Blog: Ecosystems will be the saviour of brokers

The market is familiar now with the term application programming interfaces. The ecosystem is formed by a network of integrations from within and outside of the insurance industry that work together to create innovative customer solutions. 

This should include things like customer relationship management, marketing, payments, data sources, internal systems, aggregators, reporting, claims, communications, finance, underwriters, data export and hosting.

Insurance is a complex industry, almost with standalone industries within every insurance line. This complexity creates revenue opportunity that insurers simply aren’t harnessing efficiently yet. According to the latest research from Applied Systems, 79% of managing general agents don’t use a CRM system and, according to the Managing General Agents Association, only 30% of MGAs use their data for cross-selling.  A key component for any insurance ecosystem is CRM. For an MGA or insurer to scale through the ecosystem it needs CRM; but it is inefficient to build that product and system every time for every line, potentially creating their own legacy pile. 

Unless you are a behemoth insurer with limitless tech budgets, one answer is to buy the CRM, administration and distribution platform (but please, make sure this is based around the customer not the policy), and do the rest through the ecosystem.  Build or buy it once and then distribute it everywhere across different channels and multiple verticals.  The possibilities of scale become apparent as you leverage data to give customer insight, build loyalty and engagement.

An example of an MGA that’s using the ecosystem well is Homelyfe: it now has multiple distribution via a digital widget on a broker website; through its own Homelyfe website; it’s just launched on an aggregator and is now available through the Yolt banking app.

Admiral and Vitality are further examples of insurers who do this well already.  Admiral has long sold multicar and home together.  Its combined operating ratio is one of the best in the market and that could largely be thanks to their customer service and use of an ecosystem. 

Digital democratisation is not about disintermediation - there’s nothing for brokers or MGAs to fear here. Ecosystems will be the saviour of brokers, particularly in a hard market, enabling them to compete on a level playing field and access often impressive world class services via APIs – all on the ecosystem, no matter what their size or tech capability.  

Also, consider products only on aggregators, like Hastings for example, they all pay huge electronic data interchange fees and when they get the customer, they then do nothing with them – there is no cross-sell.  The ecosystem would automatically quote customers a second policy based on needs and wants deduced from the customer data that has all been collated and stored centrally from across the ecosystem, to create a ‘single view of the customer’.

Second policy sales strongly increase customer ‘stickiness’ and that all elusive brand loyalty.  Insurers struggle with onboarding costs, so not having a strategy to retain and maximise the sales opportunity is a massive, missed opportunity. 

It is purely vanity to build and maintain all of this without risking building your own legacy piles.