Navigating the hard insurance market with new technologies

Navigating the hard insurance market with new technologies | Insurance Business

Navigating the hard insurance market with new technologies

A perfect storm has brewed in the property & casualty (P&C) insurance industry. The fatal combo of a spike in losses across multiple P&C lines, several costly environmental catastrophes, and the economic downturn from the global COVID-19 pandemic is pushing the P&C market into ‘hard’ territory.

A hard insurance market is a tough battleground for agents and brokers. It tends to mean higher premium rates and less market capacity, which spells a lot of tough conversations for agents and brokers, who have to tell clients that the price of their insurance is going up. However, there are ways that distributors can adapt to the changing environment and provide additional value for customers as insurance gets more expensive.

According to James Thom (pictured), SVP of corporate development and strategy at Vertafore, agents and brokers can utilize new technology and data insights to expand their value proposition and serve as risk advisors to customers. When thinking about how to use technology to provide better client service in a hard market, Thom considers three broad buckets: knowing the customer better, creating better connections with trading partners, and driving more efficient workflows in order to open up capacity and spend more time on advisory services.

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“When it comes to knowing the customer, agents and brokers need to leverage the knowledge base that exists out there in the industry,” Thom told Insurance Business. “That includes using third-party sources like Rough Notes, ISO or A.M. Best, and gathering information about products and the end markets that they’re serving so they can better understand their customers.

“There are also new technologies that help agents and brokers understand their customers in a more data-driven way. They can use this information to say: ‘One of your peers purchases these four coverages and they get this much limit, but you only have this one coverage. We should have a conversation about the other three.’ These technologies can guide agents and brokers through the process of identifying the potential risks that their customers face, even if they’re not super familiar with the end markets. Using those tools to build a better profile of the customer – I think that’s really important.”

Once agents and brokers understand their customers better, they can start to add value by providing more risk mitigation services and building their profile as risk advisors, according to Thom. This might include recommending a particular HR administration system or benefits administration system, or providing a network of legal services that clients can tap into if they have any legal issues. It’s about becoming “the center point” of a client’s risk management profile, rather than just the person that facilitates the insurance transaction, said Thom.

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As for cost efficiencies, insurance agents and brokers can utilize technology to scan the markets and conduct price and coverage comparisons in order to figure out the best possible options for people. The challenge is making sure that carriers are getting the best possible data on the first attempt, or at least as quickly as possible, and then streamlining that collection process. But there are technologies that help with this, including digital data collection services and smart insurance forms that digitize the insurance application and streamline the submission process between agents and the markets.

“For core insurance agent operations, as you think about becoming more efficient as an insurance agency and reducing costs, a lot of it comes back to the technology that agents are buying,” Thom added. “Many people already have an agency management system - if you don’t, that’s certainly something you should be looking at. Our experience would say that people underutilize the features and functionality of their agency management systems to a high degree. I would advise working with the technology vendors to see how to get more value out of the tools [in order to further] streamline processes and build more efficiency into their operations.”