Plugging into the Needs of Consumers

Imagine brokers walking away from $150 million each year. That’s a lot of money, no matter how big you are. I’ll explain the context for this figure later, but for now I will just say it illustrates the importance of emerging technology to brokers in the future.

The Insurance Brokers Association of Ontario (IBAO)’s message this year is one of collaboration. We need to work together with industry stakeholders to stop the incremental loss of market share. Brokers and insurers need to work together to build better communication systems and workflows. Insurers need better integration with brokers to improve their workflows and efficiencies, which in turn will reduce insurers’ expense ratios. Brokers need improved integrations with companies to streamline brokers’ workflows, reduce inefficiencies and allow brokers more time to interact with clients and sell insurance. Brokers also need to improve the way they interact with their clients to ensure that they are communicating with clients using the client’s preferred method of communication. This will help brokers deliver on the values and needs clients are looking to have satisfied.

Those are a lot of words to say insurers and brokers need to work together to build better systems that benefit all of us. You will hear a number of times this year that it isn’t about one broker insurer beating another broker insurer. Our mindset needs to shift to become, what’s best for the channel?  How will the initiative we’re working on eventually benefit all three parties in the transaction — the consumer, the broker and the insurer?

For some, it will take a fundamental shift of mindset to think of other parties when looking at workflows and system development. Others already understand we need to work together more than we ever have in the past.  

To reinforce my point that we can begin to collaborate as a channel, I thought I’d review a few of the current initiatives in our industry that are significant for all of us.

Let’s start with back-end system initiatives, the broker-insurer initiatives, before we consider the consumer-broker initiatives.

Broker-Insurer Initiatives

First, there is E-Doc, or electronic document download. E-doc is a workflow designed to seamlessly send a PDF file of the policy directly from the insurer to the broker management system using the CSIO download, and then attach the policy PDF directly to the client screen within the BMS. This little workflow change could save the industry millions of dollars through increased efficiency. Without E-Doc, the insurer would print the broker copy and courier it to the broker. The broker would then process the paper to be filed, store it and then go to retrieve the paper copy if required — all while meeting the workflow requirements of both insurers and brokers, as well as satisfying the legal requirements of the regulator here in Ontario.

Several major insurers have committed publicly to building the E-Doc solution, including The Dominion, Intact and Aviva Canada. Other insurers have developed a better understanding of the initiative and are continuing to investigate. The project built significant momentum after the IBAO’s Ontario convention in October 2011. The Centre for the Study of Insurance Operations (CSIO) is now reviewing the standard around which the industry will build the solution. The IBAO is working closely with CSIO, which recognizes the importance of this project and is working to quickly finalize its portion.

Second, we have Transport Layer Security (TLS), a lesser-known initiative recently announced by CSIO. TLS provides encrypted email transmissions between brokers and insurers. Each party needs to enable a security certificate on their email server; this automatically creates a secure email transaction. TLS will allow brokers to stay within their own BMS and workflows when sending attachments and documents to insurers in a secure manner. This is a significant development. It means brokers no longer have to log into company-specific portals to attach signed endorsements or send sensitive claims information. This is just one more step towards staying within our own BMS and will lead to future advancements.

Let’s move on to a few consumer-broker industry initiatives.  

Consumer-Broker Industry Initiatives

IBAO studies show consumers want to make a personal connection when purchasing insurance, use a brand they recognize and complete a simple transaction. To this end, IBAO has been encouraging insurers to continue to brand themselves online. However, they need to drive traffic to a common point, where a consumer can then choose a broker they recognize, perhaps through the broker’s involvement with his or her local community. This would marry the brand of the broker the consumer trusts with the brand of the insurer he or she recognizes. This method allows brokers to deliver on the broker value proposition of providing choice and advice.  

Third, mobile applications are a consumer-facing initiative at the forefront of many discussions. Mobile apps will deliver value to a consumer. However, brokers believe the value should be derived from brokers’ — as opposed to the insurers’ — mobile apps.

If each and every carrier develops its own mobile app and pushes it out to policyholders, then insurers miss the point, which is that they should be supporting the broker channel. The connection should be between brokers and consumers, not between insurers and consumers. Insurer-specific mobile apps weaken the consumer-broker connection, remove the broker from the equation and confuse the consumer if the carrier is changed at renewal. We would be much better off with one broker mobile app that served all customers of all carriers.  

Imagine if brokers had the opportunity 10 years ago to deliver one broker portal rather than a portal for each and every carrier with which they work. We didn’t have the solution 10 years ago, but we do today. Let’s not let this opportunity slip by. IBAO, through its wholly owned subsidiary Independent Broker Resources Inc. (IBRI), will be releasing a broker mobile app sometime in the first quarter of this year.

Now let’s think about the future. If we can accomplish the delivery of an electronic copy of the policy to the broker from the insurer, then what practical and legal hurdles do we need to address to deliver the same PDF to clients (should they prefer to receive it that way)? The next logical question is how to deliver an electronic liability slip for a consumer to carry in his or her smart phone? The IBAO has begun to do some preliminary research on these questions and will continue to work towards providing brokers with solutions.

So what does the $150-million figure I mentioned earlier have to do with this article?  No, it is not the cost to build any of these initiatives. It’s the cost if we don’t. In Ontario, for each and every 1% of lost market share, brokers lose $150 million dollars of revenue.  

Brokers need to develop better technology that drives efficiencies into the system. This will reduce insurers’ expense ratios, thereby allowing them to deliver more competitive rating. Brokers also need to do a better job of interacting with consumers, finding out when how they want to do business. Thankfully, there is a glimmer of hope at the end of the tunnel. Some stakeholders are starting to see the light.