are pushing the boundaries even further looking at approving claims live via their smartphone app. The latter already has a claims bot called A.I. Jim and at the end of last year it set a new world record in the time it takes to pay out a claim. The programme took just three seconds to review an individual’s claim for a stolen coat, cross-reference the claim against the policy and then run 18 anti-fraud algorithms on it before approving it and sending wiring instructions to the bank for the transfer of funds. It is expected that Aviva will follow suit with something similar in nature but targeted at the UK market.
While they certainly make a broker’s job easier, mobile apps are just scratching the tip of the technological iceberg that can revolutionise the way that brokers engage with clients – who, in turn, are expecting a much higher level of customer service in the digital age.
In fact, the insurance industry often lags behind the finance sector when it comes to investing in IT initiatives. Computer modelling such as incorporating telematics that enables insurers to more accurately predict risk would be beneficial to the entire sector on so many levels.
Embracing technology is not always the answer too. Earlier this year, Legal & General Insurance announced that it had started investigating ways to bring a form of robo-advice to their insurance processes. It goes without saying that robo advisers threaten the very existence of brokers, yet it is very difficult for a robo adviser to pick up what a human adviser often can, especially given the personal and emotive nature of insurance.
Technology can make some of us fearful because we believe that it will replace us, make us insignificant or no longer useful. But the key is not to fight it or be fearful of it because technology, while efficient, can currently not replace the human element. So while it’s necessary to keep up with technology know that you, as the broker, can still differentiate yourself by offering the personal touch. While early adopters will embrace technology there’ll be those who appreciate speaking to a human being if things go horribly wrong.