The broker's tussle of price vs. services in three key markets

SVP looks at macro differences between the UK and North America

The broker's tussle of price vs. services in three key markets

Insurance News

By Bethan Moorcraft

The insurance industry is transitioning into the digital era. Consumers want the industry to step up its game and match the services already provided by other key players like finance.

For more than 30 years, Applied Systems has been on a mission to take insurance into that new digital era and beyond, by providing innovative insurance technology and cloud-based software. It’s the world’s largest provider of agency and brokerage management systems (BMS), serving customers throughout the United States, Canada, the Republic of Ireland, and the United Kingdom.

Creating solutions that work in various insurance markets and cater to macro differences on a regional and international stage is no simple feat. Where some brokers value price, others value service. 

But which will prevail (price or services) in today’s consumer-driven markets? Insurance Business caught up with Jeff Purdy, SVP of International Operations for Applied Systems to find out more.

“We could characterise the UK insurance market as a single market with 60 million people and no regulation on pricing relative to insurance,” said Purdy. “That market dynamic has produced consumer preferences around ease of shopping, and has made price possibly the most important item in a purchase decision. Therefore, the UK market has seen lots of investment around product and panel.

“In contrast, we would describe Canada as 10 insurance markets with 30 million people, two languages and strict pricing regulation. The highly regulated market means consumers are likely to get a very similar price regardless of where they shop, which means value-add services have become important differentiators. Without the ability to differentiate on price, Canadian brokers need to think about other ways to attract and retain consumers, such as self-service portals and mobile access.”

The US has by far the most markets (with 50 in total), servicing 300 million people and regulation that’s “soup to nuts,” according to Purdy. Some states are very highly regulated, while others are fairly lax in their insurance laws. These variables mean the US does not harbour the same price aggregation culture that’s currently dominating the UK insurance market. What has proliferated recently is the rise of direct sellers in the US personal lines market. This has resulted in Applied’s BMS customers in the US being more commercial lines oriented, and, like the Canadians, extremely focused on value-add services.

“Broadly speaking, the theme would be that North American brokers are very focused on providing value-add services to their customers, which means uptake for Applied’s solution components is high in those markets,” Purdy told Insurance Business. “In the UK, brokers (especially in personal lines) are very focused on product, panel, speed and price. At Applied, we’re trying to educate our UK customers about extending their vision of what they can do, and building an even greater value proposition for their customers.”

Variables in the three markets have led to different broker preferences in Applied solutions. For example, Applied Mobile is very popular for personal lines providers in Canada, because it gives drivers the chance to prove their insurance documentation (a regulatory necessity) if they’re pulled over by authorities. In the US, the same solution is used by commercial providers, for example by contractors who need to show proof of insurance before going onto a work site.

Applied Rater, the provider’s price comparison tool, is also used more heavily by brokers in the North American markets than in the UK. Although there’s less official price aggregation, it’s still useful for brokers and agents to measure against a pricing engine, Purdy explained.

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