Honing Web-Based Broker Tools

The traditional insurance broker channel model has historically been plagued by duplication of efforts and thus added costs. At the same time, the willingness and/or the ability of insurance providers to be there when the customer wants them has been limited in meeting customer expectations. In other words, the providers have limited availability of information to the customer by our inherent processes. The insurance industry is moving toward more inquiry and transactional facilities that are web-based. This change is being driven on two fronts: The cost benefits that expanded e-commerce functionality afford, and secondly an increasingly competitive market where non-traditional insurers, including banks, provide a customer with the flexibility to make inquiries.

Service challenges linked to the latter are more complex given that the customer is likely to measure expectation against experiences they have had, not just with other insurers and financial institutions, but with all service providers. Top notch service being provided in industries that are far removed from insurance, are in fact, driving expectations of our own customers.

Integrating strategies

How the broad spectrum of insurers meet or manage their customers’ expectations remains to be seen. Certainly those that do not integrate their e-commerce strategy with the leveraging of the unique value offered by brokers in an intermediate environment stand to miss an opportunity.

The majority of customers, after all, recognize that the broker is an essential service that is not a part of most direct response packages. This is one of the reasons Canadian brokers have been successful in retaining customers in spite of the expanded range of distribution options readily available. Approximately 83% of personal property and casualty insurance premium volume still flows through broker and captive agent channels.

Even with direct channels such as the Internet, it is unlikely that consumer acceptance of the broker channel will drop much below 65% by 2003. In this multi-channel universe, some customers are going to look for experienced brokers to direct the traffic. We have already seen evidence of this in Britain, where U.K. brokers are regaining marketshare as consumers look for help to sort through the deluge of direct advertising that appears in newspapers and television.

Being prepared

But what happens when segments of the market return to the broker channel? Is a broker ready with an information platform that will respond to the customer’s heightened expectation of speed and simplicity and availability? Or do we risk losing that customer for a second and possibly final time?

It is apparent that with the Internet generation, web-based business tools on the broker level are going to be at the heart of customer retention and recruitment strategies. And it is going to be the dual response of insurance companies and brokers that will ensure that customers’ needs are met in a cost-effective manner.

The needle has been moving forward in this area for some time – most notably with inquiry software. Inquiry applications have been inexpensive to develop and rollout. More than 40% of those within the Royal & SunAlliance broker network use the client inquiry (including billing inquiry) and claims notification applications contained in BrAvO (Broker Avenue On-line), their Internet broker portal.

Transactional applications are much more complex, and the delivery of this functionality represents a more significant investment on many fronts. Focus is necessary to ensure that the delivery of functionality delivers a high level of customer value while at the same time driving out cost associated with the duplication of effort, particularly when prioritizing the costs and types of functionality that can be delivered to the broker channel. Most p&c companies will discover that there is no shortage of ideas, just limits on the financial resources available.

Piloting technology

With respect to web transactional processing, Royal & SunAlliance is in pilot with selected brokers for personal property insurance. The functionality introduced allows brokers to process new business (on a guaranteed rate basis) and amendment transactions on customers’ files in real-time over the Internet from home, office or a remote location. Early feedback from pilot brokers has been positive, with brokers recognizing the departure from the traditional model that may include service delays and duplicate processing.

The primary objective in parallel investment in internal and broker web-based business solutions is to improve customer service while reducing costs in the broker channel. Ultimately, customers may demand that the value presented by electronic access to their policies be extended to them to some degree. This evolution in the relationship between insurer, broker and the customer is not going to be an easy one. The nature of these relationships will be transformed, and brokers and insurers, each with their unique value propositions, will need to work in greater concert to meet the customer’s needs and expectations.

Insurers are investing in platforms that keep the broker in the loop. Example: investments must be made in electronic services that lower the cost of distribution while letting the broker decide on the extent of involvement in customer transaction or after-sales support.

Internal research indicates that about 90% of brokers are comfortable with the company dealing directly with the customer provided that they remain part of the process. And why would brokers not be comfortable if it means greater customer satisfaction, customer retention and a more competitive channel based on greater efficiency? Functionality offered in a real-time web-based processing environment will lower brokerage operating costs while freeing brokers to use their expertise to grow the business.

Technology has truly put the customer firmly in the driver’s seat. The Internet has raised the bar in terms of customer expectations, and it is continually changing the way we shop, bank, conduct product research, buy and administer insurance. Meeting this challenge in the broker channel requires a tremendous collaborative effort and investment on the part of insurers and brokers. In the final analysis, neither a brokerage firm nor an insurer, on its own, could deliver the high standard of service and efficiency that can be achieved by the combined efforts of these business partners.