We use cookies to improve this site and enable full functionality. You can change your cookie settings at any time using your browser. Our cookie policy.

Can brokers innovate and transform?

Can brokers innovate and transform?

Can brokers innovate and transform? Sheryl Crow once wrote that “a change would do you good”, while Mickey Rourke was famously quoted as saying that “the hardest thing to do in life is change.” When it comes to insurance brokers and embracing new technology it seems that both quotes could apply – but those “waiting on the world to change” (John Mayer) are likely to be left behind.

That’s the message from David Lambert, global insurance transaction advisory services leader at EY. He believes that brokers are rightfully asking the question as to how they can innovate and transform but that there is no time like the present.

“Technology now is cost-effective in a way it wasn’t two-three years ago – the cost of hardware and software has come down quite significantly,” he said. “If you look at the equation of investment versus return then investment now looks like a better answer in terms of the risk-reward. The technology now has been tested: it works and it’s within the realms of affordability.

“So the question then becomes: does the marketplace demand it? I’d say insurers are demanding better data and faster interfaces. Increased disclosure requirements are, in some cases, putting a lot more burden on the intermediary.”

Of course when it comes to making technological changes and updating systems, brokers may rightfully question what’s around the corner and when the right time really is to make that leap of faith – after all, there’s little point in replacing systems with new models if the ‘new’ will become ‘old’ in 18 months when the next innovation comes on to the marketplace.

However, in Lambert’s opinion, while change and further innovation is unquestionably around the corner, there is still a definitive need to ensure you’re up-to-date now.

“Insurers and brokers are going to have to change the way they do things a lot in the next five, 10, 20 years,” he said. “They can’t do that if they have an anchor dragging behind them in the form of legacy systems, legacy processes and so on. All of these things are a massive inhibitor on their ability to be able to adapt to change. 

“With modern technologies, yes things might change further but at least you are able to bolt-on or adapt to those changes with a relatively clean starting point. You don’t want to have a situation where 65 per cent of the people in your business have to chase yesterday’s problem and are not able to deal with whatever you face going forward.”
So if we come to the agreement that changes should be implemented now then what form should these changes take?

“For smaller brokers there are different ways of looking at this universe,” continued Lambert. “The investment needed in a relative sense can be very, very high. You have to, in pragmatic terms, be working towards a future state.

“Brokers are looking to change their core IT systems often in partnership with large IT consultants. People are looking to radically change their application systems – but even changing things like printing and basic email services can make a difference. It doesn’t sound like much but in many cases these services have grown up over 10, 20, 30 years and have become complicated and expensive in their current form – there are simple things that could save thousands every year. Small adjustments can make a big difference and we’re seeing brokers doing some very straightforward things.

“At the same time many are taking a real ‘root and branch’ reassessment of their IT infrastructure. You can keep going with things hanging together with old legacy systems and so on – but with those issues in the background you can’t actually transform your business. You need to be nimble and be ready for what’s required from customers and from large insurers in terms of data needs going forward.”

Related Links:
Keeping on top of cyber risks
The game-changing opportunity for insurers and brokers