by Insurance Business 10
Feb 2020
Now that A.M. Best has begun taking
insurers’ ability to innovate into account in its rating methodology, the
message is clear: Technology is part and parcel of the insurance industry. And
it’s no different for brokers.
A recent report from Argo Group delved into the minds of
brokers and small businesses to uncover their expectations around topics like
climate change, cryptocurrency and autonomous vehicles. The survey found that
77% of brokers expect autonomous vehicle usage to reduce the number and
severity of accidents, while 59% expect it to help decrease insurance premiums.
However, other technologies aren’t as high
on brokers’ radar. Thirty-nine percent said they’re only somewhat familiar with
the Internet of Things, although 91% named the IoT as the dominant technology
threat over the next 12 months.
“The results tell us that, at the very least,
they’re thinking about the various parts of technology that will impact
their business,” says Jeff Canfield, head of innovation for Argo Group. “There
were a few surprising results where the concern is actually less this year than
it was last year. I don’t have a good answer for why that is, other than my
suspicion that for things like autonomous vehicles and climate change, they
probably view it as much more of a long-term threat and not an immediate
threat, whereas in the past, I think there was an assumption that these were
both going to impact us sooner rather than later.”
While technological innovation is bringing
benefits to customers both inside and outside of insurance, many brokers are
concerned about the pace of change and what it will mean for insurance
roles in the future.
“One of the threats that’s not outlined in the
survey, but that we hear often, is the fear of being left behind in terms of
automation,” Canfield says. “If others are automating tasks and using RPA
[robotic process automation] to do things without adding to headcount and you’re
not, there’s a fear that you’re going to have an expense issue that others are
not, and ultimately that’s going to impact your financial results.”
Nonetheless, brokers are already reaping the
rewards of technology in their day-to-day processes. Many are using data and
analytics, for example, to apply more predictive modeling in their work.
“You can predict when a claim might happen, you
can predict the severity of a claim, and you can predict losses based on
location or weather,” Canfield says. “There’s a number of applications around
predictive analytics. What’s interesting is that there was originally a fear
around whether it would replace the underwriting role, but the reality is that
these tools are going to supplement what brokers and underwriters do on a daily
basis.”
Michael Howe, senior vice president of
product management at Applied Systems, sees the pace of change and innovation
in the broker channel as a good thing.
“Their willingness to experiment and invest in
technology, to try to make their businesses better and serve their customers in
different ways, is great for the channel,” he says. “I am encouraged that
people are willing to experiment with new technologies, not just for the sake
of technology, but because they’re trying to make their business better,
and that’s good for everyone.”
The most interesting and encouraging part of
this digital evolution, from Howe’s perspective, is the focus around
customerfacing digital tools. This marks a change from the traditional ways
brokers communicated with clients in the not-so-distant past.
“[Brokers] traditionally come from the ‘I’d
rather have a human connection; I’d rather go meet the person at the local
Starbucks and build a relationship that way’ mentality, so it’s
encouraging to see them augment that with all kinds of online tools and
technologies,” Howe says. “It’s about building that online relationship with
customers, and I think that’s great because the nature of the customer is
changing.
“We’re seeing lots of interest in tools that
allow them to extend their services in electronic ways, online ways and mobile
ways. That’s good because [brokerages] are letting go of that belief that the
relationship always has to be human. That human connection still matters, but
it can also be these other things, because it allows the customer to interact
with them in the way the customer wants, not necessarily the way the [broker]
wants.”
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