The relationship between insurance companies and insurance brokers has always been a mutually beneficial one, with brokers providing insurers with a valuable route to market and insurers underwriting the risks for customers.
As the link between the insurer and the end customer, brokers determine which policies are best for their clients and work hard to secure the lowest price. Commercial insurance is often seen as complex to understand - especially for small businesses who don’t have the in-house expertise. Therefore brokers also play a key role in providing peace of mind for SMEs that they have sufficient coverage at the best price.
This relationship is particularly important when arranging insurance for businesses, but there’s a problem: all too often brokers struggle to serve small and medium enterprises (SMEs).
With 99% of companies in the UK being SMEs, it should represent a huge opportunity for brokers, however the challenge when it comes to serving SMEs is one of cost-effectiveness. Lower value policies mean lower margins, so time spent servicing a particular SME quickly becomes expensive.
But this is beginning to change. New technologies like automation and artificial intelligence are transforming the market, many of them developed by start-up Insurtechs.
According to Deloitte, Insurtech attracted around US$16.5 billion of investment during the past decade, developing technology that helps support the important insurer-broker relationship, rather than disrupt or displace it.
This has led to an influx of new solutions that automate time-consuming tasks, help brokers lower the cost of serving commercial customers, scale up their offerings and provide a better client experience.
SMEs want a digital experience, as well as a human touch
It’s widely known the commercial insurance market has lagged behind personal insurance from a digital adoption perspective, partly because underwriting processes still depend on human judgement.
In its Future of Commercial Insurance Broking report, the Chartered Insurance Institute reported that, while there has been some movement towards a digital-first, self-service model for simple policies, brokers continue to play a leading role in providing tailored advice to SMEs with complex needs.
Indeed, in PwC’s 2017 Global Digital Small Business Insurance Survey, it found that small businesses prefer a blend of digital and human touchpoints. They want the conveniences that come with digital solutions, but they also want access to an expert when they need it.
E-trading is making it easier for brokers to serve SMEs
So, what are insurers and brokers doing to improve the way they work together and with SMEs? Much of the focus is on digital platforms and electronic trading (e-trading), which are automating tasks that were previously done manually.
E-trading systems have been in use for more than a decade, allowing brokers to enter detailed information about their clients and receive a fast response from insurers. The advantage of e-trading is that it helps brokers provide better service to SME clients by streamlining processes and reducing costs.
What’s changed over the years is the way e-trading services are delivered and how they connect brokers to insurance companies. In the past, e-trading systems were basic in function and often connected to just one insurance company: brokers entered client details and waited for the insurer to provide a quote.
Today, e-trading platforms have become the primary method for doing business in commercial insurance, connecting brokers with dozens of insurers in a matter of minutes.
Deeper company insights lead to better results
Today there are a plethora of e-trading platforms in the market, each designed to make brokers’ lives easier. In some cases, insurers operate their own e-trading platforms, such as AIG eXtra, but InsurTechs have also rolled out platforms that allow brokers to receive quotes from multiple insurers for each case. For example, C-Quence, a mid-market managing general agent (MGA), offers an underwriting platform that has been designed to let brokers trade more efficiently and deliver a better service to their clients. Their platform allows them to underwrite on behalf of an insurer - providing brokers with a best-in-class experience while also accurately assessing risk with insight-driven technology.
The challenge for brokers with SME customers partly because it is time-consuming to gather all of the information necessary to develop a full view of the risks they face. To help insurers to underwrite more effectively, e-trading platforms are now using APIs to connect to data sources that provide enriched company information on SMEs.
By tapping into company insights like group structure, financial profiles and real-time credit information, brokers and insurers gain a clearer picture of how a company operates. This results in a better underwriting process and provides more accurate pricing. Even more importantly, it enables brokers to trade more policies and ultimately results in SMEs getting the coverage they need in a fast and efficient way.