How brokers feel about BMS provider M&A

Broker management system (BMS) providers were busy last year on the mergers and acquisitions front, led by Applied Systems’ acquisitions of TechCanary, Policy Works and Indio Technologies.

Applied championed their acquisitions as a benefit to brokers, referencing the larger of the two acquistions in October.

“The broker will now have a complete view of their business, so they can have all the analytics and the action-driven insight that our analytical platform will provide, but now it will be inclusive of that commercial data that will come in through Policy Works,” Steve Whitelaw, Applied’s vice president of industry and partner relations, said in October.

Another big deal occurred last July, when software-as-a-service provider Acturis Group acquired Zycomp Systems, best known for its Power Broker BMS.

Whenever there is consolidation, discussion usually follows about the impact on choice. “I think that my broker colleagues are all very well-justified in wanting to pay close attention to what happens next, because we don’t want to see a situation where there’s a monopoly and people lose their power as the consumer,” Brenda Rose, vice president and partner at FCA Insurance Brokers and past president of the Toronto Insurance Council, said in November when asked about BMS provider consolidation.

What is the impact, if any, of all of this consolidation on brokerage operations?

Canadian Underwriter put the question to brokers in a recent poll. Out of 138 responses, about two-thirds of brokers said BMS provider M&A did not affect their operations at all. Of the 34% that said it did, 44% reported a negative impact, 23% said the impact was neither positive nor negative, and 21% said it was positive.

Where brokers most noticed the difference was in their operational planning. “We moved to TechCanary and Applied purchased it and shut it down six weeks after we launched the new management system,” said one broker in the survey. “We recently purchased Indio and now Applied has purchased them…”

A second broker said their brokerage was using Policy Works, but then they moved to Applied’s Epic. “We made the decision to spend months creating a commercial application and started entering the data from Policy Works to Epic,” the broker reported. “When it was announced Applied acquired Policy Works, it felt like months of work was wasted.”

In an attempt to avoid these types of administrative hiccups, one broker took the cautious approach: “Was planning on reviewing options to switch,” the broker said. “Now holding off again to see how the M&A pans out.”

Tech vendors acknowledge the administrative headache of duplicate entry. But in the case of Indio and Applied, the products are complementary, said Applied CEO Taylor Rhodes. Consolidation also helps close this “painful gap,” he said. “A broken process full of paper and PDFs, duplicate forms from many carriers that [brokers] have to fill out in a painful way that often asks for all similar information.”

For example, with Indio’s solution, Rhodes said, there is a smart, intuitive way for brokers to pre-fill and de-duplicate a lot of these forms in a smart form library. The benefit for the agent or CSR is improved workflow management. “It tells them when a renewal is up, what steps they’ve taken, where the customer is in returning their form, and really walks them through, in a foolproof way, the entire renewal or application process,” Rhodes said.

Asked if consolidation improved their workflow management, brokers were largely neutral (48% of 120 responses), with 24% disagreeing and 21% agreeing.

Many brokers did agree that consolidation will lead to better connectivity between their brokerage and insurers (45% of 120 brokers agreeing, 28% neutral and 16% disagreeing).

Also on the upside, concentration is bringing new players into the market, Rose said, citing the example of U.K-based Acturis’ acquisition of Power Broker. “So, I don’t think it’s fair to characterize it as all negative.”