Clients still want a relationship based on trust with their broker, but adding value without technology is increasingly a challenge for brokers.
There’s a crucial battle going on in the world of technology right now – and it centres around personality. Tech giants such as Amazon, Google and Apple are dedicating serious time and effort into developing personalities for their respective virtual assistants, with the aim that they will be likeable as well as functional.
However, there isn’t the same race in insurtech. At least not yet. Robo-advisers are mainly focusing on functionality and making sure that their platforms deliver what clients expect. But would their rise in prominence be hastened if clients not only trusted the technology, but actually liked it too?
Lloyd’s brokers have historically relied almost entirely on their personal reputations for business, but they might be in danger of being usurped by insurtech if they fail to innovate entirely. According to a recent study by EY, the top four investment robo-advisers managed $128bn in assets as at November 2017 – up a massive $88bn from 2015, which suggests how quickly tech could muscle in on the insurance market.
This does not mean they have to become fully fledged robo-advisers, of course, but rather that they have to develop a 2.0 version of their business: embracing technology for improved efficiency but maintaining that personality to help maximise the quality of the customer journey.
A recent survey by Novidea showed that almost one third of respondents (29%) stated they did not have a digital business intelligence system in place, while little more than a third (36%) had a customer relationship management (CRM) platform.
Although embracing new technology can seem daunting – and the perceived cost of doing so expensive – brokers cannot afford to refuse to embrace technological change, because doing so means they risk being left behind.
Traditional broker firms may feel that accepting new technology into their firm means they will inevitably become redundant over time. But failing to harness digital systems that enable the storage and analysis of data to benefit their business could mean remaining bogged down by everyday tasks that could be outsourced to a tech solution.
The rapid advancement of technology means that just being a few years out of sync with modern developments could result in a cavernous gap in terms of technical capabilities. This information technology gap has been called one of the most significant risks faced by the sector, and is often driven by its overreliance on legacy systems.
With clients expecting instant responses from a growing number of services in their lives, brokers need their offering to be responsive. Not only is arriving with a briefcase of paper documents becoming ever more outdated, searching for individual pieces of paper and answers to questions on specific policy documents is likely to feel cumbersome in the digital age.
Clients want to be able to make decisions quickly and make hassle-free adjustments to their policies instantly. Data-driven systems allow brokers to make changes to policies, show quotes and change personal details in real-time all, crucially, in front of the client.
This is particularly pertinent as quick responses to client questions enhance the experience their experience and improve a broker’s productivity. Determining quotes and assessing clients’ needs – right there and then – enhances your offering and provides information at the speed time poor consumers demand. Simply, brokers need to offer this type of service if they are going to survive.
Filling in forms or plugging information into a database, submitting the request and then responding days or weeks later is no longer a viable option for a company hoping to remain in business for the long term.
It’s important to remember that technology doesn’t only serve the client facing side of your business either. One of the key reasons to have a data-driven technology system is that it keeps information safe, records when changes were made and by whom, and assists with compliance.
If the Financial Conduct Authority (FCA) were tasked with investigating a decision your firm had made or a complaint from a client, having a full and transparent audit trail available at the click of a button would remove a great deal of stress compared to having to try and locate physical documents.
With the use of technology now ubiquitous, the regulator is likely to expect firms to be able to produce a full audit trail of work with each of its clients, proof of client agreements, and evidence that the client’s insurance demands are met by the selected policy.
While it might sound like technology is an overarching and dominant force in the firms that embrace it, it is important to remember that the relationships that brokers already have – and are able to develop – can work with digital systems too. In fact, the collaboration will enhance the overall offering.
Clients still seek out brokers they feel they can trust and develop a relationship with, but adding value without technology is increasingly challenging. Lloyd’s is clearly a highly respected institution, but when it comes to tech, brokers need to take matters into their own hands to drive change.
By leveraging existing customer data, brokers are able to offer tailored advice that goes above and beyond the customer’s requirements. For a start, they can create a 360-degree view of the customer, enabling them to identify cross and upsell opportunities. This is not only good for a broker’s business, but will also improve the customer experience, which is essential for client retention.
Beyond this, technology platforms enable data to be accessed from any device, in any location, at any time. The ability to provide clients with an answer or an update almost instantly is a huge advantage, especially at a time where brokers are under pressure to increase the value they deliver to clients.
This touches upon the difference between ‘technology’ and ‘data-driven technology’. The latter harnesses data, which drives insight, which drives knowledge, which drives quality. Data-driven technology can do the heavy-lifting for a broker, allowing them to seek out new business and provide their existing client bank with excellent service and cover.
And it’s this human touch that remains so important in spite of the necessity for technology. Brokers who take the time to understand and improve customer experience are rewarded with more referrals, higher revenue per customer, lower churn and better customer satisfaction ratings.
Such service will also allow brokers to compete on metrics beyond price, thus helping to bolster the profitability of their business. And if the use of technology becomes fully entrenched in a firm, brokers are likely to be able to derive actionable insights from numerous data sets.
With accurate data aggregated on one single platform, AI can be applied to it to give valuable insights into each customer. Armed with this knowledge, brokers can provide the highest possible value to the customer and go above and beyond the competition.
The Lloyd’s broker will always have an integral role to play in the market. But as the insurance industry modernises and becomes increasingly customer centric, they will need to embrace the benefits of real-time technology in order to maintain their role as trusted advisers. However, having said that, human personality will ultimately be the secret ingredient that powers a broker’s business forward.