The insurance industry may have been a bit slower than other sectors to embrace technological innovation in the past, but that is beginning to change, and with good reason.
There is a growing awareness that improved data connectivity between industry stakeholders is crucial if insurance professionals are able to meet changing consumer expectations.
“It is important that industry leaders take steps to address data connectivity in the insurance world,” said John Elliott, CIO for RSA Canada. “Consumer expectations of the online retail experience are finding their way into financial services in general and insurance in particular. Consumers want to be able to get answers to their questions quickly and easily online. They want to see the offerings in the marketplace, make a selection and then close the deal – much like the Amazon experience.”
The insurance industry has struggled to create such a seamless experience and, in many cases, buying a policy can be a frustrating process. It’s often a drawn-out process, entailing a series of calls and lengthy waits to receive answers to a consumer’s questions. Contrast that to an online retail experience and it’s clear to see insurance has some way to go.
“In order to enjoy this seamless experience, the participants in the industry to be connected to each other, but that is not as easy as it may sound,” Elliott said. “Multiple platforms are used by the broker channel and, of course, by the carriers as well. Many of them are old legacy systems which are difficult to modify and make responsive to modern data connectivity strategies.”
But there is precedent for seamless connectivity in a complex financial world and the insurance industry can look to the successes of retail banking and capital markets for inspiration. In the investment world, whether you are a day trader, a sophisticated investor or a registered trader at a securities firm, you can quickly configure and place a trade and instantly track its progress. Elliott wants the same thing for the insurance industry.
“Our first step is to find a model whereby we can connect seamlessly with one another,” he says. “The IBAO is working on setting up a hub whereby a standardized request for information or quote from a broker, working natively in his/her system, could be sent to a switch or hub, be translated as needed and then forwarded to the appropriate carriers. Once the carriers have processed the request in their systems, an electronic response would be sent back to the requesting broker’s systems – all within seconds.”
Elliott describes the industry’s efforts to improve data connectivity as being a “long road” but he does believe the all-important first steps are being taken. The industry challenges have been acknowledged and participants are working on solutions. The next step is to conduct tests to find out which solution architectures are best for our industry. The Toronto Insurance Council and the IBAO are currently testing alternate approaches which realize the same goals. Not surprisingly, each solution architecture has its own pros and cons.
“Ultimately, we want brokers to be able to work within their native broker management systems and not have to hop in and out of various carrier systems and portals,” Elliott says. “Increased connectivity will also enable brokers to communicate electronically with other industry partners, further improving the efficiency of the industry in serving its customers.”
There is little doubt that the pilot efforts currently being conducted will be of direct benefit to Canada-based brokers and customers. They will enable brokers to be more responsive to their clients and significantly lower operating costs, thereby reducing prices to consumers and improving industry profitability. To be in a position to fully benefit from the changes, Elliott advises brokers ensure they are using the latest version of their broker management software.
“It’s important for all industry participants to engage in the efforts with open minds,” Elliott says. “There are multiple feasible approaches. Working together, brokers, carriers and third party vendors will identify and build the best solution for the industry.”
