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Viewpoint: Seeing the bigger picture of technology

Instead of the bulk of their tech investments going to stagnant administrative systems, the real focus should be on the front office

Carriers and brokers need to switch their focus to digital-first distribution and revenue operations

After five years at the helm of Zywave, speaking to hundreds of customers and significant investments in research and development, I am still convinced most insurance organisations have misplaced priorities when it comes to technology.

Today, carriers and brokers still tend to use platforms that concentrate on back-end functions, such as claims and accounting. They are hampered by clunky policy administration or agency management systems provided by disparate or legacy technology suppliers, none of which “talk” to each other. Their cobbled-together tech stacks and never-ending spreadsheets mean they struggle to find customers and engage with them.

Instead of the bulk of their tech investments going to stagnant administrative systems, the real focus should be on the front office – on revenue-generating activities, such as attracting new customers, digitally quoting business and servicing existing clients.

This shift in operations can best be achieved through open architecture software that creates a single, integrated digital platform to seamlessly connect insurers, agents, brokers and their clients.

Carriers and brokers often spend their time and energy looking backwards at how to overhaul their legacy systems and end up patching together outdated tech. But the insurance industry of tomorrow will be focused on digital-first distribution and revenue operations, not administrative details.

It will integrate customer relationship management systems and smart data to improve efficiency, minimise risk and maximise profitability. And it will free up more time for sales, marketing and account teams to spend providing real value and consultative advice.


Back office pre-occupation

For far too long, there has been a preoccupation with back-office operations to the detriment of the customer. When I joined Zywave in 2018, I talked to leading analysts who said the software stack for the average carrier or agency was 90% back office and I do not think there has been enough change since.

I knew from my experience in other industries the balance should tip more towards prospecting, distribution and supporting customers.

In a recent financial impact study completed by an independent third party, one of the key concerns raised was that insurance organisations lacked efficient ways of identifying potential customer prospects and struggled to gather accurate and topical information for marketing campaigns.

Instead of the bulk of insurance companies’ tech investments going to stagnant administrative systems, the real focus should be on the front office – on revenue-generating activities, such as attracting new customers, digitally quoting business and servicing existing clients

Small and medium-sized insurance agencies, especially, often fail to find the time and resources to profit­ably offer value-adding services that support customers and increase retention rates. And configuring, pricing and quoting comparable policy rates relies heavily on inefficient and error-prone processes, contributing to lower productivity and profitability.

For the companies in the study, which was commissioned to quantify return on investment (RoI) for Zywave customers, adopting our tools improved these organisations’ efficiency of prospecting and selling to their clients, while at the same time reducing marketing costs.

The modular software solutions, which gave companies a 160% RoI over three years, also boosted name recognition, increased customer “stickiness” and accelerated new employee ramp-up with cloud-based training. This is tangible evidence the new way of looking at insurance tech stacks really works.

For decades, the re/insurance market has been discussing modernisation and digitisation – a conversation that still has a long way to go. I came into the industry after running a large software company in the sales automation space and stepped into this role with a focus on supporting producers to acquire customers and manage distribution.


Five-year lag

What I have noticed is the insurance industry lags about five years behind other sectors in the adoption of sales and marketing best practices. There are those who say insurance will never change, that it has stayed the same for generations. But I believe it can and must – and one of the reasons is the growth of private equity in the insurtech market.

It is nearly impossible to be complacent when you are the chief executive of a private equity-backed company. During my time at Zywave I have observed how quickly private equity is changing market dynamics and it is critical carriers and brokers keep up.

The insurtech revolution promised to fix the market’s problems by disrupting the way the re/insurance process worked from start to finish.

However, many of these new companies have failed or become much more traditional in their approach after realising change needs to be more “evolution” than “revolution”. The fact is the attempts to digitise the insurance market have, so far, failed.

As carriers and brokers manage increasing consumer demands, supply chain disruption and global energy shortages that have sent prices soaring, it has become more important than ever they are equipped with the latest and most efficient, customised solutions.

Rather than trying to disrupt the market, a better approach is to collaborate and integrate, using the latest techno­logy, such as artificial intelligence and machine learning. The result is a seamless platform that centralises carriers’ and brokers’ tech stacks, simplifies processes, saves time and money, delivers valuable data and facilitates digital distribution.

The market is crying out for sophisticated, modular software that is purpose-built for each function within a business. Insurance tech solutions that are mono­lithic or stagnant need to mature to become more agile, with unique workflows and tools that can meet the needs of a diverse set of distribution strategies and lines of coverage.

The best modular data and platform solutions help organisations predict the right amount of coverage needed, while allowing smarter distribution by matching the right buyer to the right supplier.

To secure a profitable future, the market must be revolutionised through innovative technology that powers digital transformation at every stage of the insurance lifecycle. It is vital our industry not only considers today’s needs, but analyses, anticipates and innovates around the industry of tomorrow to ensure long-term success.

Insurtech should be dynamic, not a one-size-fits-all solution, and it should focus on rethinking the traditional tech model, offering modern, modular solutions and tools that align with the specialised needs of each organisation, large or small.

Market participants need to take a step back and look at the bigger picture, to see whether their resources are being invested where they can have the most significant impact.


Jason Liu is chief executive of Zywave

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