How moving to the cloud is helping brokers thrive in a mobile world
The world of broking is changing.
Market dynamics, a global pandemic and changing customer behaviours have all come together in a melting pot that is making the broking world almost unrecognisable to how it was just a few years ago.
“We are looking at a changing world, especially with what is happening with Covid-19, where all of a sudden people weren’t able to go into London, print out pieces of paper and walk to their offices,” said Novidea UK managing director Ben Potts. “There has been a big realisation now that a broker has to have data available wherever they are. Brokers need to have the capacity and capability to support growth in a remote working place.
“Whether it’s at home, a customer’s office, an airport or anywhere else, a broker should be able to go on their phone and access all the required information just as if they were in the office.”
Potts called this ‘scaling to mobile’, and said that it is “all about putting in place the processes, governance and controls that are needed” to provide access to every system from anywhere a broker has access to a mobile phone or tablet.
He was also quick to point out, however, that this change was not solely down to the outbreak of Covid-19 across the globe.
“The market conditions had already been changing the role of the broker, coronavirus has just accelerated that,” he said. “Premiums have been dropping, commissions have been dropping, and brokers have had to adapt and change.”
Potts said that while high-value and complex risks will continue to need a large amount of broker-led interaction, the mid-level and lower value business will need to change.
“To be competitive on the bulk of their business, brokers have traditionally competed on getting the best deal on the best terms, but that very quickly changed to competing on price,” he said. “But with consumer behaviour changing and premiums falling, brokers can’t compete on price anymore, and they have to compete on value.
“That is difficult for brokers, because they need data to compete on value, and brokers are notoriously not very good at having and managing data. The other way brokers can add value is for them to spend more time with their customers and being more consultative, but that has an associated cost and that influences the price they can offer.”
To combat this, Potts said brokers must diversify their business and that they should turn to technology for the help they need to make this a success.
“Brokers now realise they can’t just focus on the high value business, they have to get to the lower value, higher volume business that involves delegated authority or quota shares across a book of business,” he said. “But brokers need to reduce the amount of time needed to be spent on that low value, high volume business, because if they spend too much time with the customer it is not profitable business.
“So brokers are looking to automate processes and reduce costs, and are using technology like portals to be consultative, [instead of using the time of a human broker].”
“It is all about spending less time but adding the same value, and you do that by managing and accessing your data much more effectively,” he added.
Power of the cloud
More traditional systems have usually had high costs associated with the level of access and detail associated with such mobile systems, and it is here that Potts said cloud-based systems can help.
“If you try to scale traditional technologies, it soon gets very expensive,” he said. “But with cloud-based technology the infrastructure is already there, it is robust and scalable, so the cost-per-licence actually gets cheaper the more people you put on a cloud model.”
Cloud technology also gives brokers the ability to view data and analytics across the business as a whole, as well as at an individual unit level. Something Potts said is incredibly powerful.
“Having that allows COOs to see what is good business and why it is good business, rather than just looking at the aggregate positions,” he said. “The aggregates will just say the business is doing ok, whereas some of it is actually appalling and some of it is very good. Modern COOs want to open Pandora’s box and have the technology to assimilate it and work out what is good business and why.
“Coronavirus has given this new breed of COO the leverage to have the credibility to get some spend and make these changes faster.”
And Potts said that brokers in the London Market are beginning to wake up to this need for change, aided by seeing the success of their colleagues in the personal lines mass market and the way Covid-19 has changed the way they are working in the short-term.
“Coronavirus has acted as an accelerant for change, and there is an opportunity for brokers here,” he said. “Personal lines business has already had to automate, but in the London Market the premiums have been so big that until now they haven’t had to automate, so culturally it is taking a long time to accept that they will have to change as brokers.
“But Coronavirus has put a spotlight on technology, and brokers are realising that a lot of what they are working with is no longer good enough.”