Insurance brokers invest a lot of time and money in their IT infrastructure. However, despite the last decade seeing an enormous amount of effort devoted to managing portfolios, ensuring that legal and regulatory requirements are met through automation and a sincere focus on getting better information from reports; there’s still a lot of work to be done to ensure that brokers receive value from their spend.
Key Value Drivers for the Next 10 Years for Insurance Broker Software Systems
- The level of competition – competing solely on price offers no value add and is ultimately unsustainable. Insurers need to examine their whole delivery model from end-to-end and work out how to reduce the total cost of their business processes and how to better meet emerging patterns of consumer behavior.
- Customer demand – technology needs to support client requirements. It should support self-service (for maximum efficiency) whilst still driving cross-selling and a variety of sales and delivery channels.
- Clear decision processes – IT systems for brokers must provide data to support the corporate decision making process. This data should be compatible with data provided from 3rd party sources for maximum effect.
Current Blocking Issues
- Complex Legacy Systems – As insurance product portfolios have developed, legacy systems have been endlessly tweaked to try and meet the complexity of modern insurance needs. These systems have often become so complex that extracting useful data becomes time-consuming and effort-intensive. This also has an impact in terms of the risks of implementing further changes which delays putting improvements into practice and that costs money.
- IT relationships – technical environments often become closed off from the wider decision making process. It is often easier to explain the benefits of additional hardware than it is to have an honest conversation about changing core platforms.
- An excess of data – the more data that is produced from legacy systems the more that data is shared without addressing the key question; “What will that data be used for?” Decision makers can find themselves drowning in volumes of data which doesn’t answer any specific questions or drive rational progress.
- A lack of benchmarks – there have been improvements in this area of late but there’s still a lack of actionable data from benchmarking. Benchmarks should identify both problems and potential solutions.
What can be done to improve the situation?
- Cost driver analysis – most businesses fully understand how much they are spending on IT and what they are spending it on. Many however, cannot fully articulate why they are spending in the way they are.
- Decision making process alignment – Once you know why you are spending the way you are, you need to ensure that decision makers can use that data in context to improve service-levels and reduce the overall level of risk. This needs to be fully aligned to the bottom line.
- High-level support – The senior team need to be able to support this decision making process and ensure that it remains a priority in budgets and balance sheets.
- Real-time useful data – This should lead to systems that produce accurate real-time reports that offer service, financial, operational and general IT metrics that can be compared to benchmarks. This is the only way to ensure that your IT spend is producing value.
Did you know that nearly 5% of most brokers’ outward investment is spent on their IT infrastructure? Yet only a tiny fraction (if any) of that is spent on calculating the true business value of that investment? If you want to ensure that your insurance broker is really getting the most from your IT spend – you need to spend some time working out how to quantify that and work out exactly how you’re going to support the needs of tomorrow’s customers. You shouldn’t need a crystal ball to make the most of things.