Click. Bind. Repeat.
High-tech wizardry is revolutionizing our world. When insurers began selling auto and homeowners cover directly to clients over the internet long ago, thousands of agents were thrust out of work over a few short years.
Later, visionary brokerages became aggregators, using sophisticated high-tech engines to allow consumers to find the cover they liked best by entering their details only once. Now insurers are bringing similar technological innovation to the commercial market, allowing distant carriers to offer their products directly to local brokers over the internet through quote-and-bind portals.
These proliferating websites enable U.S. brokers to buy cover—sometimes on admitted paper, sometimes from carriers and MGAs in other states, and even from London—without sending a fax, opening an envelope or picking up the phone. The revolution is wholesale.
“It is absolutely the future of distribution,” says David Umbers, CEO of Ascent Underwriting, a managing general agent in London. His company’s portal, Optio, is a hit in the United States. Ascent receives tens of thousands of online inquiries each year from its 90 selected and registered U.S. brokers. So far, the website delivers two main products to U.S. producers: a modular cyber cover for small to midsize enterprises and a medical billings policy.
More products are in development for distribution through the system, which provides country-specific products elsewhere around the world. Next up is a product for allied health professionals that incorporates cyber cover.
Quote-and-bind portals typically allow brokers to enter the fundamental details of a client’s risk into a secure website, select the coverage options they want, then submit the electronic proposal for instantaneous underwriting—or referral if the algorithms kick it back. If the system accepts the risk, the broker first views the price of cover, then may bind with a click before printing all the relevant documentation, sometimes with the broker’s own corporate branding.
A process that has taken days or weeks using traditional channels can now be completed within minutes. Not only do such systems slash costs from the process; they also allow broader choices.
“Cost is the big advantage,” Umbers says, “because the mechanism of distribution is so efficient, but quite often quote-and-bind portals provide a better product, too. They have to be best of breed. That is the key to Optio’s success.”
The Lloyd’s carriers providing the risk capital that backs Ascent’s portal-policies love it, too. Distribution through Optio allows them to get at small and midsize commercial risks that otherwise would not make economic sense to bring to London through the usual long chain of wholesalers and placing brokers.
“It is a great way of selling high volume,” Umbers says. “It gives us huge operational efficiencies and access to a market that is otherwise impossible to reach. It reflects complete concentration of value within the distribution channel.”
The Range of Options
Not all quote-and-bind portals are quite what they seem. Optio policies always carry the Ascent brand, but many carriers choose to extend their reach through a process known as “white labelling.” Local wholesalers or MGAs apply their own branding to the front end of the website and to the products distributed through it. White labelling is a valuable tool for carriers working with local companies whose home-market reputation and relationships may be stronger than their own, and it has obvious benefits for the distributor.
The systems also have the significant advantage of improving and radically simplifying data capture, dissemination and analysis. By their very nature, quote-and-bind portals capture data at the source, the originating broker. It is then available for analysis and reporting by everyone in the chain, all the way to the ultimate carrier and even to reinsurers, without re-keying.
It all began more than 15 years ago, when insurers first created e-commerce platforms. One first mover was the Lloyd’s operation Beazley, which in 2001 launched a platform called EazyPro to distribute specialist professional liability cover for SMEs directly to U.S. surplus lines brokers. In its first 10 months of operation, it brought in premiums of about $1 million. But things have moved a very long way since then.
EazyPro is now very close to retirement. It has been superseded by a new system called myBeazley. Its ancestor was primarily a quoting system. It priced risks—or referred them to London for underwriters to look over. Either way, risks were bound at Lloyd’s, and the documentation was posted to the broker. Today, myBeazley, like other new-generation portals, has many more bells and whistles and allows online binding of many risks with no human intervention at all. It limits questions to the bare minimum (in the case of professional indemnity policies, just four), then instantly provides pricing. Cover can be bound in less than two minutes, and supporting documentation is printed by the binding brokers.
Like Ascent’s Optio, the system refers more complicated risks to underwriters. Documents and data can be uploaded to them. MyBeazley has a monthly payment option, handles midterm adjustments, allows automatic renewal, delivers broker-branded documentation if desired, and provides management information with a click or two. Its latest new product for U.S.-producing brokers is event cancellation insurance.
“MyBeazley is generally used for SME and mid-market business,” says Paul Willoughby, head of IT strategy and innovation at Beazley. “Brokers can register in three or four minutes and will usually be visited by a Beazley underwriter before they get going for five or 10 minutes of training.” The system offers admitted and surplus lines cover for licensed brokers in the United States. Around the world, more than 400 are using the system to date.
Some systems have even greater reach. StarStone Insurance began developing its Escape portal in 2010 to distribute small umbrella excess casualty cover to wholesalers and MGAs.
“There was a market need for easy access to smaller-scale casualty covers,” says Kardiner Cadet, the insurer’s vice president and head of e-commerce. “Brokers spend the brunt of their time trying to place underlying policies and needed quick responses on the excess or umbrella cover.”
An important change, Cadet says, was StarStone’s move to admitted paper, which gave usage a dramatic boost since it eliminates the extra administration that comes with surplus lines. Admitted policies now account for 86% of those sold through Escape.
The online offering was expanded three years ago to include an equipment floater that offers coverage for contractors’ equipment and miscellaneous property. The most recent additions, now being rolled out, include a senior-care follow-form excess liability product for nursing homes as well as the newly launched Escape 123, an E&O product that targets professional service providers with revenues under $500,000.
The system now delivers about 40,000 policies every year from roughly 5,000 brokers who actively use Escape (about 20% log in every day). Most risks generate premiums somewhere between $750 and $5,000.
One reason for its success is the personnel support StarStone has dedicated to the product. Brokers currently initiate up to 150 live chats daily to consult with one of five dedicated underwriters, who respond on average in 18 seconds and typically conduct three or four chats concurrently. They also answer 40 or 50 phone calls and up to 100 emails on an average day. Meanwhile, e-business development representatives ensure brokers understand the products and the system functionality.
Cadet reports some impressive results. “Eighty percent of the accounts quoted go straight through to bind without the broker having to consult with an underwriter, 20% are referred to an underwriter, and half those are declined,” he says. That suggests a remarkable 90% conversion rate for business quoted across the Escape portals.
Even larger is Markel Online. Its various portals deliver an unusually wide range of products to wholesale brokers, allowing them to rate, quote, bind and issue property, general liability, liquor liability, inland marine and excess liability coverages on a non-admitted basis.
Paul Broughton, Markel’s managing director of marketing, says Markel expects to expand the available offering even further. “We are evaluating additional product line opportunities at this time,” he says, noting that for 2017 Markel expects approximately 250,000 quotes to have been created via Markel Online.
Wholesalers are attracted by the system’s efficiency. “By limiting the amount of data needed to produce a quote, with a complete application, our producers are able to bind a straightforward account in a matter of minutes,” he says. “Of course, a multi-line, multi-class, multi-location risk, or one requiring underwriter approval may require a bit more time.” Speed to quote is always critical when designing a portal, Broughton says.
Like many other quote-and-bind portals, Markel Online is available to specific individuals employed by appointed wholesalers. They gain access to certain products based on prior agreement. “Once a producer contact is created in our agency management system, specific rights are assigned to the user, and a password is provided for them to access Markel Online,” Broughton explains. “Our underwriters provide information on our risk appetite and training on underwing guidelines. Producers are then off and running, with little to no formal system training needed.”
Much of Markel Online’s business is handled by MGAs. “It has provided an excellent mechanism for our MGAs to produce quotes, bind coverage, and issue policies, thus allowing them to more effectively write business on Markel’s behalf,” Broughton says.
Hiscox, the Bermuda-headquartered insurer with its origins in Lloyd’s, uses its $250 million portal system internally, as well as with third-party intermediaries, to provide professional liability, general liability and business owners policies to U.S. companies with revenues up to $5 million. It provides same-day coverage for more than 150 professions. Hiscox handles the billing and, like myBeazley, the portal delivers automatic renewals, which allow originating brokers to earn commission for the lifetime of a policy. In some cases, Hiscox reports, the system has helped wholesalers acquire new clients that may otherwise have been channeled by their retail agents directly to insurers.
“We have built this system to help our broker-partners and their retail agent audience bind the necessary coverage small businesses need in a matter of minutes,” says Kevin Kerridge, executive vice president for the Direct & Partnerships Division at Hiscox USA. “We also offer the ability to quote and bind over the phone with call center agents.”
More than 200,000 policies bound through the digital platform are in force today, many accepted through co-branded portals, which Hiscox says it can have up and running for a brokerage within a couple of weeks.
“Our average policy premium is $500, so with this model it’s important that the machine take as much of the strain as possible,” Kerridge says. “You almost have to have the mindset that, as soon as a human touches a risk, the agent and the underwriter lose money on such tight margins.” The results are impressive: 85% of applications get an immediate bindable quote. Still, even with its machine-driven approach to this kind of business, the Hiscox call center takes more than 50,000 calls per month.
Portals into the Future
Although portals are used effectively across many product lines today, some wholesalers are already looking to a next-generation approach that would reduce the number of systems they use during the course of their day, improve their internal efficiency, and let them retain the considerable account data they accumulate when entering risk and client information into portals. Many are embarking on their own system projects that rely on carriers’ application programming interface (API) systems to create internal quoting tools for their own use. An API allows a broker to enter the details of a risk once, then receive a quote from all of the multiple interfaced quote-and-bind systems.
“Brokers can integrate with us through API,” says Beazley’s Willoughby. “They don’t have to log on to the system. Instead, they get their prices directly from us on their own platforms.”
Several larger wholesale brokerages, that in essence have built their own internal aggregators, have developed such systems. Smaller firms might have to rely on re-keying into multiple quote-and-bind platforms for a little longer, until third-party vendors make an off-the-shelf aggregation product, although they typically stick to the quote-and-bind portals they prefer.
Meanwhile, as is so often the case with technological revolutions, some believe quote-and-bind portals are almost obsolete already.
“API technology means portals will probably be eliminated in the next few years,” Willoughby predicts, although currently only a handful of systems have built-in API functionality. “We have it up and running for our cyber product and could easily do it for myBeazley.” Such a move would give brokers’ systems access to everything including a document generation tool allowing them to create paperwork that carries their own branding. The next step in the revolution, according to Willoughby, is the incorporation of blockchain technology. “It could be incorporated, but I am not sure the market is quite ready for that yet.”
Hiscox believes a multi-channel customer experience is the future of distribution. “Whether it’s in person, online or over a mobile device, consumer demand is driving the future,” Kerridge says. “Companies across all industries are looking for ways to connect and transact with their clients in a smart and convenient way.”
But that doesn’t signal the end of the agent or broker. “We disagree with the notion that insurance agents are going the way of the dodo,” Kerridge says. “Agents are here to stay, but they will look different and be much more digitally empowered.”
StarStone’s Cadet is also thinking about the next big thing in technology-driven distribution. “I don’t believe company portals are the be-all and end-all,” he admits. “Technology is always evolving, and carriers need to find different and better ways to make their products more accessible to brokers. We must evolve and adapt.”
That, he says, could include mobile apps, integration with brokers’ management systems, even using bots. “We will see failures as insurtech evolves, but we should not be dissuaded,” he insists. “Most insurtech, while important, is simply a variation on an existing theme, not a true innovation. We must continue to keep our eyes open to spot the true innovations when they emerge.”
Leonard heads the Leader’s Edge Foreign Desk.