Galbraith believes using technology combined with insurance is a win-win formula
We were pleased to hear Eric Galbraith’s comments relating to insurance technology in his address to Purple Partnership’s annual member conference this week. Insurance technology has clearly moved a long way up the industry agenda over the last few years.
In fairness, Mr Galbraith has been highlighting this important topic for some time. In his opening remarks at BIBA 2012 Mr Galbraith was appreciative of the opportunity the internet afforded brokers:
‘While I certainly concede I’m not as tech-savvy as my children or even grandchildren, I can and do appreciate the value of the internet and social media in disseminating information and in opening up worlds and opportunities we wouldn’t otherwise enjoy’
The internet opportunity for brokers is huge
At Quotall, we would go a bit further and suggest that the internet opportunity has and will continue to redefine the shape of the insurance industry.
The UK leads the world in e-commerce, and British shoppers are driving the digitisation of the UK’s economy. The internet now contributes a larger share to our GDP than in any of the other G20 countries.
According to the Boston Consulting Group, if the internet were a traditional sector it would be bigger than UK construction, education or utilities.
British shoppers now make 13.5 per cent of their purchases online, compared to 5 per cent in the US and 6.6 per cent in the world’s most wired nation, South Korea. Even more customers choose to research online and buy offline.
As Dan Cobley, managing director of Google UK has said:
‘…the UK internet is leading the world in e-commerce. At a time of financial uncertainty, the UK internet economy continues to grow at an incredible rate…’
Customer behaviour has changed – a ‘find a broker’ service is no longer adequate
In the same BIBA 2012 speech Mr Galbraith also said:
‘Having witnessed the continuing problems of fraud, and what some insurers have seen with increased claims as a result of internet selling, I remain very sceptical about any move to commoditise commercial products without broker input. To this end we will continue to promote our signposting initiative and our very popular ‘Find a broker’ service.’
In the context of the rapid growth of the UK’s digital economy, we do not believe simply promoting face-to-face services will be enough to enable brokers to compete in the future.
Brokers need to be online for themselves
BIBA claims to help 400,000 people a year through its online and helpline ‘Find a Broker’ service which is admirable. However, there are well over 1.2 million online searches per year specifically relating to insurance brokers.
In our view insurance brokers have to open online channels now to find and attract the majority of customers who are already researching and buying insurance online. In a decade the ‘internet generation’ will form the bulk of the target market, and they won’t be looking for a broker in the Yellow Pages.
Insurance has become a transactional business
BIBA chief executive Eric Galbraith has also voiced his concerns over the transactional nature of insurance and the over-emphasis on price.
‘Insurance has moved on to a transactional business, it’s important for us to demonstrate that’s not the right way to go about getting the right answer from both insurers and the customers point of view. If you take comparison sites, they have produced a position where there’s an unhealthy focus on price – more claims, more fraud, it’s not good business.’
The fact is that, as long as there remains insufficient product and service differentiation from insurers, the market will be open to commoditisation and aggregators will readily participate.
As long as the market is commoditised, transactional process efficiency will be critical to ensure that brokers and insurers can trade profitably, and insurance technology will be the key enabler.
For most brokers the internet should be a new channel, not a new business
Mr Galbraith also suggested that insurance technology should be used in a more complementary method, as opposed to simply facilitating online transactions. As he said:
‘Using technology combined with insurance is a win-win formula.’
Unsurprisingly perhaps, at Quotall we agree wholeheartedly. We would encourage brokers to:
- view the internet as a channel for finding and attracting the growing number of customers researching and often buying their insurance online
- embrace insurance technology which: provides a modern, efficient online trading facility for customers and brokers
- delivers process efficiency through a full cycle, auto-rated back office system
- seamlessly integrates both of the above