Brokers bridge the digital divide

Not so long ago, Michael Lovegrove, co-founder and CEO of insurtech company JRNY, would have advised traditional brokers to start shifting towards a digital model.

Once the COVID-19 pandemic hit, he began urging them to move as fast as they could.

‘Meeting in person is no longer possible [in some regions] and if customers working from home don’t have a complete office set-up, they may not be able to print out documents, sign them, scan them and send them back to their broker,’ he says. 

‘That process is fundamental to the life of a traditional broker, so, in the current situation, you must be able to do all these things online, even if that means piecing together technology where and when you can in order to survive.’

Lovegrove is concerned that if brokers lack the resources they need for all their employees to work remotely, customers could have a poor insurance experience.

‘That’s the last thing we want, but there’s a lot of scrambling going on and I hope the temporary solutions being put into place will have the capacity to do what’s required,’ he says.

Lovegrove suggests brokers should prioritise technology that enables their customers without printers or scanners to self-serve online while keeping themselves involved in the process. 

Tools that enable screen sharing, such as Zoom, Microsoft Teams and Google Meet, are also vital in the immediate term, but Lovegrove believes brokers need to commit to digitising everything they can now for the long haul.

‘COVID-19 is not going to be short-lived, so it’s extremely important they invest in offering their services online in a customer-centric way,’ he says.

Partnerships could be the pathway to expediting this process.

‘Traditional brokers excel at building relationships and serving their customers to the best of their abilities, and many have built huge customer bases,’ says Lovegrove. 

‘Partnering with a digital technology provider can create a solution that benefits all three parties — the broker, technology partner and, most importantly, the customer.’

ACCELERATING BROKING’S DIGITAL TREND

Whichever path brokers choose, COVID-19 will likely prove to be a powerful catalyst in their update of technology.

‘Historically, brokers may have been using services that enabled them to do something like quote in real time, but that’s a long way from the full digital experience you would have if you were a small to medium-sized enterprise (SME) looking for a business pack online,’ says Chris Bayley, co-founder and chief innovation officer at global insurance distribution platform company Cover Genius.

In the past, independent broking group Insurance Advisernet provided its brokers with technology designed to make their lives easier but managing director Shaun Standfield says many declined to use it.

‘Pre-COVID-19, there was definitely a cohort who thought they didn’t need to learn how to use these tools because there was someone else in the office to do it for them,’ he says. 

‘Now, suddenly, they’re working in isolation and have no choice but to learn how to use them as fast as they can.’

Digitisation has, of course, been reshaping and disrupting the insurance industry for years, in part driven by rising customer expectations, according to Saurabh Mehta, Singapore-based partnerships director of Cover Genius.

‘Insurers were already being forced to rethink their traditional broker models and find innovative ways to present insurance options at customers’ digital touchpoints,’ he says.

Not surprisingly, this sparked concern for the future within the broker community. However, the move to online transactions has tended to stay within certain sectors, such as SMEs and businesses at specific stages of their life cycles.

‘Digital has made it much easier for smaller businesses to get the coverage they need without having to jump through too many hoops,’ says Bayley. 

At this level, the products are pretty standardised, so there’s minimal need for advice. SMEs are also looking for value, so if you can remove mouths to feed in that value chain, both the customer and the person selling the policy can benefit.’

Standfield adds that business owners’ insurance needs are relatively straightforward when they are first starting out.

‘At this point in the cycle, it often makes sense to buy your insurance online,’ he says. 

‘But the risks increase with the growth of the business, and you’re also likely to become more risk averse as you have more to lose. That’s when you’re likely to seek out a broker.’

ON THE LOOKOUT FOR OPPORTUNITIES

Forward-thinking brokers have already identified opportunities associated with new technologies.

‘A strategic approach to technology can increase a broker’s capability and enhance its business proposition in a number of ways,’ says Mike Emmett, CEO and managing director of equity-based insurance broker network AUB Group.

‘Digitisation can improve customer experience and reduce time-to-serve. Developing partnerships with parallel industries, markets and ecosystems can boost market exposure. 

'And leveraging digital customer engagement models can increase a broker’s ability to compete effectively and efficiently in the end-to-end spectrum of insurance customers. This is particularly important in the areas where consumers are most likely to start looking online for their insurance needs.’

Data and analytics tools are also providing some brokers with valuable insights.

‘The data we draw from third-party sources enables our brokers to have richer conversations with their clients and ultimately give better advice,’ says Standfield.

‘For example, we can spell out major hazards for specific occupations and provide detailed information about natural perils. We also draw on data for risks associated with client locations, such as the sea level and proximity to bushland. 

'Five years ago, that would have taken an hour or so to research, whereas now our advisers can access all that and more with just a few keystrokes.’

He points out that while many brokers are expected to act as specialists, most need a diverse range of clients to protect themselves against shocks in any one industry.

‘Our advisers are community-based and community-focused, providing advice to people in all kinds of occupations,’ he says. ‘For them, having access to this level of data can be game changing.’

LOOKING AHEAD

While it’s impossible to forecast the long-term impact of COVID-19, it’s likely that most brokers will need to develop an approach that encompasses both traditional and digital services.

‘Customers look to brokers for independent, expert advice. Yet they also appreciate time-saving digital solutions,’ says Mehta. ‘I believe the future will see a number of insurance companies working on a hybrid model to reach customers both physically and digitally with suitable products and digitised sales collateral.’

A hybrid approach can also play a vital role in building trust. 

‘As an insurtech, we make it possible for customers to understand what kind of insurance they need and then buy it online,’ says Lovegrove. ‘But we absolutely understand that some people still want personal contact. 

'That’s why we offer to redirect them to an adviser or broker who can talk them through any further questions they may have.’

Before COVID-19 put a stop to face-to-face meetings, baby boomers and millennials were the groups most likely to choose personal contact, perhaps because that was the relationship they took for granted in the past. 

'As restrictions are lifted, it will be interesting to see whether their digital experiences have changed their expectations. Lovegrove suspects that just might be the case.

‘You have to remember what customers are really looking for, which is reassurance, and brokers can provide that without being in the same room,’ he says.

‘Clients want to feel confident they’re buying the right insurance or that their claim is being taken seriously. They’re not trying to make a new friend.’

NEW FOCUS IN A CHANGED WORLD

COVID-19 has also changed the way consumers look at insurance.

‘People are becoming more aware of the details of their insurance policies,’ says Lovegrove. 

‘Some business continuity insurance might not cover damage or loss caused by the COVID-19 outbreak, and I don’t think I’ve ever come across a travel insurance policy that covers this kind of crisis. In the past, customers didn’t pay much attention to pandemics, but now it’s what everyone wants to know about.’

More broadly, digital disruption has driven many brokers to consider new business models. 

In a March 2020 article for InsuranceThoughtLeadership.com, EY’s global insurance leader Isabelle Santenac noted some are repositioning as underwriting and risk advisers in order to boost revenue and strengthen customer relationships. 

‘Risk placement will always be important to commercial insurance brokers, but it will no longer be their sole focus,’ she said.

Santenac also acknowledged that it would take considerable effort and investment to execute this transition.

‘Brokers must overcome market scepticism about their ability to add value in a primarily digital world,’ she said.

‘They will also need new skill sets, higher-quality data and modernised technology. Those that transform successfully, and immediately, will be well positioned to lead the creation of industry ecosystems that connect industry players following variants of all these business models — a traditional strength of brokers.’ 

Another change is the growing synergies between jurisdictions in the region, notably new legislation that is bringing Australia and New Zealand closer together.

‘There may be differences in terminology between Australia and New Zealand, but at a macro level, there’s a lot more alignment,’ says Standfield. ‘The changing legislation in New Zealand in terms of licensing for brokers is very similar in intent to that in Australia.’ 

CUSTOMERS LEAD THE WAY

Mehta believes customer needs will drive future changes.

‘Whether or not we’re dealing with COVID-19 or any other crisis, people want clear options, clear comparisons and clear descriptions of the cover, along with a claims process that’s seamless and easy to understand,’ he says. 

‘Brokers will either need to transform themselves or partner with insurtechs if they’re going to meet their customers’ expectations with a transparent and simplified insurance experience.’

Lovegrove adds: ‘I really want to emphasise that, if the traditional model was struggling, it’s now broken. 

'Brokers must look to engaging digitally now if they want to get through the next six to 18 months. The good news is that larger and more traditional insurers and brokers that act quickly to preserve their businesses are going to cut out a lot of unnecessary costs. 

'They’ll also be able to provide better service than ever before. So, while there might be some short-term pain, in the end their businesses will be more profitable and sustainable if they embrace the change.’

FIVE TRENDS FOR BROKERS TO EMBRACE

Cover Genius’s Saurabh Mehta believes that traditional brokers will need to adapt to emerging trends. Here are five changes he anticipates:

As more customers choose to purchase some or all of their insurance online, brokers will need to consider providing end-to-end solutions.
Brokers will need to offer more and different products, such as the personalised, contextual or bite-sized insurance products made possible by technology.
Coaching to help brokers understand, segment and profile users could enable them to apply the correct hybrid of digital and personal service to each customer.
Questions from digitally savvy and well-informed customers will drive brokers to stay in touch with trends in technology.
The fast learning curve resulting from COVID-19 could inspire brokers to make training programs part of their digital transformation.