Blog: Future-proofing the broker model

Rather than striking fear into brokers, app-led propositions can deliver significant value for brokers – the opportunity to take back control, and enhance every aspect of their business and the tripartite relationship between customer, broker and insurer digital initiatives. 

Apps play a significant role in every aspect of customer’s lives and brokers need to be accessible on this platform, catering for the way in which customers want to interact with them.  Apps keep brokers connected to their customers. In-app messaging, chat facilities, camera phone documentation for slick onboarding, gamification and reward-led engagement, all these tools provide endless touchpoints between customer and broker, raising customer satisfaction (by between 10 and 15 points according to McKinsey) and driving retention. 

Such dynamic customer engagement via smartphone apps provides access to rich end user data, enhancing Know Your Customer and thereby allowing for more efficient onboarding, hyper-personalisation of service delivery, and perhaps most importantly the ability to price and adjust terms based on a data-driven understanding of risk. Insurers, therefore, get better value from brokers that understand their customers better, improving relationships via a mutual understanding of each-others’ key priorities and business drivers.

In the motor sector, app-based telematics and connected dashcams are already driving a deeper understanding of customer driving behaviour, and thus delivering gains in terms of dynamic pricing that rewards safer driving, better identification of fraud, and associated back-end administration and reporting efficiencies. While in home insurance we’ve seen the launch of Neos for smarter app-based home protection, and in the USA home and renters’ insurance start-up Lemonade is utilising artifical intelligence powered app technology to allow customers to make instant policy changes. At a time when differentiation of service is key, AI and data enrichment is also enabling brokers to make use of aggregated learnings from across their customer base (including claims scenarios) for sophisticated decision making, asserting their value and ability to respond proactively to needs.  

App-led propositions also deliver a significant cost benefit for insurers, compared to traditional methods.  As well as improved identification of fraudulent claims, digitisation and automation can reduce the cost of a claims journey by as much as 30% according to McKinsey, as well as increasing the accuracy of payments and reducing loss-ratios. In the motor sector there are already examples of driver-apps paired with fitted dashcams that capture the moment of impact in a collision or damage to a parked vehicle and automatically sending the footage as first notification of loss to insurers for speedy verification and validation without the need for user interaction. While driver assistance features such as lane departure alerts, forward collision warning systems and fatigue alerts work to reduce claims frequency. 

Brokers must embrace the opportunity, resistance is futile. Those that fail to adopt will buckle under the pressure of those that do embrace digital technology. This pressure is perhaps closer than brokers might think. Ping An Insurance Group, a giant in the Asian insurance market and first fully digital insurer in China has been quick to spot that innovation in the European market is hampered by legacy technology systems and issues. The company has made no secret of its desire to invest in start-ups in order to capitalise on this gap in the market.  

Brokers in their efforts to tackle the competing pressures of legacy technology, siloed data, increased competition and customer expectations, have indeed fallen foul of the sticking-plaster approach – patching legacy technologies rather than focussing on an entire multi-line digital strategy and new way of working. But the technology is available and the insurtech’s software as a service business model means that a huge capital investment is not required by brokers allowing them to easily launch new digital products or services.

Brokers have a choice – to be disrupted or be the disruptor.