“Our future is in broker distribution, but not the broker distribution we have today”

It’s not in the DNA of this company to go direct, but staying relevant means making Apple-sized changes

“Our future is in broker distribution, but not the broker distribution we have today”

Insurance News

By Alicja Grzadkowska

As the war of the direct channel versus the broker channel wages on, particularly in personal lines, some insurers are making a strong stand on one side of the battlefield, though it’s hard for anyone to ignore that change is coming to the distribution of insurance.

“We’re 100% [in] broker distribution and we’ve made the decision that this is the path we’re going to take, but I think the challenge for us is that while we’re focused on brokers, we also recognize that the broker distribution channel needs to change, and a lot of it has to do with adoption of technology and simplification of the workflow,” said Paul Jackson, chief marketing and distribution officer at Gore Mutual Insurance Company. “We actually don’t think that it’s within our DNA to launch a direct channel. What we do think is that there is significant change that needs to happen within the broker channel so that it continues to be relevant and grows its relevance.”

Direct channels are also expensive to launch and require a technological capability that not every insurance company has access to, but the modernization of the broker channel will be a challenge without implementing some form of technology that provides value propositions modern customers can relate to, explained Jackson. Allowing an insured to use their smartphone to manage their insurance needs is one approach that some companies are already taking advantage of, such as Desjardins, which offers a mobile app that clients can use to send photos of damage done to their car after an accident right to an auto appraiser.

“The companies that are starting to think about how they engage insurance customers in an experience through a device – that’s really interesting to me and I think brokers typically aren’t doing that because they’re forced to do a lot of admin that insurance companies put on them,” said Jackson.

The solution? Automate that administration – an application of technology that doesn’t replace the broker, but rather increases their capabilities.

“If you’re a broker and you’re representing Gore, and you spend 90% of your time doing administration work that we need you to do – data entry, frontline underwriting, gathering data, scanning, faxing, emailing – that isn’t creating a customer experience, that’s just facilitating an admin process. It’s really incumbent on us, the insurance companies working with brokers, to extract that admin and free up the broker to be able to focus on the sales and service experience for customers.”

Brokers are, for their part, welcoming technology solutions that take away the administrative tasks, and associations like the Centre for Study of Insurance Operations (CSIO) are working hard to put standards in place that will streamline aspects of brokers’ administration work. However, Jackson pointed out that if a broker spends 90% of their time doing admin and then it’s automated, that leaves a big void in their day. Instead, the broker needs to be repositioned on the frontlines. Gore Mutual is working on just that via its ‘Broker of the Future’ initiative. Jackson draws comparisons to the new Gore retail spaces coming next year and a well-known tech giant’s stores.

“We want to transform the bricks and mortar space, the office of the broker, so that it’s not an office – it’s now a retail experience,” he said. “Imagine an Apple store where you have merchandise that’s beautifully placed, you have screens where people can interact and they can explore solutions and do it in a very gamified way, or have a cappuccino at a nice coffee bar.”

The people working at these reimagined brokerages will not be there to perform administrative tasks – they’ll be there to provide a great insurance buying experience, but that’s only one part of Gore’s innovation strategy for the future.

“We’re going to work on the digitization of the business, so identify all the administration processes that we can automate with AI or using just better integration technology, and free up the people to then talk to customers and understand customers and create those relationships and that trust and the experience, so the customer has a seamless experience between the smartphone and in-store,” explained Jackson. “We want to try to create an insurance brokerage that is a real modern retail experience, online and offline.”

As insurance faces down disruption from direct-to-consumer models and insurtechs, the industry has another set of other burning questions to answer, Jackson told Insurance Business, such as how do we insure new insurable risks or new assets that people have, how do we deal with the millennial customer as well as a young, urban consumer who might not have a car or a home, but they have money and assets? He cautions that the industry needs to be careful that somebody somewhere is poking around, wondering if there’s fat in the process, and figuring out how to make the insurance purchasing process more efficient and customer-focused. Insurance companies have to do this themselves or someone else will, warned Jackson, and that means evolving the current way of doing business.

“We recognize that our future is in broker distribution, but not the broker distribution we have today,” said Jackson.

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