How brokers can adapt to rapid changes in technology
With today’s rapid acceleration of digital-first experiences, customers have increasingly come to expect “anytime, anywhere” access to information, products and services. Even in relationship-based industries like insurance, putting technology solutions into play is becoming more important. To stay competitive, brokers have to figure out what tools and technologies can enable them to better meet their clients’ needs, as well as benefit their own businesses.
Research shows that brokerages are making positive progress toward technology adoption. A Q1 2020 survey of independent brokers in Canada, the U.S. and U.K. found that 33% of agencies and brokerages use self-service portals, representing a 50% increase, and 52% have extended mobile technology to their employees. The survey also found that 71% of agencies and brokerages host their software in the cloud, up 9% year over year. In addition, 29% of agencies and brokerages reported using data analytics applications, which is a 26% increase year over year.1
However, while technology adoption continues to trend forward, it’s still a key challenge for brokers. In the Canadian Underwriter National Brokers Survey, sponsored by Sovereign Insurance, rapid technology changes landed at number four of the top five challenges Canadian P&C brokers are facing. In addition, adopting new technology came in as the fifth “strong challenge” to their business.
There is a myriad of reasons why technology keeps brokers up at night, but here are some common challenges and how brokerages can overcome them:
Pace of Change
Technology continues to evolve at a rapid pace and there’s no shortage of innovative digital solutions hitting the market. The challenge for brokers is how to keep up with all the trends and tools, and determine which solutions best suit their needs.
The key is doing the research. While “shiny new objects” seem exciting, they might not save brokers time or money, or enable them to better service clients in the end. The imperative for brokers is to first figure out what they need and what their clients need, and then find technologies that fit. If they start with technology first, and not the problem they need solved, their new tech investments might end up collecting dust on the shelf.2
In addition to embracing technology to help advance their business, brokers are tasked with learning and adopting technologies and tools introduced by the different carriers they partner with. While many of these advancements may support broker business, others could miss the mark if brokers aren’t partnering with carriers during the ideation and requirements gathering process to ensure it meets their needs, and in some cases aligns with their systems.
Technology options may be expanding, but that doesn’t mean resources are, too. On the heels of the pandemic, many companies are still dealing with budgetary pressures and conflicting priorities, so they’ll have to get creative.
One insurance expert suggests assessing other expenses critically to free up resources, including time, money and personnel. For example, because of the pandemic, companies no longer need big travel budgets and there may need less commercial office space. When it comes to time, one suggestion is to increase the time available to personnel by adding more people or by cutting other projects or responsibilities.3
While a complete digital transformation can take years and a huge investment, some brokerages have built on their existing technologies, which isn’t as costly. Some easy-to-implement solutions include chat bots and text messaging services.4
The Talent Gap
New technologies in the workplace require new skills in areas such as data and analytics, mobile, cloud, artificial intelligence, and more. Brokers will need digitally savvy employees to power any new solutions they implement, which might require both training current employees and hiring talent from outside the organization.
When it comes to introducing new technologies, the problem for business leaders is that some employees may be resistant to change. Some reasons include fear of the unknown, no clear benefits or value, and lack of communication. To overcome this challenge, employers are encouraged to use tactics such as: prioritize ease of use, connect to people’s needs, customize training, use group endorsement, and keep an open dialogue.5
When hiring from the outside, brokers may encounter difficulty filling roles as the digital talent gap continues — a common challenge for many companies. In a May 2020 survey by McKinsey, 87 percent of executives said they were experiencing skill gaps in the workforce or expected them within a few years. Yet less than half of respondents had a clear sense of how to address the problem.6
To close the talent gap, one solution is to focus on reskilling and upskilling initiatives, which is beneficial to both companies and employees. For example, employees will have pride knowing their company wants to invest in them and their future, and loyalty will likely follow. 7
See: Finding qualified workers: how to support the insurance talent pipeline
Brokers considering new tools and technologies should be mindful of new cyber security risks. For example, if brokers have “anytime” access to clients’ information on their mobile devices, or if data freely flows to all employees in the organization, how does the company ensure the information is protected from cyber threats?
While there’s no question the threat is real, brokerages can take steps to mitigate cyber risks. Some key measures include backing up and encrypting data; securing mobile devices; providing employee awareness training; enabling security software; using strong user authentication; and many more.8
See: Cyber loss prevention: How to mitigate cyber risks to your business
As brokers continue to explore technology solutions and evolve their offerings, insurers too are driving their digital transformations forward. According to PwC, elements of digital transformation in the insurance industry include digitally enabled sales, direct-to-consumer engagement, automated advice, digital underwriting and automated claims adjudication.9
Some are also developing technologies to enhance the broker experience and make it easier to do business with their partners. 10 This presents a great opportunity to involve brokers in that process to ensure it really meets their needs.
While it can be daunting to keep up with new trends and technologies, it’s well worth it to make the effort. Keeping pace with change and finding the right solutions for their business will ultimately help brokers compete and better serve clients in today’s digital-first world.
1 Applied, “Applied Systems Reveals 2020 Digital Technology Adoption Survey Results among Global Independent Agencies and Brokerages.” July 21, 2020
2 Canadian Underwriter, “Digital brokers: Should you buy your own tech or build someone else’s?” Oct. 22, 2020
3 Property Casualty 360, “Five major challenges of insurance digital transformation,” Aug. 26 2020
4 Canadian Underwriter, “Brokers succeeding with chatbots, refund portals, text messaging: InsurTechTO panel,” Nov. 8, 2017
5 Memory, “Resistance to change: Motivating employees to adopt new technology,” Oct. 16, 2020
6 McKinsey, “To emerge stronger from the Covid-19 crisis, companies should start reskilling their workforces now,” May 7, 2020
7 Chief Executive, “Closing the tech skills gap: 3 factors for CEOs to consider,” Sept. 3, 2020
8 Canadian Centre for Cybersecurity, “Baseline cybersecurity controls for small and medium organizations”
9 CIO, “Insurance rising to the challenge of digital transformation,” March 28, 2021
10 Canadian Underwriter, “How carriers could save brokers from drowning in friction,” Feb. 23, 2021