The insurance industry is undergoing a significant transformation, and both brokers and carriers in the small commercial insurance market are facing unique challenges. The emergence of insurtech, changing consumer preferences, and the rise of digital channels continue to disrupt the traditional value chain.
Insurance professionals must adopt a strategic approach to stay relevant and competitive in this environment. One way to navigate these challenges is by leveraging supplemental platforms and partnerships to bolster one’s digital capabilities. In doing so, the industry creates a win-win situation for all stakeholders, including insurers, brokers, and customers.
Disintermediation & How It Impacts the Small Commercial Insurance Market
Disintermediation in the insurance industry means eliminating agents and brokers from the sales process. The term describes a market that favors direct-to-consumer solutions where insurance companies issue policies without intermediaries.
For agents and brokers, disintermediation can result in a significant reduction in profitability. This is because they are no longer involved in the sales process and cannot earn commissions from selling insurance products. Additionally, agents and brokers can lose their value proposition as customers can access insurance products directly from insurance companies.
As for insurers, many currently lack the claims handling, risk management, and other capabilities needed to sell directly to consumers. Brokers are still a necessary piece of creating a frictionless transaction.
Many argue that disintermediation is a myth and that the broker channel is far from falling away. Instead, some are predicting the small commercial insurance market will shift toward ‘agent-enabled direct transactions.’
“Agent-enabled direct is a notion we’ve really rallied around at Deloitte,” said Mark Purowitz, US Insurance M&A leader, principal, Deloitte Consulting LLP, Deloitte US, in an article for Insurance Business Magazine. “We believe that in various stages across the customer interaction, the ‘self-directed to guided’ notion will kick in, and customers are going to want to interact with brokers differently based upon their needs, the level of complexity in their transaction, and ultimately whether or not they feel that getting answers digitally versus talking to a human satisfies their needs.”
Supplemental Platforms & Partnerships: A Masterstroke Amid Disintermediation?
Despite the disruptions in the insurance industry, insurers and brokers can thrive by leveraging technology and adapting to the changing market.
One way to do this is by using supplemental platforms and partnerships that provide insurers and brokers with additional tools and resources to serve their clients better. These platforms offer services, such as customer relationship management tools, marketing resources, and training materials to help brokers streamline their operations, expand their client base, and increase sales.
Insurtechs, for example, help brokers access specialized insurance products and services from carriers they trust. This allows them to provide more comprehensive coverage options to their clients, which can improve customer satisfaction and retention. Some platforms also offer lead generation services, which can be a valuable resource for brokers looking for more clients. Likewise, these platforms help insurers connect with qualified brokers and agents, increasing agent distribution.
One platform that can significantly enhance the ease of doing business for agents, brokers, and carriers is Relay. Relay provides a streamlined platform for quoting, binding, and managing policies. Agents and brokers can access multiple insurance carriers, compare coverage and pricing, and efficiently manage their policies and customer data through the platform. This saves them time and resources, allowing them to focus on building customer relationships.
Relay also offers digital tools to streamline submissions and enhance communication between insurers, agents, and customers. With Relay, independent agents can easily submit ACORD forms. The platform automatically routes submissions to carrier systems using API technology.
What to Consider When Leveraging Supplemental Platforms & Partnerships
While leveraging insurtech can be an effective strategy for brokers striving to serve the small commercial insurance market and insurers looking to expand their agent distribution, it's essential to consider a few key factors before committing to a partnership.
Alignment With Business Objectives and Goals
Insurers should ensure the platform or partner aligns with their business objectives and goals. They should seek partners who share their vision and are committed to helping them achieve their goals.
For example, insurers should assess how the partnership will help them increase their market share in the small commercial insurance market. This way, they can make strategic decisions on how to allocate their resources and leverage the capabilities of a platform.
Data Security & Privacy
Another key consideration is data security and privacy. Insurers must ensure that any supplemental platform or partner they work with has appropriate security measures to protect sensitive customer and business data.
Additionally, they should consider how data sharing will work between the partner and their existing systems. And that any data transfer complies with applicable laws and regulations.
Integration With Existing Systems & Processes
Finally, insurers must consider how the supplemental platform or partner will integrate with their existing systems and processes. Integration is crucial for ensuring the partnership delivers value and meets the insurer's objectives.
Successful Insurtech integration capabilities can boost front-end user experience and improve support for agency and broker sales processes, significantly boosting sales. Insurers can reduce churn rates and premium increases. Some insurers see premium increases from 0.5% to 1.0% in P&C by successfully implementing these improvements.
Enhancing Digital Capabilities for Insurers & Agents
In today's digital economy, insurers must find ways to stay ahead of the competition and provide independent agents with the tools they need to thrive. Supplemental platforms and partnerships offer a promising solution for expanding agent distribution and enhancing digital capabilities.
By partnering with innovative insurtech platforms like Relay, insurers can provide independent agents with digital tools to streamline the submission process, enhance customer communication, and stay competitive in today's fast-paced digital landscape.
It's essential to consider all the key factors when exploring partnerships. The right platform or partner ensures that agents have all the support and tools they need to thrive in the competitive small commercial insurance market.