After we initially took a look at the customer perspective, followed by the insurance perspective, in the three-part article series about the topic of "Process beats product", the sales perspective should follow to complete the series.
This article was written in cooperation with the renowned German broker pool BCA AG, so we would like to take a closer look at the needs of broker pools.
Trend towards the platform economy in the insurance industry
The term broker pool already carries it in the name: the pooling of connections from the broker to several, different product providers through a central instance.
BCA, founded in 1985, was one of the platform pioneers. Now it was no longer necessary to undertake and administrate diverse individual connections as a broker, but rather efficient access to a wide market was made possible through a single connection to the platform.
In this way, fundamental developments were anticipated at a very early stage, which were later completed by the insurance companies for reasons of efficiency.
Whereas in the past providers of unit-linked life insurance policies also had various individual agreements with fund companies, the pooling of the order process was optimized at the same time by connecting platform providers. On the one hand, this increases the negotiating positioning of the insurance company and on the other hand, this increases the economies of scale from the insurance companies and platform by avoiding small scales. This leads to efficiency gains on both sides and can be taken into account in the tariff calculation, so that ultimately the end customer also benefits from this.
In principle, of course, this also applies to other services in the insurance industry.
Intermediary between product provider and broker
The role as an intermediary between product providers and brokers is an essential part of the business model of a pool. Initially, the focus was on access to as many product providers as possible via the pool for brokers.
In the meantime, however, well-positioned pools are full-service providers for the optimal running of a brokerage office and cover many processes along a broker's value chain. This allows brokers to ideally combine personal and digital consulting in a cost- and effort-efficient manner.
Broker pools thus relieve the burden on brokers and increase their productivity. In this way, they help them achieve more active sales time and increased sales potential.
From door opener to platform
Today, broker pools can no longer inspire customers with access to multiple product providers alone, as this has become a basic feature of a broker pool.
Similar to large software conglomerates or smartphone manufacturers, broker pools require an ecosystem, the abandonment of which as a broker would lead to inconvenience, media disruption, increased overhead and less active sales time.
Future target image of a broker pool: coverage of the process and value chain
Large solution providers for brokers and distributors have to take care of interfaces between systems along the process and value chain. From the position of an intermediary, this includes both input management via the broker/multiple agent access channel and input management via the access and return channel to the respective insurance company.
From BCA's point of view, a workflow without media discontinuity within the consultation process for new business would ideally look as follows:
Jumping from a broker management program with customer data into a comparison calculator, subsequent tariffing, logging, online conclusion and return of the data.
In some sectors this is already commonplace. Manual intervention is often still required for hedging complex risks. Product providers that offer a user-friendly process here have a clear advantage with brokers.
Comparison of the thesis "process beats product"
For a broker pool, it is therefore a matter of knowing and occupying large parts of the process chain and having the interfaces to the core systems belonging to the insurance companies under control in order to avoid media breaks and to realize market and customer-oriented process speeds.
The product is only one part of the process chain that fits the wishes and needs of the policyholder and provides cover for the financial consequences of insured risks.
The processes form the access channels that can be experienced by the customer and broker and thus form the basis for the customer experience in the application, contract and service phases.
As a result, the processes, their process depth (in the sense of seamless interlocking) and the resulting products have a significant influence on the Net Promotor Score (NPS), the reputation of the insurance company and the willingness of customers and sales to recommend the insurance company to others.
Outlook/Trends
Some parts of the process chains must of course be carried out on the surface, but a relevant part can already be mapped automatically as straight through processing via relevant workflow engines. For this purpose, a connected broker should not necessarily have to be a software developer, but should simply beable to make the necessary settings through graphic interfaces specific to needs and industry.
Particularly in the case of processes required by regulation, but also in the case of processes for products with low margins or low added value, it is necessary to validate the extent to which efforts or throughput times can be optimized by straight through processing.
In the future, such "broker work places" will certainly become an admired feature in the sense of the Kano analysis and a differentiating feature for broker insurance companies and insurance companies with the broker sales channel.
Just imagine that brokers could not only download CSV, Excel or PDF via the already existing broker/extranet accesses, but also view the workflow status of the respective business transaction in the new and existing business - similar to the shipping status of a package.
Further differentiating features are the data quality and the frequency of the data provided. If the expectations of customers and brokers with regard to response times are not met promptly and in line with the market for the same insurance cover and with the same costs or maturity benefits because the process speed is not competitive due to poor data quality or the delivery frequency of data and the process chain comes to a standstill, the customer and broker vote with their feet. The NPS from the provider decreases.
Different forms of software operating models may also result in media discontinuities or latencies with effects on process speed. The use of container technologies can provide positive support here. This is because it enables operation in a data center (on premise) or in a "private/public cloud", but also in a mixed environment. If systems in a process chain are located with the same operator, this can have a beneficial effect on process runtimes.
Conclusion
The insurance industry and its broker market are subject to industrialization.
Current market drivers are cost-efficient processes combined with a positive customer experience. Customers here are not only the classic end customers, but all those involved in the process.
The administrative costs of a product and the administrative expense ratio from a provider will increasingly become the focus of market participants.
The mere representation of wishes and needs via products is increasingly no longer sufficient; instead, it is becoming important to determine the framework conditions and process costs at which these products find customers with the same or similar scope of coverage, and which customer experiences are created in the process.
Standardization and harmonized interfaces are part of the prerequisites for faster and more transparent processes.
For products and processes with low added value, automated straight through processing is the duty of a prudent businessman.
Enthusiasm and transparency can be generated by modern core systems in combination with modern workflow engines at the customers' and sales' digital touchpoints
Container technologies will spread factually and become a market standard as they cover all operating models.
Formulated from the perspective of brokers and broker pools:
Individual advice must be supplemented by additional digital offerings and fully automated processes in order to continue to survive in this challenging market environment.