Capgemini recently released its World Insurtech Report for 2020, in which a major theme was that insurers must turn their focus to meeting the digital needs of customers as big technology firms and non-traditional players continue to enter the insurance space.
With tech giants making a name for themselves in the industry, insurance carriers and brokers are under pressure to improve high-impact areas like the customer experience. And despite tech firms emerging as tough competitors, insurers and brokers are also relying on insurtech to boost their value propositions.
The biggest opportunity in the broker market, according to Seth Rachlin (pictured), executive vice president - P&C insurance leader at Capgemini, is the emergence of electronic trading platforms.
“Ultimately, as those electronic trading platforms evolve, the brokers who are particularly tech-focused are going to see enormous value, not only in terms of their operational efficiencies, but also in their ability to deliver true value-added services to their customers,” Rachlin told Insurance Business.
Rachlin said that over the last few months – in the height of the COVID-19 pandemic – he’s had some interesting conversations with brokers. He’s been left “impressed” with the ways that insurance brokers are thinking about using digital technology to augment their value proposition as opposed to viewing technology as a threat to their value proposition.
“Any routine, low value-add transactions – like getting insurance cards, getting certificates of insurance, updating policyholder information, and things like that – should all be fully automated and fully digital because there’s no value delivered to the customer by making them call you to sort that out,” Rachlin explained. “It’s a waste of time for the broker, and it’s a waste of time for the customer.”
If brokers can automate and digitise the lower value interactions that they have with policyholders, then they can focus on delivering more value in the higher impact interactions. Many are starting to tap into the full capabilities of the electronic trading platforms in the market, and they’re using data analytics to become better partners in risk.
Rachlin commented: “We see a lot of brokers making significant efforts to pull in better loss information and better claims information so they can be partners in risk with their customers, in terms of explaining to them the patterns they see, benchmarking them against peers, and then being able to say: ‘If you do this, this, and this, your total cost of risk might in fact go down, and could go down significantly.’”
One of the factors that continues to drive the consolidation of the broker market, particularly the middle market broker segment, in all the geographies is the benefit of scale when it comes to digital capabilities and investment in technology.
“There are benefits of scale in terms of capabilities around digital automated transactions, around claims analytics and value-added loss related services, around turning data into an asset and monetising that data in terms of how you interact with the carriers as well as how you interact with the customers,” said Rachlin. “With all of those things, brokers derive great benefit from scale, and I think they’re starting to understand that. Brokers haven’t typically been significant investors in technology, but based on the discussions I’ve had, that’s definitely changing.”