02 November 2002
Many brokers underestimate the potential of the information they hold about their clients. Information on client productivity and service levels is often not freely available and commercial client records are disconnected from insurers’ back-office systems. This causes substantial duplication, low productivity and high error rates, resulting in poor service to the end-client.
This level of inefficiency, coupled with falling commissions and the advent of Financial Services Authority regulation, does not bode well for the long-term prospects of commercial dominated brokers who are still operating with systems that offer little connectivity when transacting commercial insurance.
Forward-looking broker systems must provide brokers with answers to ‘the four Cs’: connectivity with insurers, other service providers and clients; cost and efficiency improvements; compliance with FSA regulations; and client focus, with improved client service and marketing opportunities.
A recent Acturis survey showed that rework and duplication between brokers and insurers leads to an average commercial policy taking 164 days to reach the end-client. It also showed 34% of the premium is swallowed up by the frictional cost of transacting commercial insurance.
However, changes are taking place as insurers and brokers recognise how unsustainable the situation has become. For example, in October AXA linked it BusinessRisk solution with the Acturis broker system, enabling brokers to process quotes and policies directly onto the AXA system without re-keying.
A connected platform also offers opportunities for end-clients to access portions of their data. And brokers can develop more efficient links with introducers, sub-agents, loss adjusters, solicitors and other insurance service providers.
Connectivity with insurers can only be achieved through having a structured client and risk database, as it is through the structuring of this data that the connectivity can be created. As such, commercial policy records should not just be recorded on a text basis but captured through the use of structured questions depending on the type of quote involved – different questions for a shop quote versus those for a commercial combined risk.
This structured database offers internal process efficiencies as well as connectivity with insurers. Client risk registers and insurer quotation submission forms can be created at the touch of a button for clients and insurers, without the need for any manual re-keying of data.
The FSA has stated compliance will add cost to the broker distribution model, so it is critical brokers prepare well for 2004. There are several compliance benefits brokers should expect from their system.
Firstly, a locked-down audit trail of documents created by the system. This means files cannot be tampered with as it is clear what was sent out and when. Secondly, locked-down cover details and a full history of policy versions for different renewal and MTA periods so it is always possible to know exactly what was on cover at any given point in time. Thirdly, a log of complaints is critical, captured at client level and then reported on, to properly prepare for periodic audits. Fourthly, staff training, which should be hands-on and interactive and followed up by a documented assessment programme to ensure understanding. This ensures brokers can tangibly demonstrate that staff have been fully trained.
The final benefit of an integrated system with powerful reporting and a structured risk capture process is that brokers can now use their data to develop further business opportunities. Brokers can analyse their book of business by occupation codes and look for areas to develop scheme offerings.
In addition, clients that have a certain policy with a broker, for example, commercial combined, but no other business, such as motor fleet or engineering, can be instantly identified and targeted. Client-centric information such as total client revenues and those from a full relationship spanning many clients is also important.
Brokers can, for the first time, allow their systems to drive their business forward rather than allow IT to hold it back. And those looking to survive beyond 2004 must invest in their future. Short-term premium increases and commission levels have created a window of opportunity for this investment.
Commercial dominated brokers need an IT system that has been developed with commercial business in mind. Connectivity, be it with insurers, clients or other service providers, is the future and is the only sustainable model in an increasingly difficult and regulated marketplace.
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