The pitch to independent New Zealand brokers weighing an offer from a network has become familiar. Compliance is getting harder, technology is getting more expensive and scale is the only sensible answer to both. Michael Neary (pictured), managing director for insurance ANZ at DXC Technology, accepts the first two propositions and disputes the third.
"So I don't think it is just you've got to be big to have technology," Neary told Insurance Business.
His argument is that the determining variable is not the number of people in a brokerage but the economics of the book it writes.
"Some might be small, but they've got very high-value insurance customers with high spend," he said.
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A firm placing a handful of complex commercial risks faces a different technology question from one processing volume retail business. At the high end, Neary said, manual process and deep client engagement may be entirely appropriate. In retail, technology is doing something else, reducing the unit cost to serve. He offered the comparison that it might take a thousand retail policies to equal one large one.
He was candid that this makes for an unsatisfying answer to anyone wanting a number.
"I know that's not giving you a complete answer, but it's really around that appropriateness," he said.
The list of things Neary said no brokerage can compromise on, whatever its size, is shorter than the consolidation pitch implies. Security, protection of customer data, ease of use and the digital experience. Beyond those, he said, there are several ways to approach the problem.
DXC frames its own offering in three tiers it calls protect, extend, transform. Neary is deliberate about the vocabulary, preferring "heritage" to "legacy" when describing the core systems brokers have already paid for.
Protect means staying on the existing system of record, on the basis that a broker who has made a substantial investment should not be stranded by it. Extend means wrapping that system in application programming interfaces (APIs) that deliver better user interfaces or data analytics while the underlying platform stays in place. Transform is a full replacement.
Neary's most counterintuitive point concerned the last of those. The assumption that large firms transform more readily does not hold cleanly.
"In some ways, it's easier for a small organisation to transform because you can get your arms around the number of policies, but then a bigger organisation can afford maybe the skills and capabilities that are needed for a large-scale transformation project," he said.
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Scale buys project capability. It does not buy simplicity, and a smaller book can be migrated with a clarity that a large one cannot.
Asked how many brokers run DXC's Assure platform, Neary said the company does not disclose the figure, noting only that its client range runs from very basic deployments through to global players in the broking and intermediary market. He said DXC plays a key role in the London market at the largest end of broking as well as servicing smaller brokers locally.
