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.
Major Challenges Facing Insurance Brokers in 2023
The insurance industry is a foundational part of the modern economy, providing critical risk protection. Brokers play a crucial role in this industry helping customers find the best insurance policies and providing advice to make the most of their policies.
Today and tomorrow, playing that crucial role is increasingly challenging for brokerages. Delivering services the economy needs, while operating the businesses efficiently, is no easy task.
In 2023, automation will be more important than ever due to continuous labor challenges in the insurance industry, specifically from a home office processing standpoint.
- Brian Carey, Sr. Director at Equisoft
Customer Expectations
Customer expectations are challenging for every industry and are running away from insurance at large. Customers expect more personalized service, faster response times, and better access to information.
“Insurance brokers are facing an increasingly challenging environment. Their industry and customers are changing along with increased competitive pressures from big tech companies and Fintech companies”
- BeInsure
According to PWC, 41% of consumers are likely or more likely to switch providers due to a lack of digital capabilities.
The 2020 Gartner FS Customer Experience Survey found that two out of top five insurance customer requirements are related to speed:
So does Insurance have a customer experience problem? Let's take a look at some opinion data from consumers:
Insurance brokers provide a crucial service to the economy at large, as well as communities and families locally. What these data show is a perception gap, perhaps justified in some cases. The important bit is it doesn't have to be so. I believe it shouldn't be so.
Regardless of how your customers feel about you, this is a headwind all insurance providers are faced with. However, today's problems can be tomorrow's innovations and differentiators. Brokerages who invest in and provide a superior customer experience will stand out. And begin to shift customer perceptions to more closely track the value insurance products ultimately afford them.
To close the customer expectation gap, brokers need to invest in customer engagement, systems to quickly respond to customers, and analytics to provide better insights. As we look to 2023 and beyond - brokers must strive towards a seamless customer journey, with easy access to information and services.
For more info on customer experience and expectations, here is KPMG's research report: Customer experience in the new reality: perspectives from the insurance sector.
Digitization
As Alan Kay said, “The best way to predict the future is to invent it”
Digitalization is the third challenge in this article, but it very well might be the only 'make or break' challenge. Customers are increasingly relying on digital solutions to search for, compare, and purchase insurance policies. Brokers must keep up with the changes by investing in digital marketing and technologies that increase efficiency.
And customers are warming up to the idea of digital and tech enabled service:
Some of the areas brokerages should consider include:
CRMs for customer relationships
Predictive analytics for risk assessment
AI and ML for decision optimization
RPA for internal efficiency
And don't forget about your internal operations! These are arguably more important to digitize.
Brokerage interaction with customers is a relationship driven game. However, most brokerages people resources are deployed against non-relationship driven activities - processing renewals, processing edocs, matching claims and policies, clicking buttons in the management system, etc.
Digitizing, then automating more of these internal procedures increases consistency, scalability, resilience, and human resource availability.
Check out Mantra Labs' case for why the insurance broker should become digital.
Cyber Security
It has become paramount for brokers to ensure they have the right security measures in place to protect their customers' information and data. They must invest in the requisite technologies and keep their systems updated with the latest security patches. The problem exploded in the 2010s (shown below). Although the trend was curtailed, as technology cycles spin, it's likely to reappear in new, but familiar ways in the future.
A king once said, “if I cannot protect my own castle, why would my people trust me to protect theirs?”
In addition, brokerages should conduct regular security audits and training to ensure their systems and processes are secure, and inform customers about their cyber security policies.
And by the way, cyber insurance is a growing market segment - so now is as good a time as any to dive in!
For a deeper dive into Cyber Security, take a look at Cybersecurityguide.org's Cybersecurity insurance: A complete guide.
Regulatory Compliance
The insurance industry is constantly evolving, with more complex regulations and customer expectations. Regulatory compliance is one of the biggest challenges facing the industry. Insurance companies find themselves increasingly overwhelmed with ever-changing regulations, and brokers must maintain compliance.
To do this, they need access to comprehensive resources and should consider legal and ethical implications of their decisions. Last, but not least, new regulations can impact customer demand and expectations. Staying on top of the latest and greatest ensures you can be proactive and prepared - on behalf of customers.
If you're looking for compliance tools, check out Webinar Care's list of top insurance compliance software.
Wrapping Up
The insurance industry is facing numerous challenges that make it difficult for brokers to operate their businesses. Nevertheless, by understanding the challenges, investing in the right technologies, and staying up-to-date on the latest industry trends, insurance brokers can remain competitive in the marketplace and provide their customers with the best possible service and advice.
"AI and RPA are only beginning to transform how business is done in the insurance industry. We can expect to see burgeoning usage in operations, customer service, risk assessment and mitigation, and regulatory compliance"
Snacks for thought:
Cornerstone Insurance was spending 6 hours a day properly naming and categorizing their daily EDOC downloads.
They engaged Quandri to automate this work and a few weeks later, ta-da! Now, there's a bot for that.
The bot saves Cornerstone 1,440 hours and $27,000 per year, and the process is complete before the staff logs in each morning.
Read on here: quandri.io/case-studies/cornerstone-insurance/
Mackay Insurance was taking 3-5 weeks to review renewal documents and was going to hire additional staff to reduce the backlog.
Then, they found Quandri and now there's a bot for that.
The bot saves 2,400 hours per year, completes the renewal review process 35X faster, and reduced their costs by 67%.
Read on here: quandri.io/case-studies/mackay-insurance/
Friday night reading, dive deeper into the major challenges:
Deloitte, 2023 insurance outlook - Global insurance industry at a crossroads to shaping long-term success
Beinsure, Top Challenges facing Insurance Brokers
Carrier Management, Executive Viewpoint: Key Strategies to Attract NextGen Talent to the Insurance Industry
Insurance Journal, Bridging the Insurtech Divide with Data in 2023
Comments