Brokers play a vital role in the insurance economy, one that places them center stage between the end customer and insurance carriers, and makes them well placed to leverage the enormous amounts of data generated by the industry.
This is a real opportunity, says Nigel Phillips, commercial director at CDL Solutions. “The ability to process, analyse, make decisions on and learn from this data has been relatively limited, but the recent growth in technology means that affordable, high-speed solutions capable of processing Big Data in real-time are now readily available.”
Despite the many advantages, most brokers have been slow to adopt digital tools. But they can’t delay any more. Digital transformation is no longer a thing on the horizon: It’s here and is happening now. This is why brokers need big data and analytics if they’re to remain competitive, connecting the dots for the clients and insurance companies they serve.
There’s a reason people are using search engines and insurtech for their insurance needs: the customer experience.
Digital tools can improve that experience from the very start of the broker-client relationship. The pen and paper method for client onboarding and data collection, for example, is far from perfect, says Phil Edmundson founder and CEO at cyber risk insurer Corvus Insurance Holdings. Responses tended to be insufficient, brokers frequently found they were missing information and then it would take months to hear back from clients.
Big data makes it possible to collect data on the back-end, without having to rely on the client for answers. This saves a significant amount of time for underwriters and means brokers don’t have to hassle clients for an unnecessary amount of data.
Brokers can also use analytics to deliver a much more personalized service. Brokers didn’t have much to go on when it came to pricing a policy 20 years ago, writes Martin Watts at Artificial Labs. Today, predictive analytics lets them leverage dozens of data points to tailor every aspect of the policy to the end user.
The mere act of digital transformation can improve the broker-customer relationship, writes ANVL’s Ashley Harter. “Customers want to know that they’re working with someone who understands modern technology and its benefits. Through digital transformation, insurance brokers are able to achieve better communication with their customers, providing information to their customers faster, and interacting with their customers from anywhere. Further, customers will notice improved benefits in their insurance services.”
The kind of personalized service described above may seem more time-consuming on the surface, but digital transformation actually makes brokers more productive.
Digital transformation can significantly improve broker efficiency, writes Nivin Simon, lead research analyst at Mantra Labs. “For instance, enabling employees with remote digital tools empowers them to quickly take action – from quoting prospects to providing policy details and managing claims for existing customers — especially when they need it most.”
Tools that do much of the work in the background can be used, meaning brokers only have to review and approve recommendations, writes Jeff Mitch, Managing Director at Accenture Strategy.
“For example, automation and AI solutions can be applied to gather and consolidate data, review policy documents, and even make preliminary coverage and pricing recommendations that the broker can then validate, he explains. “And AI-powered online risk monitoring solutions can be used to continuously monitor risks and flag scenarios that require broker review. By taking that approach and expanding the solution set over time, the broker is enabled by technology and able to deliver better outcomes to their client.”
This level of automation makes brokers much more efficient when it comes to selling, too, says Giuliano Altamura, a global financial services business unit manager at Fincons Group. Not only do these applications offer a more engaging user experience, but brokers are also able to free up time due to automation taking mundane but necessary activities off their plates.
Additionally, analytics can help brokers increase the sales they make for carriers by identifying the most profitable sales channels. “Ultimately a brokerage needs to know what channels are generating sales and what are the related costs,” says Smythe Advisory’s Alex Wong and Gagan Ahluwalia. “This includes customers generated through producers, customer referrals, on-line advertising, traditional advertising, affinity relationships, existing customer development, lead purchases and physical location.”
One of the biggest benefits of upgrading the customer experience is an increase in customer lifetime value. When customers feel like they are getting a personalized and valuable service, they are much more likely to stick by their broker in the future.
Using digital tools to make the onboarding process as smooth as possible is one example of this, writes Zviki Ben-Ishay, cofounder and CEO at engagement platform Lightico. “While customers rarely make claims, once they become a customer, they regularly pay insurance premiums, which is the lifeblood of insurance companies. But if dissatisfaction with the onboarding process leads to a failure to convert, the provider misses out on many years of regular payments that would have happened had it made a better impression.”
The lifetime value of customers can be further increased by brokers successfully identifying upsell and cross-sell opportunities. Analytics and big data once again play a role here, allowing you to explore new opportunities.
“For example, you can look at the types of policies and riders that businesses in the same vertical typically buy and suggest those to your existing customers,” writes Joyce Sigler, account executive at Jones-Wenner Insurance Partners. “Or, if you have 10,000 of one type of policy and the carrier has an attractive endorsement for just $12, reach out to those customers and offer it. For them, the ROI can be huge, and for you, those amounts can add up.”
Big data empowers brokers to act as true consultants to their clients. In particular, data can help brokers identify gaps in client policies and make suggestions as to the best supplementary coverage, writes Sean Mallon at SmartData Collective. This allows brokers to show the added value that their offering brings which can in turn increase customer loyalty. Most importantly, however, it means brokers can make sure clients have the protection they need.
Big data also lets brokers provide a more tailored and comprehensive service to clients that gives them the coverage and advice they need. For instance, the ability to tailor products to customers significantly increases the levels of customer engagement, according to a report by McKinsey partners including Tanguy Catlin and Johannes Lorenz. Pricing insurance by miles driven is one example of this. But brokers can even preempt their clients needs, they explain.
“In an analog world, an insurer will be unaware when a customer holding a home insurance policy puts that home on the market. In a data-rich digital world, that need not be the case, and the knowledge that a home is up for sale becomes an opportunity to offer new home cover, new auto cover, and perhaps a life product to help cover a mortgage on the new house.”
Despite the overwhelming evidence of the need for digital transformation, many brokers may still be hesitant to make the shift because it seems time consuming. They needn’t be. Research by Bain’s Henrik Naujoks, Harshveer Singh, Camille Goossens, and Andrew Schwedel shows the shift to digital can be rapid. India’s Max Life, for example, trained more than 9,000 sellers and 25,000 agents in two weeks.
If the events of 2020 have taught brokers anything, it should be that digital is no longer a choice. And when push comes to shove, they can digitize a lot quicker than they think.
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