03 April 2003
Simon Ronaldson explains how the adoption of application service provision (ASP) technology can drastically improve all brokers' levels of customer service.
For as long as I can remember the insurance industry has suffered from customer service problems. Whether the issue was mergers and acquisitions, inexperienced staff, poor processes or ineffective IT systems, the aim of most brokers was often to offer no worse a level of service than the broker down the road.
Extensive research by Acturis threw up some truly frightening statistics:
The main reason behind such poor service and appallingly high error rates is the fact that the current commercial process contains so many manual hand-offs between broker and insurer.
An inefficient process is restricting already time-poor people and the result is poor customer service at a high cost to the end customer.
The process is so labour intensive, and so much effort is duplicated between broker and insurer, that the cost of serving the customer is as high as 35 pence in the pound.
Given that this is so, how can the application service provision (ASP) model of IT provision - the system by which all data and applications are held on a secure third-party server and delivered over the internet on demand - help a broker deliver lower-cost, superior service to its customers?
Connecting brokers - and clients
One or two modern brokers' IT platforms can now use the ASP model to connect their servers with an insurer's back-office system. The benefit of such connectivity is enormous. Currently any broker using a solution like, for example, AXA's Business Risk must key the risk information into its own back-office system, and then re-key it onto the Business Risk website seperately in order to pass the information through to the underwriter - double the amount of work. Brokers using systems able to connect with an insurer's back-office system directly are provided with preconfigured risk-capture templates that allow the broker to key the data once and then pass it straight into the insurer's back-office IT.
As more insurers become connected, the benefit to the broker increases exponentially. And insurers are only the first step: affording clients access onto a broker's system is also a possibility. Links can be forged with sub-agents and introducers - an issue that will become even more important when FSA regulation arrives. Connectivity can also be used to improve service from loss-adjusters and solicitors. The fully connected marketplace is now a reality.
The unique advantages of ASP
This level of connectivity can also be created by conventional client-server IT systems - so, although the ASP model is the most efficient way to do it, connectivity is not exclusive to ASPs. The ASP model, however, does offer other benefits that are totally unique.
Firstly, as all brokers on an ASP share the same bank of servers, they can each benefit from a far superior and more powerful IT system than any one firm could afford alone. For the first time smaller brokers can enjoy big-company functionality - a broker system can now be created with the kind of management and accounting tools previously only enjoyed by large insurers.
Issues such as eased compliance through automatic data storage within the system - a major issue for commercial brokers - are dealt with simply and effectively by the ASP model, and at an affordable price.
A further benefit of the ASP model is that brokers can concentrate their limited resources on what they do best: looking after the needs of their customers, rather than spending time and resources managing IT systems.
Furthermore, ASP allows brokers to manage service effectively across multiple offices; facilitate home working when required; and also ensure that systems are instantly scalable, upwards or downwards, to meet changes in the business. These are key differences from the client-server model, in which offices often operate as disconnected technology 'islands' - work on client files can only take place at work, and servers must be upgraded or replaced to facilitate the growth of a business. These are all blockages to the provision of better customer service.
The service-enhancing benefits of the ASP model, in summary, are four-fold:
With many brokers already enjoying the benefits of such a cost-efficient IT solution, and with the spectre of a more expensive, and heavily regulated, market around the corner,
forward-looking brokers would be wise to look at their technology options before it becomes too late.
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