The Demand for Digital Brokers
One of the most crucial requirements for a broker in the digital age is understanding what clients expect in terms of service, and how a firm can best meet those expectations.
This understanding has become even more important after the seismic changes to business models and day-to-day life brought about by the COVID-19 pandemic, a hard market, worsening economic conditions and related difficulties.
Digital Driving Decision-Making in Small Business
A study released earlier this year by insurtech Semsee offers key insights into how customer expectations for brokers have changed for smaller businesses, thought of as generally “having less than $2 million in revenue annually—though this is not the definitive definition of what constitutes a small business,” according to Semsee CEO and co-founder Philip Charles-Pierre. More than half (55%) of survey respondents said they would switch to a different agency if it had more “digital service capabilities” (i.e. billing, policy and claims information online). Additionally, even more (59%) said they would switch agencies if another could provide quotes faster.
This goes hand in hand with how customers want “transparency in price and coverage,” says Charles-Pierre. “Agents and carriers may understand their policies. But being able to digitize a lot of the more ‘mundane’ processes allows customers the time and space to walk through and understand their policies with their agent in greater detail.”
In line with that, the study also showed that more than 8 in 10 small business owners believe it is important for their agents to provide quotes from multiple carriers and to offer the ability to see and compare coverages and pricing. Combined with the fact that over half of respondents (58%) said that they would be willing to wait 2-3 hours or less for new quotes, it’s clear that small business owners expect their agents to make use of digital tools to streamline backend processes and get quotes to them faster.
Matt Miller, CEO and founder of Embroker, had a similar view. “I think that trends have been increasingly focused on the digital experience and having digital capabilities overall,” he said. “Each year that goes by, we see increased buyer demand for what used to be capabilities that didn’t exist but now are starting to be developed in terms of having fully digital touchpoints and the digital experience for all aspects of both buying coverage and managing it.”
Embroker, an MGA that provides a fully digital experience for customers purchasing insurance through its online platform, has also recently announced the deployment of Embroker Access, a platform that allows outside brokers to access and sell Embroker’s digital products for small businesses, such as directors and officers insurance, employment practices liability, cyber insurance and professional liability. According to Miller, “We’ve been surprised by the amount of brokers that have actually asked for access. I think it really does reflect the shift in expectations—and how much brokers have realized the need to keep up with the market and get access to these digital products. We did a closed beta of the program and actually sold $2 million of premium in under three months, which was well ahead of our projections, and I expect that’s going to accelerate pretty rapidly from there.”
Moving on Up
For larger clients, expectations in terms of broker digital capabilities are very similar to those small business owners hold. “I would say that as a whole clients want things to happen quicker. And if it’s digital that happens to provide that experience for them, then yes, absolutely, they want their broker to have more digital tools,” said Aimee Edgin, commercial operations manager at broker Parker Smith & Feek. “Clients overall are looking for easier ways to do business.”
Taruja Deshmukh, associate account executive at broker Conner Strong & Buckelew, a founding member of insurtech-focused start-up BrokerTech Ventures, agreed. “While our clients value the human element in our process, they are looking for solutions that combine the benefits of human interaction and oversight with technology that’s fast and user friendly, especially when it comes to areas that are more transactional or administrative in nature.”
Both Deshmukh and Edgin highlighted several digital tools their firms have been making use of or are considering. “We’re continuing to evaluate and implement several insurtech solutions to ultimately drive more value and efficiencies for our clients, including digital application platforms, streamlined submission platforms, back-end automation and tools for enhanced analytics,” said Deshmukh. “We also explore other risk management tools that could benefit our clients, such as wearable devices, virtual training solutions, third party insurance verification platforms, RIMS platforms, and so on.”
This type of innovation doesn’t happen overnight. Edgin says her firm has been on this path for a while. “Around 20 years ago, we took a look at what tools we needed to be able to best support our clients—internal, external, all of it. We’re at the point now where we have internal marketing systems, filing systems, and client document distribution systems, and are in the process of looking at other partners that could essentially plug and play to take those systems to the next level. Essentially—what can we do to make everyone’s lives easier, right?”
One particular example of a digital tool both Edgin and Deshmukh found helpful is the digital application platform. As Edgin put it, “We performed a survey for our clients and asked ‘what’s the biggest pain point that you see right now when we talk about putting together an insurance program?’ And the number one answer that we received was insurance applications. Year over year, you’re putting them together, and oftentimes, you’re putting a lot of the same information on there over and over again and just adjusting one or two things. A huge piece for us was being able to offer the client this system where you provide them a link, and then fill out an application, but all of that information is captured. So year over year, they’re only modifying just those things that they need to update. They’re not having to recreate the wheel every year.”
Streamlining administrative tasks is a client desire across the board, no matter the size, and because these kinds of backend processes—applications, filing systems, document distribution, digital invoicing, and so on—tend to be able to be automated and digitized no matter the size of the client, it’s a crucial point to consider. Even if the complexity of insurance programs for larger clients prevents (for now?) the underwriting automation that, for example, Embroker can do for smaller clients, that doesn’t mean there aren’t other pain points brokers can address with available digital tools.
Pandemic Drives Digital Adoption—But Not Only Factor
Those interviewed highlighted that the trends in client expectations of more digital tools, more automation, and a more streamlined purchase process did not begin with the pandemic, but have been building over the past 5 to 10 years. Said Miller, “I’d say the pandemic has accelerated trends that already existed. I think what’s clear at this point is that the trends are inexorable—we’re not going backward.” Nevertheless, he added, “This year has been the most marked in terms of the amount of change and buyer demand in terms of digital experiences overall.”
According to Edgin, “There was already a need for [digital tools] to develop to a greater degree, the last several years in particular. The pandemic has clarified where we need to be able to be there for our clients. It’s provided a filter where we can determine exactly what they need and how quickly they need it. And a lot of it is technology based, whether it’s a client-facing application or an internal one, because it comes down to empowering our staff, who are the insurance experts, to be able to get the answers clients need into their hands as quickly as possible.”
“Prior to the pandemic, we were actively looking for insurtech solutions to improve our agency operations and client experience,” said Deshmukh. “The pandemic has certainly validated that effort and reinforced the importance of moving these efforts forward.”
Naturally, this all stems from the fact that social distancing rules, lockdowns, and other efforts to contain the spread of COVID-19 have led to brokers and carriers needing to conduct much of their business virtually—renewal meetings over Zoom calls, remote visits for loss control purposes, and so on. But another contributing factor to the acceleration of digital adoption trends mentioned was the hard market.
“There’s a number of clients that have never experienced a hard market until the last couple of years—the last hard market was over 15 years ago!” said Edgin. “You’ve got the hard market coming down, and you’ve got the pandemic on top of it. The economy’s in flux. I think they’re looking for any tools they can to get ahead of that and help understand it. So we are absolutely taking advantage of every technology tool that we can get our hands on that makes sense.”
Deshmukh had a similar assessment. “Many clients have not experienced the severity of the current hard market before, so they, and we, are dealing with a longer quoting process, more information requests, and more extensive marketing efforts,” she said. “There is a need for innovative solutions to bridge the gap between the reality of the hard market and expectations rooted in a soft market.”
Communication is Key
With all this new technology, automation, and advent of other digital tools, natural next questions follow: has the role of the broker changed at all in the digital age, especially now that clients clamor for digital capabilities? Does the broker still have a place when it comes to smaller businesses when the quote-bind process can be automated so effectively?
To the latter question, the answer is yes. “Relationships are fundamental,” said Semsee’s Charles-Pierre. “Nothing in the [study] shows customers don’t want that relationship. They may not have time to go through the differences in coverages themselves—but they want an agent they trust to go through and explain why they specifically chose this policy.”
And according to Miller, “[Brokers are] seeing the advantages that digital has in a real meaningful way that changes the day to day of their work processes. If you’re spending hours on a small D&O quote, and dealing with underwriters and carrier platforms and analog processes, and you can reduce that to five minutes, it’s just a huge, huge increase in efficiency for our broker partners.”
What’s clear is that automation and other digital tools are enabling brokers to have more productive conversations with their clients, whether their clients are a small business owner or a large national corporation. With the time saved due to digital adoption, brokers have more time to dig deep into the specific terms of a policy or program, have more capacity to work with carriers on mitigating increases to protect their clients and more capacity to work with clients on risk control efforts.
“We are at a pivotal time where we need to challenge the status quo and push ourselves to find and implement new solutions to be able to move our industry forward,” said Deshmukh. “I don’t think the underlying need for the broker has changed, but what is changing is how we allocate our time—with the technology that’s available, there’s less of a need to have time spent on more manual tasks, and more time needed to act on the insights that are derived from the technology.”
“Fundamentally, we are the same,” said Edgin. “We are the same broker that we were before anything started happening with the pandemic. It’s more a matter of being intentional in touching base, letting our clients know that we are there for them, using the technology to facilitate that relationship and that growth. It allows you to zero in and home in on exactly what aspects of their program need to be addressed.”