What Changes in Customer Behaviour and Commercial Combined Product Digitisation mean for the Modern Broker

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Historically, insurance policies were written on a monoline basis and often against perils simply defined as “acts of god”. The insurance contracts themselves were typically single sheet documents signed by those subscribing to or underwriting the risk. As the legal system evolved and lawyers sought to evolve areas where the short policy document failed to provide much clarity; insurers removed uncertainty by explaining their intentions through longer and more complicated definitions and exclusions. The insurance industry, shaped by the industrial revolution, continued to grow fuelled by a rapidly expanding demand from new businesses seeking to transfer some of their newly found risks to an insurer.

It is well known that the base of modern insurance can be traced back to 1688 when Edward Lloyd’s coffee house was first mentioned as the place to go for insurance. However very little is spoken of how the business was transacted. From the very start, ship owners relied on brokers to advise them in their negotiations with underwriters to ensure the policies they were buying were fit-for-purpose.

Commercial combined insurance policies first appeared as a solution to make a variety of different insurance policies more accessible to small businesses and have since evolved to capture an array of medium and large businesses with higher risk activities. While they are most certainly a significant improvement versus separate, monoline policies aggregated together under a traditional, non-combined insurance program; having up to 10 different coverage sections in a single document resulted in a very large, single policy legal wording issued to every single client even if they have not chosen to buy all of the coverage.  

As much as the insurance industry has advanced in size and sophistication, the role of a broker to properly advise and protect their clients is as important now as it ever was. However, with the advent of modern technology, customers expect to receive instantaneous answers to queries and solutions to problems. These increased levels of expectation are compounded by the fact that insurers, in an attempt to reduce acquisition costs and drive underwriting margins, have sought to take advantage of the commercial combined product and commoditise it for digital distribution often making it seem extremely simple for a customer to purchase their commercial insurance policy directly from them. It is clear to any insurance expert that direct insurer distribution is really only suitable for the simplest of commercial insurance risks, usually for SME businesses with low-risk activities.

These customers may choose the convenience and the instant response offered by the digital journey and the lower price attached to the sub-standard policy, over a solution prepared by an expert. Inadequate policies mean that some claims may not be paid, and certain activities could be excluded, which defeats the purpose of buying an insurance policy to begin with. Brokers can harness the power of technology to deliver fast and superior solutions that allow them to properly educate their customers on the cover they are buying.

Fundamentally, the primary advantage that a broker can provide to their customers is advice. The broker does so by understanding the customers’ business, gathering information and finding the relevant and available insurance policies. Technology now allows brokers to focus purely on advice and to positively differentiate themselves in the eyes of the client.

Information collation in the digital age

There are now more public information repositories which hold information about customers and their businesses than ever before. Whether it’s the EPC register that can help to determine the size of a client's building and support the validation of their reinstatement value and sum insured, to obtaining financial information on the business from Companies House. Brokers can directly access more sources of accurate data than ever before and better yet, leverage solutions that integrate with all these data sources. This not only improves the customer journey as a result of having to ask a significantly reduced number of questions, but it also increases the likelihood of securing more competitive premiums on their behalf by being able to offer a broader picture of the customer's risk to an insurer.

Whole of market review

Commercial customers will always appreciate choice. Offering a single solution won’t satisfy most clients and failing to provide a transparent comparison of the market will simply mean that they will seek out other quotations elsewhere. By using the latest in technology, brokers can now configure the policy sections and limits required on a commercial combined policy and key their customers risk information into a single platform which will return a range of quotations from a variety of insurance providers. Technology is advancing in this area and the Upsurance marketplace is well-suited to help brokers focus on advice. Customers no longer have to undertake non-manual work in vanilla trades to be acceptable. Instead, the platform can ask relevant questions which allow participating insurers to quote for higher hazard risks whilst maintaining the convenience of a single combined policy wording.

Delivery of recommendations

There is a continued drive for efficiencies and an increased focus on the environmental impact of businesses alongside hybrid working conditions. Travelling for face-to-face meetings is no longer a viable option for the majority of small or medium-sized businesses. Brokers now rely more and more on technology solutions across the board to better advise and interact with their customers.

In conclusion

Rapid digitisation is all around us and commercial insurance customers, which are ultimately run by the same consumers who have been accustomed during the last 10 years on the convenience made available to them in their personal lives. These customers are now adopting the same buying habits in their commercial lives. With significantly larger capital resources, direct insurers have already aligned themselves to take advantage of this now that the technology is both significantly more affordable and available. Brokers must take the opportunity to leverage their skills and expertise to continue to be the choice of the discerning commercial insurance buyer by utilising technologies adept to new customer behaviours.

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