The rise of insurtech has been the talk of 2017 with the expectation that the arrival of new ways of doing business and leveraging technology will have a disruptive influence on the industry. Once again, 25 years after the arrival of direct insurance companies, the future of the broker is being debated. However, Chris Butcher, CEO of Ambant Underwriting Services says why he believes insurtech can be an opportunity for intermediaries if they adopt the right approach.
Much has been said over the last 12 months about how the insurance industry is on the verge of significant disruption with huge numbers of insurtech start-ups about to take all our customers away by building direct relationships with the end customer.
However, is this really happening? Will the impact be as terminal on the intermediary chain as some predict and is there anything that brokers can do?
In the reinsurance sector, we are seeing the major brokers investing millions into new insurtech start-ups and adopting a very proactive approach to the implementation of technology into the market.
It is positive to witness the insurance broker community utilising current client relationships while embracing the opportunity to use the latest tech innovations to support their client. This includes, for example, the method of interaction, or the tracking of innovation in their own businesses to better assess risk.
A large proportion of the UK broker community focuses on value added services to business customers. These customers depend on the trust they have with their advisors.
In our experience, seeing over 100 prospective insurance MGA businesses in the last six months, those which are succeeding are those which have insurance professionals at their core. These are most often senior insurance practitioners who recognise the need to transform the industry, have the vision, and have the knowledge and abilities to overcome the practical difficulties.
Fundamentally, they recognise the value of the broker distribution model and are building new MGA ventures which will support the UK broker.
There are also niche personal lines portfolios which are developed in the UK broker environment and can be grown successfully with the adoption of what the current buyer really wants – a vastly improved customer experience, aligned to the effective use of technology. A win-win for the industry; reduced cost and improved customer experience and hence a more positive outlook.
A case in point is the high net worth book that has transitioned from AIG
into a new MGA, Azur, that we are working with. The aim of Azur is to remain very much a broker distribution model but to implement technology to change the way the customer has their risk products delivered in terms of both communication and levels of service.
This is being done alongside its broker partners and I believe it is those brokers who adopt that “can do” attitude that will thrive in the insurance industry of the future.
Insurers are looking at how technology can drive improved service levels, reduce frictional costs and more importantly make the industry more relevant to its end customer.
Technology has provided the opportunity for insurance to step out of the dark ages and redefine how it operates. What cannot be forgotten is that other industries are, and have already, implemented technology to better meet the needs of the customer.
We as an industry, have looked at how we believe it can benefit not just the clients but customers, both commercial and personal lines, are already seeing technology change their interaction with a host of other goods and service providers and there is a growing expectation that insurance should be doing the same.
Brokers have to change to engage with their underwriting partners and drive the implementation of insurtech. Brokers have the trust and the relationship with the client and as such have a valuable insight that needs to be utilised.
We are already seeing new underwriting entities that are looking to offer more bespoke underwriting products, insurance for your skis when you are skiing, for example, rather than an annual policy where the client is paying for cover when there is no opportunity to use them.
The firms we are already working with to launch and those we have already got off the ground recognise the fact that insurtech will change the market and are building business that are structured to embrace technology to develop and drive success.
Brokers cannot afford to wait to see what develops. They need to be proactive, engage with the underwriters and play a part in developing future solutions that benefit the capacity providers, the brokers and most importantly the customer.
The days when the industry spent all its time creating reasons why it did not need to change have passed. The industry is and will change and the firms that will succeed are those that recognise the need for change and play a part in driving that change.
The preceding article was an opinion piece from Chris Butcher, CEO of Ambant Underwriting Services. It does not necessarily reflect the views of Insurance Business.
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