The Future of Broker Insurers
Future digital broker insurers will stay in the background and simply provide a self-service platform for brokers, predicts Ingolf Putzbach, managing director of the technology company sum.cumo. Read the details in his guest article in the following.
For a long time, insurance sales seemed immune to change. By now though, despite the market's inertia, nothing is the way it used to be. It's all the fault of the customer, who assumes that buying insurance should be no different from buying any other product or service. They take it as a given that it should be possible to get information, conclude contracts, and receive customer service via digital channels.
Insurers and brokers cannot afford to ignore this development any longer. Business models have to change. However, processes and IT systems adapted to these new customer expectations are slow to emerge.
Digitizing the insurance business
The insurance industry can only be digitized successfully if the process actively includes the brokers, because they will continue to serve a critical function. No one buys insurance on an impulse. The decision to buy is almost always based on rational considerations and thought processes in which trust plays a pivotal role.
For online insurance purchases, this trust is established by means of seals, testing results, customer reviews, and comparisons. None of these tools, however, will ever replace the personal expertise of a broker, even in cases where the decision isn't overly complex or of existential significance.
On the other hand, the customers of brokers are right to expect that completing the purchase, requesting customer service, or reporting a claim should proceed as smoothly and free of complications as with an online-only insurer.
Insurers retreat into the background
In fact, the insurer retreats into the background, since any customer loyalty is mainly toward the broker. The role of the insurer should be limited to guaranteeing the transfer of risk by providing efficient and cost-effective processes. Thanks to artificial intelligence, this will work better and better, even for the classic insurance disciplines such as underwriting and claims processing.
A self-service platform for brokers
Thought through to its logical conclusion, the role of a digital broker insurer is that of a self-service platform for brokers that they operate by smartphone or desktop computer. The hallmark of such a platform is that brokers are able to handle all of their business processes, from closing and amending contracts to processing claims, themselves in real time. Alternatively, brokers may decide to let customers perform certain tasks themselves, such as registering claims and answering questions during the application process.
With correctly designed products, this scenario of "the digital broker" can already be implemented almost in its entirety; the necessary technology is available.
Critics may argue that this transfers some of the duties of the insurer to brokers instead – but in actual fact, this is already happening today, and the main problem is the costs (in terms of time, money and attention) that non-digital communication between insurers and brokers incurs.
Of course, a digital broker insurance can't be a closed shop. In accordance with the principles of Open Insurance, brokers must be able to transfer customer and contract data, along with their complete histories, into their broker management software at any time.
Benefits for broker insurers
The question remains: Which insurer will be the first to be able to provide its brokers with such a platform? For the established broker insurers, this is essential to their survival. An arbitrary number of direct contacts can be administrated very efficiently, rendering unnecessary the workaround using pools and networks that many insurers currently use.
In this respect, digital broker insurance would be a coup – for brokers and insurers alike, and most of all for customers, who wouldn't need to do without competent consulting and would nonetheless be able to enjoy efficient insurance coverage delivered via modern digital channels.