E-BUSINESS EQUALS E-FFICIENCY

The Internet has enabled service industries to transact business at greater speeds and across more territory than ever before. And yet, web-based technology remains largely under utilized by most property and casualty insurers and the independent broker network. The primary focus has been at the call center level, or using the Internet as a hi-tech shop window with some e-commerce capabilities.

Both the appearance and execution functions available through the Internet are important to insurance product providers and intermediaries. According to the U.S.-based Association for Co-operative Operations Research and Development (ACORD), the number of customers purchasing insurance over the net increased from 11% to 19% over the last year. But neither function moves the Internet closer to giving the independent broker channel the potential to score real gains in market efficiencies over direct writers.

The challenge for carriers is to move functions and information across the entire supply chain, of which the broker channel remains a critical link for approximately two-thirds of the Canadian market place. Only then can brokers use web technology as a back-end tool for reducing costs and better understanding the customer.

Royal & SunAlliance has already moved the needle forward with several online applications. The highest profile to-date is online billing inquiry, which is equipped to intelligently answer approximately 95% of a broker’s questions while they are still on the telephone.

This still is only the beginning. Impressive advances in delivering web-based solutions for brokers are being made, particularly in the areas of personal portals and “push” technology. The portal enables the sharing of information across the entire supply chain. In a recently published book, “B2B Canada”, authors Matthew Friedman and Marlene Blanshaw write that the “enterprise portal is becoming less a window on corporate data stores than the key link in the information supply chain”.

At the same time, push technology will “push” the right information to the right person, enabling the more efficient use of brokerage staff to service new or existing customers.

There are three main areas where web-based solutions can help the broker channel become better equipped:

Efficient processing;

Enhanced customer support; and

Effective portfolio management.

Efficient processing

Both insurers and brokers must counteract the trend in rising expenses with less expensive ways of distributing products. This is especially the case when direct writers and new entrants not encumbered by old legacy systems are competing on price.

Web-based solutions tighten up the distribution channel by eliminating double keying, since information is entered once and uploaded or downloaded between the insurer and the broker’s office. All of this reduces the number of telephone calls between broker and carrier, and controls the paper burden that had traditionally accompanied each piece of business.

Released from frustrating games of telephone tag or the need to carry out other unnecessary administrative actions that do not add-value, brokers will find that back-end support will reduce overheads and free up staff to “sell”, thus increasing broker revenue.

Enhanced customer support

Customers are becoming accustomed to making quick, inexpensive purchases based on well-informed choices. The pressure is on brokers to continually add-value to the customer experience.

Web-based solutions will ease this burden. For example, the information customers want is not always available on the carrier’s web-site, nor readily available elsewhere unless the customer knows what to ask for. This is the real value of brokers in the market place, giving the customer, among other things, fast and easy quote information and updates, and guaranteed rates. Indeed, a web strategy can be designed with the intention of reducing the insurer’s presence to the point where a broker only calls the carrier on an exception basis. This not only eliminates a layer of bureaucracy, but uses technology to put the broker in control of the customer relationship. Once in control, the broker can address several customer concerns such as slow service and inaccuracies. Policies can also be changed faster, and the chance of information being accidentally altered along the supply chain is greatly reduced.

In addition, brokers can add value to the customer experience by building their own websites, and may want to consider contacting one of their insurance companies to see if they provide direct support in customized website development. This site could be the means through which brokers could pull functionality from their insurers’ websites to enhance their own customer servicing capabilities.

All of this translates into greater customer retention through higher levels of personal customer support. Which is a bonus, given that the cost of increasing business with a satisfied customer is considerably less than recruiting a new one.

Effective portfolio management

Information sharing across the supply chain gives the broker’s office ready access to the insurance carrier’s monitoring and analysis tools. Broker staff time can be better spent on analysis and acquisition/retention activities. Analysis of shared information also enables brokers to identify unprofitable customer segments (which in turn helps the carrier in its own customer relationship management activities) and engage in target marketing.

With the support of push technology, brokers benefit from the early identification of customer problem areas which can be solved proactively. However, at the same time, insurance carriers must be careful that we are not replacing an uncontrollable mountain of paper with an equally unmanageable stream of electronic bytes. Same time management analysts estimate that employees are already spending half of their time filtering information and directing data. This is an inefficient process that runs counter to the value of the Internet. Nevertheless, the problem could become more acute as insurers use the Internet as an inexpensive method of distributing manuals, product-marketing materials, sales and administrative bulletins, etc.

Proactive decisions affecting efficiency, product development and customer relations are based on information – how it is processed, how it is accessed, and how it can be leveraged. To this end, portals will become to brokers what airline reservations systems such as Sabre and Apollo are to travel agents: a fast and efficient business management tool. As with the airlines, brokers can expect insurance companies to brand these web-based productivity tools. Royal & SunAlliance has already moved in this direction. The company is in the process of launching BRAVO, standing for “Broker Avenue Online”.

Web-based solutions are providing brokers with an unprecedented opportunity to shift their focus from operations to strategic business development. In an increasingly competitive field highlighted by direct writers and virtual banks, the broker channel is going to rely on such solutions for more of their bottom line boost.