To protect market share and profitability from the growing threats of new competitors, increased regulations, evolving customer expectations, and digital disruption, insurance brokers need to own more of the customer relationship and compete on service rather than price.
A forecast of 4% annual revenue growth might make everything might look rosy for the insurance broker market. However, brokers are facing increasing competition from new entrants, disruptors like price comparison websites and aggregator platforms, and from insurance companies selling directly to customers.
Digital communications technologies are making it easier to provide on a mass scale the kind of personalised, advice-focused service that is the broker’s major USP.
At the same time as opening the market to new competition, digital disruption plays a role in commoditising products and services. After all, if most players have access to roughly the same market and risk data, are selling to the same customers who have similar problems, and are under the same regulatory regime, their products are likely to converge.
This can make it difficult for established companies with nothing new or exciting to bring to the table to stand out. Business as usual is always good enough, until suddenly it isn’t.
While established brokers and agents can play on the trust they have built up with customers and can count on simple inertia to stop their customers from leaving too quickly, without some means of differentiation it will become necessary to compete on price and erode margins.
Specialise, advise, and disrupt
Insurance brokers can differentiate themselves from competitors by becoming specialists who focus on solving one or two (preferably big and important) problems for clients.
While this inevitably shrinks the size of the market they can sell to, positioning themselves as experts in a field can enable them to become a leader in that space and convert more prospects into customers.
While products might be getting more commoditised, customers’ lives and businesses are getting more complex, which means there is a growing demand for expert advice.
Insurance brokers should be expanding their advisory and risk management services, along with the portfolio of insurance products they are able to offer, to be able to design personalised insurance solutions to meet clients’ exact needs and budgets.
The digital innovation opportunity
Recent research into digital innovation conducted by the British Insurance Brokers’ Association (BIBA) suggests that there exists an opportunity for forward-thinking brokers to take a lead on the competition with minimal smart investment in the right technology.
40% of brokers believe the sector has not embraced innovation very well, 44% think software houses supplying the industry are to blame for not having done enough to innovate, while 77% said cost innovation was the main barrier.
It’s true that brokers face several barriers to delivering digital innovation, including disjointed customer service capabilities across different channels, the incompatibility of legacy systems, the siloing of product and customer data in different systems, and the difficulty of integrating with insurance company partners’ systems.
Even if vendors of insurance broker software are not keeping up, there do exist off-the-shelf and customisable technologies that enable brokers to offer new services and improve the efficiency of their current business models.
At the heart of it all sits the agent desktop and workflow
One of the major issues with delivering digital customer experience is that frontline personnel do not have access to the necessary tools.
The place to bring together all the data and systems that human agents need to seamlessly manage interactions across multiple channels is in their desktop application, which provides them with a single user interface for almost anything they need to be able to do.
Here is what the ideal insurance broker digital customer experience environment might look like from an agent’s point of view:
All applications used in fulfilling the broker’s various business processes are integrated with the agent desktop and workflow software. This means that, using a single interface, agents can generate quotes, manage documentation, follow up and close sales, set appointments, make cold calls, manage the onboarding process, chase up renewals – using whatever digital channel they like and with all customer and product data at their fingertips.
Departmental and channel siloes are eliminated as data is made available in the desktop regardless of where it is stored. Legacy systems are also given a new lease of life and can work with one another, with new digital channels like chat and instant messaging, and with external systems like those of the broker’s insurance partners.
For more information download the whitepaper.