Despite a declining presence in the personal lines market, brokers continue to grow their books in the commercial sector. Phillip Walter explains how brokers can capitalise on their market stance by using technology to become slicker
In the commercial market a one-for-all proposition is less welcome and less appropriate than in personal lines - the focus is on customer service.
Commercial enterprises still rely heavily on the expertise of their broker in arranging their insurances and, understandably, have high expectations in terms of knowledge, advice, and placement of business all the way through the process to the supporting claims service.
Irrespective of size, brokers that are both focused and quick to react possess the ability to tailor their individual strategies swiftly, and leverage the benefits of working in close partnership with insurers, underwriters and loss adjusters. They can, therefore, gain a significant competitive edge.
For example, Commercial Lines Broker of the Year at the British Insurance Awards 2005, Kerry London, has successfully developed long-term relationships with clients, niche markets and insurers, and addressed special needs in the market. This approach has seen it grow significantly, recently moving into a top-four position within the UK independent broker market.
Smaller intermediaries and brokers have also increased their share of the UK commercial lines market. The Association of British Insurer's analysis indicates that provincial brokers increased their commercial lines market share from 7% to 29% during the period 1998 to 2002. When it is revealed that the small to medium-sized enterprise market in the UK is estimated to be worth £4bn in gross premium income, the importance of commercial packages becomes self-evident.
However, it would be wrong for brokers not to look for ways to further improve upon this and one way is to become slicker and quicker, and technology is a tool that can help achieve this objective.
Technology is playing an increasing part in improving commercial lines business processing. However, the sheer complexity of commercial insurance has brought new challenges to insurers and software providers. The need to automate data risk capture, and for system integration, demands greater innovation. When the time currently taken to obtain a quotation from a reputable range of insurers is considered, and that 50% of commercial insurance documentation is said to contain errors when issued - driven largely by human interaction - with upto 20% still wrong after three attempts, there is a significant opportunity to reduce costs and improve efficiencies for brokers, insurers and, inevitably, the end consumer.
I-market is helping to bring intermediaries and insurers together by creating an online infrastructure, an internet portal, via which brokers and insurers can trade securely and effectively. As a consequence the costs of administration can reduce, while access to rates, speed of response and service to customers can improve.
Having a portal infrastructure, however, is only part of the picture. Clearly, there needs to be a range of products from a range of insurers available via this mechanism to bring the portal to life and all of the I-market insurers are working hard to deliver this.
The other piece of the jigsaw needed for the full potential of the infrastructure to be exploited, is a dynamic link between the intermediaries' own office systems and the I-market portal. Again, all of the major technology providers in the market are investing in improving commercial lines trading, and are integrating their own functionality into their broker solutions and the I-market portal, providing a single point of data entry. This fulfils not only the portal's data requirements but also updates the intermediaries' office systems, providing a full and permanent risk record capable of being used within presentations, mid-term adjustment calculations and the renewal process.
Only when all of these pieces of the jigsaw are assembled will the full extent of the benefits of the infrastructure kick in. No longer will brokers have to start their commercial data fact-finding with a blank piece of paper or a set of pre-printed forms, and then later re-key that information into the system. In the future, they will capture the information relevant to their assessment of their customer's needs as they gather it, be that in their office or equally in the field using mobile technology.
This means that you can be onsite at a client's premises, collect risk data and submit a quote at the same time, and, for some classes of business, be able to provide a guaranteed range of quotations from insurers back to the client within minutes. The information will then be electronically submitted directly into the broker's office system for document production and completion.
The improvement to customer service utilising this greater functionality is huge. It could potentially wipe out the vast majority of the inefficiencies and errors in the existing process, and deliver the edge that commercial brokers are looking for to enable them to maintain their dominant position within the market - while delivering greater customer service, efficiency and accuracy.
- Phillip Walter is chief executive officer at Insurecom.
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