Category: Blog Post

Why now’s the time to digitalize your business

Inflation is squeezing every section of the economy, and the insurance industry is far from immune. One estimate shows that rising prices in 2021 led to an increase of approximately $30 billion in loss costs (the amount insurers pay to cover claims).

MGAs and agents are already operating on thin profit margins, with the average around 2-3% per customer. So, passing the rate hike on to your customer simply won’t work. Achieving and maintaining operational resilience is going to require squeezing every ounce of efficiency from your operations. There’s never been a better time to digitalize your insurance business. Streamlining operations and improving efficiencies is a long-term strategy to help insurance organizations become more resilient, no matter what outside trends and developments come your way.

Given all that, let’s look at the ways going digital can help your insurance business thrive in this economic climate.

Activating Your Data

Soaring prices and thinning margins mean there’s less room than ever for inaccurate business decisions. Insurance businesses must begin gathering their own customer data and gleaning the insights that data has to offer. The question is how to do that, and the answer is a more powerful and flexible agency management system.

It starts with true and comprehensive integration. The right modern AMS will provide real-time access to all customer and policy data at the point of need. This is achieved by bringing every aspect of a business into a single platform, providing 360-degree visibility of the front, middle, and back office. Your people must have the power to access the data they need, when they need it, from anywhere.

Smoothing the seams between offices creates new efficiencies that already contribute to a healthier bottom line. But that’s only the first step. Once your data is consolidated, what’s to be done with it?

Putting Your Data to Work

You’ll need a platform that provides powerful analytics tools to help turn your raw data into actionable insights, facilitating better-informed decisions.

For example, a modern AMS will track the resources that are being spent on each account, from time spent selling, supporting, and traveling to relevant salary and commission costs. You can use this data to determine which accounts are most profitable. The results are data-driven insights into what kind of new accounts you should pursue, as well as better planning for the resources you’ll need to effectively manage those accounts.

Using Data to Win and Retain Customers

Encore Insurance, a digital-native independent insurance agency specializing in personal lines, needed to to revamp how its sales team managed and assigned incoming business opportunities. Unleashing their data and creating a single source of truth across the agency was paramount. Once Encore had a clearly defined picture of where growth opportunities existed, everything changed. For the first time, Encore had the ability to accurately evaluate its new business closure rate and determine whether they’re spending too much on the leads they acquire.

There is tremendous value in learning what kind of customers you want to acquire, but there’s arguably even more in retaining and optimizing the profitable accounts you already have. In fact, the cost of acquiring a new insurance customer is seven to nine times higher than the cost of selling to an existing customer. Increasing the lifetime value of your customers, then, is crucial.

Of course, along with robust and accurate service, today’s customers also expect increasingly short turnaround times. Which brings us to:

Leveraging automation

Automating workflows allows you to free your team from repetitive tasks that can become a bottleneck. For example, Novidea’s comprehensive approval process workflow can confirm authority limits, view peer reviews, and notify the right team members of activities ready to be approved.

This kind of intelligent automation helps your bottom line multiple ways, including:

• Eliminating human error from repetitive workflows, helping protect you from potentially costly errors and omissions.
• Reducing processing time for new policies, thereby increasing your customer satisfaction and retention.
• Helping you keep talented team members who want to flex their expertise, not do busywork.    

Ready?

Operational efficiency, customer retention, and data-driven decision-making are vital for navigating this high-price, low-margin insurance industry. When you’re ready to go digital, reach out to the Novidea team. We’d love to discuss how we can help inflation-proof your business.

As the UK and global economies face record inflation increases, it is interesting to note that the insurance market got there first. Rising premiums have been a fact of life ever since the world began to come out of lockdown.

While this is perhaps a much-needed correction after years of under-pricing, it is of course putting brokers under pressure. Whenever there is a hard market, brokers are forced to demonstrate their value in a world in which ‘intermediary’ is increasingly becoming a dirty word.

With rising premiums increasing costs on top of general inflation, clients will be looking to contain expenses. So how can brokers increase their value to clients – and prove it?

The need to demonstrate value

With the FCA’s general insurance pricing reform coming into effect in January last year, the impact has been far reaching – much more so than many realised. However, the emphasis on all parts of the value chain – including brokers – to prove that they are providing fair value to customers, is actually a potential benefit.

Why? Because in a hard market, brokers who can prove that they offer value are at a competitive advantage. Now they have to prove it for regulatory reasons too, so the question becomes not whether they should, but how. Technology can provide the answers, but more of that later.

One area of concern for some is broker schemes, which typically provide cover that is tailored to address the specific needs of a certain demographic. Schemes need to demonstrate that all its policyholders are benefiting from fair value. Similarly, each new client policy now needs to be re-marketed as new business. This is a change of approach for many (perhaps most) brokers and increases the volume of administration associated with each client.

FCA rules – a burden or an opportunity?

Granted, the FCA rules have added to the regulatory toll for brokers, as they involve significant reporting and data processing. Forward-thinking brokers, however, should take advantage of this. If not, the costs of complying with FCA rules will become increasingly punitive as time goes by.

Brokers who look at automating and improving their processes with an end-to-end, cloud-based platform can massively reduce costs in the longer term. Not only that, but those brokers would also be able to prove their value to clients – an invaluable feature in a hard market.

Deploying a leading end-to-end software platform will reduce the manual processing associated with any kind of reporting. The platform automatically captures the data and surfaces relevant insights in real time. It also makes it simple to create bespoke reports for each client account, since it will automatically log every policy and resulting action. This enables brokers to track, report, and justify their remuneration because they can evidence the time and effort spent serving client needs.

Similarly, this allows brokers to monitor distribution channels, such as delegated authorities, binders or facilities. Brokers can audit these channels in real time, enabling them to assess the fairness of commissions or set fees for administration.

Becoming fitter and leaner

When game is scarce on the east African savannah, it is the lions who are leaner and fitter that have the advantage. It’s the same in business.

A modern cloud-based system helps brokers to benefit more widely from process efficiencies. Such a system reduces re-keying, automates common tasks, and captures meta-data to provide beneficial insights to the users.

Brokers need to think holistically about their future trading needs and consider using a platform that is evergreen and will not limit future innovation or growth. In other words, they need an agile and customisable platform that can scale with their business.

Growing the business by providing and proving value

Adopting such a system also acts as a catalyst for brokers to review the way they do business and where else they can improve efficiencies, generate more revenue, and grow the bottom line.

With cloud-native, data-driven insurance platforms (like Novidea’s Insurance Management Platform), for example, brokers such as Marsh, HIBL, Howden, and SRG have been able to get a 360-degree view of the customer and other stakeholders.

This enables full integration between customer-facing policy front-office transactions and the middle- and back-office with straight through processing. This means that brokers can extract more value from their customer and policy data with actionable intelligence from any device, anywhere.

Turning data into actionable insights. Enabling better-informed decisions. Delivering greater value through the selling of new products and services.

In a world that increasingly values value, doesn’t it make sense to be able to provide and prove it?

(First published by London Market Forum, February 2023)

We’re almost at the end of the first month of the year! Time flies! And as we look ahead to the remainder of the year, it’s clear that the insurance industry is facing both challenges and opportunities. There are many trends that are poised to shape the industry in the coming year.

In this blog post, we’ll take a closer look at the top trends and predictions for the insurance industry in 2023, and explore how they are likely to impact brokers, insurers, and policyholders alike:

1. Move to cloud-native – Hybrid working and broking-on-the-move have been a growing trend for the last few years, and digital ways of working are now expected, if not demanded by both employees and clients. Brokers need the ability to service clients seamlessly from anywhere, at any time, with access to all the data they need about clients, contracts, and carriers. We’ll see this continued growth over the next few years, but especially in 2023.
   
2. Personalised pricing – Recent studies suggests that there will be large household premium increases over the next 12 months, as every facet of claims has become more expensive. Many insurers are struggling with how to price risk accurately to continue creating healthy ratios. We expect, however, to see market leaders moving towards personalised offers and pricing, based on more intelligent application of complex data.
   
3. Increased adoption of IoT – 2022 saw a growing number of InsurTechs, insurers, and policyholders reaping the benefits of IoT, from flood forecasting to vehicle parametrics, to building construction data and the real-time reporting of this data. This will lead to further adoption of IoT across insurers and business lines. We expect this to continue growing with innovative new products using technology not traditionally associated with insurance, e.g. weather data and construction data used to improve efficiency in claim processing. 
   
4. Maximising the value of existing customers – With increasing competition, rising costs of doing business, and cash-strapped customers, agencies, brokers, and MGAs will invest more on optimising their existing customer base, for example by offering multiple policy packages, more tailored services or cross- or upselling via the use of comparative customer data.
   
5. The war for data talent – To maximise the value of data, businesses need top data analysts. As a result, the salaries of these specialists are rising and the marketplace is becoming intensely competitive. This is especially true because of the parallel rise in demand for the same skillset in financial services, retail, entertainment, and pharmaceuticals. In 2023, more insurance businesses will be competing for this limited talent pool, meaning we should expect to see salary costs increasing further. They will also need access to the latest tools and technologies. The companies that win the war for talent are likely to be those that invest wisely.
   
6. Continued MGA expansion – We will start to see more businesses move into the MGA space in 2023. This could be accomplished by strategic acquisitions based on product and line of business synergies. Start-up MGAs are driving most of the future trends in insurance, and many agencies and brokers will build this type of growth into their business plans sooner rather than later.
   
7. Increased collaboration between insurers and InsurTechs – 2022 saw Aviva and Lemonade’s unlikely partnership. It is yet to be seen if this is the start of a big new trend in 2023. Our hope, however, is that this competition will inspire more brokers to digitalise and adopt cloud-native platforms so they can compete more effectively with better on-demand customer service.
   
8. Embedded Insurance – 2023 will see the continued rise of embedded insurance in e-commerce, led by Amazon. The e-retailing giant’s recent UK partnerships offering a range of policies to small and medium-sized businesses, backed by three insurers, is likely to pave the way for others. How many SMEs will switch to buying insurance via Amazon? Will Apple or Google enter the market next? 
   
9. Global geo-politics will remain challenging – With no sign of the Ukraine war coming to an end, a potential economic slowdown in China, rising energy costs and ballooning inflation rates in many countries, all of this is having a knock-on effect on insurance businesses and their clients. We anticipate more economic turmoil and rising prices in 2023, meaning brokers, MGAs and agencies will need to keep tight hold of expenses and look to optimise margins where they can. 
   
10. Regulation and change management – On 9^th December, the UK government unveiled a detailed plan to reform 30 financial services regulations – including Solvency II and others that impact directly on insurance businesses. What the impact of this will be is yet to be seen, but we can expect a lot of change and increased costs for the market. Businesses that prepare with access to fast, accessible reporting to the FCA through enhanced Management Information and better use of data will come out on top. 
    
11. Acceleration of digital transformation programs to survive and thrive – The insurance industry continued to evolve in 2022, increasingly adopting new technologies. It looks like our industry is reaching an inflection point, and we will see a real transformation in 2023 as forward-thinking companies look to increase efficiencies, drive down costs, and prove their value with better use of data.

As we progress through 2023, the way in which brokers, MGAs, and agencies to stay ahead of these trends and adapt to the changing landscape of the insurance industry will be critical. The efficiencies and improvements that come with technological advancements should be a high priority for those wanting to continue to flourish in these challenging times. To see how Novidea can help, click here.