Editor's Note: This article was created as part of my fractional/interim role leading Growth and Demand Gen at Quandri. You can read more about my time there here.
Insurance brokerages have long been a keystone of the financial sector. Insurance is a bedrock of the modern economy and way of life. Brokers provide tangible and intangible services to all economic actors, protecting assets on behalf of customers. As the rate of technological change accelerates advances, it's becoming increasingly clear that brokerages must embrace a more digital future.
The industry broadly is primed to enter the technological garden of eden promised by the internet and AI. And the future will open to those who answer the call. In this post, we'll explore the tech-enabled future that awaits insurance brokerages, and the opportunities it presents for brokers and their customers.
A Few Potential Benefits
a. More smiles
As technology continues to evolve, brokerages are finding ways to leverage it to create a better experience for their customers. Incorporating tech into their operations, brokerages are able to offer customers a more streamlined experience that includes automated processes, faster communication, and more accurate data.
Do you remember the first time you bought something online, found the exact information you wanted in a search engine, etc.? It’s like magic. The first time I saw the inside of a Tesla - magic. The first time a broker called me 5 minutes after I hit their website form and solved my problem within 20 minutes? Magic. And no one likes magic more than the capital C Customer.
Delivering frictionless experiences has never been more available to brokerages and the expectations of their customers have never been higher.
Meeting or exceeding those expectations leads to improved customer satisfaction and loyalty, as well as lower costs and more capacity related to servicing customers. At the end of the day, isn’t improving the lives of your customers why you do what you do? Maybe your just in it for the paycheck. If that’s you, two things. 1 - more power to you, 2 - happy customers is a nice side benefit.
b. More free cash flow
If free cash flow is the oxygen of a business, tedious internal processes are the python that slowly squeezes until you can’t breathe.
Insurance brokerages have a unique opportunity to capitalize on the potential benefits of technology to reduce costs and increase efficiency. By leveraging digital tools and automation, brokerages can reduce the amount of manual labor required to complete tasks. This leads to a decrease in opex required to grow and higher productivity levels from existing overhead costs. When technology automates tedious internal processes, the work done by humans becomes, well more human.
c. Omni-present customer service
Brokers need to meet customers where they are, and today that's online and the office isn’t closed.
Customers are accustomed to using digital channels to engage with businesses, and expect the same from their brokers. Automated customer service and self-service resources provide customers with quick and accurate answers to their questions without the need to wait on hold or speak to a customer service representative. In turn, this frees up human customer service resources to focus on high value, high touch interactions - which also improves customer (and employee!) satisfaction.
d. Data crunching
‘Data is the new oil’ - an MBA graduate
In the age of information, brokerages can unlock a future of enhanced data analysis. Predictive analytics and machine learning are now democratized technologies. Brokerages see and process a tremendous amount of data. Tools that increase data fidelity and volume are key allies to seek out. The end result for brokerages is better understanding their business drivers, performance, customers and market segments. Plus, remaining competitive, today and tomorrow, with large industry players (you know who we're talking about).
Leveraging Tech Across the Brokerage
Insurance brokerages are increasingly looking to technology to enhance their operations and help them better serve their clients. By leveraging tech in different areas of their business, insurance brokerages can more accurately identify and assess their clients' needs and develop tailored solutions that will best meet those needs. Whether you need to do more with less or do more with the same, a tech enabled future brings the promise of amplification and productivity.
a. Risky business
By leveraging advanced analytics and machine learning, insurance brokerages can identify and analyze risk more quickly and accurately than ever before. This allows them to develop more comprehensive, holistic solutions for their clients that address both the current and future risks they may face.
As the amount of information available to brokerages continues to increase, investing in tools and methods to wield the information is paramount.
b. Claims, claims, and more claims
Brokerages can now automate the claims process, saving time and money, while staying sane. Automated claims systems also enable companies to track and monitor the progress of their claims, ensuring that they are handled efficiently and accurately. Additionally, tech-based claims management systems can provide real-time insights into the status of a claim, helping companies make better decisions and reduce their overall claims costs.
c. Keeping things above board
Technology has always revolutionized the way businesses operate
Especially when it comes to compliance and reporting. Today, companies can automate tedious tasks, such as collecting data and generating reports, allowing them to focus on more human tasks. Additionally, tech can help businesses stay up-to-date on the latest regulations and industry standards, avoiding penalties, finding opportunities, and staying on top of dynamic market conditions. Technology also offers enhanced security measures and analytics, ensuring that companies are always in compliance and remain competitive.
Strategies for Adopting Tech Solutions
Implementing insurtech solutions is a necessary step to modernize your insurance business and stay competitive in the industry. But the adoption of these tools is often overlooked. In this section, we'll discuss strategies to get the tools your brokerage needs implemented, adopted, and delivering ROI.
a. Investing appropriately
The first strategy for doing so is investing in the right systems. By researching the latest technology and understanding the needs of your brokerage, you can make an informed decision about which systems are the best fit for your business and team.
A simple decision making framework is to ask yourself:
Will this thing compliment my existing resources (tools and people) and help increase the ROI of those investments?
If the answer is yes, hit the gas pedal. If the answer is maybe, proceed - but with caution. If the answer is no, your time can be spent better.
b. Learning is earning
To ensure brokerages are able to maximize the new tech tool, it is essential to ensure your team (the folks who will be working intimately with the thing) are supported sufficiently. If necessary, consider making an invest of time and/or dollars in training your staff. A well prepped team will help to ensure that the transition is smooth, the new thing is being used appropriately, and will drive your investment toward positive ROI faster as a result.
Training should include both how to use the technology and how to best leverage it to increase business efficiency and productivity. Additionally, access to vendor customer support will help troubleshoot and mitigate any issues during the transition.
With the right people resources in place, you increase the likelihood of realizing Insurtech’s full potential.
c. Customer centricity and strategy
Adopting any new technology, especially for brokerages, requires a customer-centric lens. This is where the risk often lies in a shiny new tool. In practice, it means taking the customer's needs into account when choosing the right solutions and making sure those needs are actually met. It means understanding what they need and how they want to interact with their insurance products.
By keeping the customer at the center of the decisions you make, it prevents pitfalls that improve internal operations at the expense of the customer, and eventually your business.
Last, but not least, which of these is more exciting to an employee?
We’re going to implement this shiny new thing and it will lower our operating costs.
We’re going to implement this shiny new thing and it will improve the lives of our customers.
I’ll wager option b and feel pretty good about that bet. If you’re not sure, ask your colleagues and let me know how it goes!
Challenges of Tech Adoption
The way insurance brokerages operate is undergoing radical change due to new technologies, customer preferences and the general evolution of the industry. As technology becomes an integral part of the broker’s arsenal, their business operations, customer services, and product delivery must adapt to the modern environment.
Technology and talent are like PB&J.
To ensure success today, tomorrow, and in the not-so-distant future - brokers will find new ways to leverage their technology and talent resources.
a. Secure the tech stack
First and foremost, security and infrastructure.
Why would a customer trust a broker with protecting their wellbeing, if the broker can’t protect their own business?
This means online and offline security measures to protect customer data and ensure a seamless, secure transfer of data experience for customers. Utilizing cloud computing, the latest and greatest security and infrastructure is available. Plus, with strong computing infrastructure, brokers can store and share customer information quickly and securely, allowing for fast and accurate decision-making.
b. Customer service made for humans
Customer service is of paramount importance when it comes to insurance firms. With the rise of self-service options and online shopping, customers are increasingly looking for a personalized experience that offers convenience and trust. This is easier said than done. Nothing ruins a day quite a like a poorly tuned chatbot that takes a long time not solving your problem. If you don’t know what I’m talking about, contact your local telecom or internet provider.
Utilizing a combination of automated and personalized customer service is the future brokers must embrace.
Bringing in some automation and self-service tools can ensure their customers are in fact getting the service they want, when they want it. As long as there are high fidelity mechanisms to ensure the customer experience is what you want, then automate away.
c. Talent and employee buy in
Insurance brokers can’t afford to just be transactional – they need to be trusted advisors that deliver a personalized service. To achieve this, brokers must attract and retain the best employees. Compensation, benefits, work environment, culture, etc. All important and foundational aspects of developing talent.
The future of the insurance brokerage industry is in the hands of those who are willing to embrace technology and adapt to the changing environment. And as an old man once said, ‘the best way to prepare for the future is to invent it yourself’. Swimming with the tide is more fun than struggling against it.
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