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A revenue windfall awaits tech-savvy brokers

03 May 2021 Gareth Stokes
Alicia Narainsamy, Digital Underwriting Head at SHA Risk Specialists

Alicia Narainsamy, Digital Underwriting Head at SHA Risk Specialists

Non-life insurance brokers who fine tune business processes to accommodate emerging insurance trends should see ongoing improvements in new business and revenues. In today’s context this requires harnessing various digital technologies that allow you to improve you administration, distribution and underwriting efficiencies. “The first step in digitally transforming your business is to understand your clients’ needs,” says Alicia Narainsamy, Digital Underwriting Head at SHA Risk Specialists. Her presentation to the InsureTalk 11 webinar focused on technology as a platform to take commercial non-life insurance brokerages to the next level. InsureTalk is an insurance education initiative by CN&CO.

Digital transformation drives premium growth

The 2020 COVID-19 pandemic and subsequent national lockdown has accelerated a number of technology trends. Brokers and their clients are still adapting to the changes that technology has introduced to the post-pandemic or ‘new normal’ business environment. For example, more than half of the brokers in a recent SHA survey said that their clients would be happy to continue meeting virtually, while 77% of businesses indicated that work-from-home made sense. “Around 84% of businesses have digitalised as a result of pandemic; so it is safe to say that the pandemic accelerated technology developments across all sectors,” said Narainsamy. 

It helps to think of technology as a platform rather than a tool. In other words, technology is an enabler that all of your business processes should be built around. Tech adoption does not require that you change your entire operating model; but rather involves using tech smartly to improve existing processes. According to SHA: “You need on one hand to really understand your business strategy and on the other, to partner with insurers whose technology you can leverage off of, allowing them to do the heavy lifting”. There are three pillars that will underpin your digital transformation. 

First, you must have a deep understanding of your commercial client base, including what industry each operates in. You can use this information to deliver personalised solutions to your clients and to offer them an appropriate mix of covers. Second, you must avail yourself of the digital platforms that exist in and around the insurance industry and in the general business environment. The thoughtful integration of digital platforms and portals into your brokerage will allow you to offer efficient online services to clients and optimise your offering regardless of the prevailing business environment. And third, you must seek to achieve scale by leveraging your existing client base. 

You can build trust in the virtual world

Trust remains crucial in a world where face-to-face advice, whether online or in the real world, remains the cornerstone of financial and risks advice. The good news is that there is growing consensus that open and transparent broker / client interactions over MS Teams, Zoom and similar are excellent for building trust relationships. “Technology helps by improving service levels and empowering brokers to give advice; but it does not replace advice,” said Narainsamy. She offered SHA’s Pocket Underwriter as an example of innovation in a dynamic insurance environment. This platform assists commercial brokers in placing complex public liability and professional indemnity covers to SME clients. 

Risk management was singled out as a discipline in desperate need of innovation at scale. “COVID-19 has accelerated digital transformation, making it one of the top trends in business,” said Narainsamy. “But many of these transformations have gone ahead without any way to capture and manage the associated risks, leaving insurers and brokers with a huge gap, especially in the SME segment”. An obvious example is in selling the innovative cyber insurance products that many insurers have developed. SHA has responded to evolving cyber risks by partnering with third party specialists to offer cyber vulnerability scans during underwriting. This allows brokers to render advice and sell cover with a clearer picture of a client’s cyber risks. 

Spectacular conversion rates

The specialist risk insurer has already seen excellent results from brokers using its digital platforms. Narainsamy compared the hit rate for quotes completed by brokers on-site versus quotes processed through office-bound underwriters: “We see a major disparity in the figures; the broker hit ratio is 75% but when an office-bound underwriter conducts the quote it scales down to 25%”. This difference is attributed to the fact that brokers, at most times, are in front of their clients, making it easier for them to conclude the sale. Platforms should address key consumer frustrations such as slow turnaround times. SHA says that it is possible to produce and activate quotes for SME businesses in around 10 minutes. 

One of the things that insurers have learned during lockdown is that pre-pandemic processes were not always as digital as assumed. A glaring issue was that many brokers were still completing proposal forms in the old way, on hard copies that required physical signatures. “Platforms allow clients to complete things online, wherever they are in the world; we can send clients a link to complete qualifying questions and allow brokers to receive that information and generate a quote in close to real time,” said Narainsamy. Where platforms really shine is in giving brokers access to all the information needed to write holistic risk covers. 

So, for example, it is possible to set up optimal solutions for SME clients in specific industries. Brokers can advise on a risk solution starting with a template of basic covers and are able to add specific covers where necessary. They can also make on-the-fly adjustments to cover limits and give immediate feedback to clients insofar the impact of these changes on premium. These benefits have proven useful through pandemic. Premium underwritten via SHA’s Pocket Underwriter increased significantly during 2020 as brokers made increasing use of the platform during virtual interactions with consumers. 

You are a broker – embrace your role

Some parting advice for South Africa’s commercial non-life insurance brokers insofar integrating technology: “Do not get drawn into the realm of chief information officer, chief technical officer or tech specialist; you are a broker and there is a place for you in today’s collaborative insurance ecosystem”. Also, remember that the argument that so-called robot advisers will replace the human element is moot because risk management remains a people-centred discipline. As Tim O’Reilly, founder of O’Reilly Media said: “What new technology does is create new opportunities to do a job that customers want done”. 

Writer’s thoughts:
Commercial non-life insurance brokers are still learning to what extent technology can assist during the underwriting stage. But there are many questions that will only be answered with time. For example, is it possible to do a thorough SME risk assessment without a real-world site meeting? For now, we ask whether you are (or have considered) using digital platforms during your on-site or virtual SME quoting activities? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts [email protected].

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