How to Adapt and Scale your Niche Insurance Brokerage

    How to Adapt and Scale your Niche Insurance Brokerage

    7 Sep 2017

    Technology and Infrastructure

    If it feels like every brokerage management system out there is the same, that’s because they usually are. You’re not imagining things. Most platforms are designed to be rigid and inflexible.

    The person who designed them probably meant well. After all, it’s much easier to build a box and then squeeze a bunch of people into that box, than it is to customize a box for every single customer.

    So, what these product developers do is they build a great platform for liability insurance and then sell that platform. Life insurance? Property and casualty? Nope. It doesn’t handle those products well. You’re growing and expanding and need to add a new business line? Too bad, catch you on the next platform release.

    Adapt your business today with Novidea's innovative brokerage management  platform.

    What’s lacking in all these platforms is the ability to scale, change, and adapt to your unique needs. And yet, this is exactly what’s needed in the industry.

    So, what’s the solution? What can you do to scale your niche insurance brokerage?

    Use a dynamic platform

    The next generation of brokerage solutions includes cloud-based platforms with customizable workflow capabilities that won’t lock you and your brokerage up in platform prison. Instead, they’ll change easily with your business. These platforms allow your brokerage to specialize and give you flexibility to scale up or down. They also allow you to grow your partner network without having to shell out more cash for upgrades or support.

    The learning curve isn’t quite as steep anymore and your agents become more productive and more profitable for the agency much quicker. It’s almost impossible to outgrow the system. And, with some providers, like Novidea, you can’t outgrow them. Every time you want to offer a new product, expand into a new location or acquire an agency and onboard new employees to the system, the process is seamless. All they have to do is plug in the new bits as your brokerage grows.

    Of course, you don’t have to adapt your agency to these new platforms, but not doing so can mean the difference in getting ahead or getting left behind.

    Focus on one line of insurance

    Most insurance firms would actually be better off specializing in one type of insurance because they can become experts in that product line. When you’re focused on one niche, you usually end up with more business. People start seeking you out. And, if you do a good job in positioning yourself in the marketplace through marketing and PR, your brokerage will have an endless number of leads.

    For example, a small life insurance brokerage would be better off specializing in life insurance than trying to dominate life, health, property and casualty, and business lines. And yet, this is what the typical brokerages try to do. They try to be a “one stop shop.”

    But, if that small life brokerage develops relationships with underwriters in the industry, develops its field underwriting process, product offerings, and takes on underwriters in-house, then it can specialize in hard to place insurance cases (called “impaired risk”). It can be the first to market when there’s a new life product. It can place cases that others cannot because it has relationships and knowledge others do not.

    Why can’t a brokerage develop deep knowledge in all lines of insurance? Because it takes time. Time that needs to be devoted to one line. If a brokerage spends 100 man-hours developing proprietary underwriting processes and relationships with life insurance companies and another 100 man-hours developing similar processes and relationships with property and casualty companies, it would spread itself too thin.

    Instead, if it devoted 200 man-hours to the life insurance line, it could master that line of insurance instead of trying to be a “jack of all trades.”

    Adapt your business today with Novidea's innovative brokerage management  platform.

    Develop your network

    A dynamic platform is not only good for scaling a niche specialization, it’s also great for developing a partner network to help you grow your business even more. A small brokerage that specializes in one line of insurance doesn’t automatically dominate that niche just because it specializes. It needs to develop a partner network by teaming up with insurers or agencies offering complementary lines of insurance to swap referrals and gain mutual benefit. To do that; however, you need a platform that is flexible enough to communicate seamlessly with all types of partners--both low-tech and high-tech.

    Some insurers are still using EDIs or “Electronic Data Interchange” and they’re not upgrading anytime soon. And, even though it takes a month (or more) to get set up with the insurer, having a management platform that is compatible with EDIs will allow you to partner with insurers still using them.

    On the other hand, other insurers use advanced communication systems known as APIs or “Application Programming Interface”. This is a newer integration where the software talks directly to the partner’s system rather than through a file feed. This means you can send the same information to multiple carriers without a lot of hassle, headache, or throwing your brand new iPhone across the room.

    APIs are created by companies that leave parts of their software “open” so other apps can integrate with them and request information. In the insurance industry, it lets brokerages do convenient and useful things like sync with partner insurance companies whenever there’s a change in benefits. For example, Allstate Benefits has instant syncing for employee enrollments.

    Having a management platform that seamlessly integrates with both EDIs and APIs lets your brokerage communicate and partner with other insurers, regardless of their technological status.

    Where To Go From Here

    There’s a lot of hype in the industry right now. Will digital platforms really change the face of the industry? Think about it for a moment and the answer will come into focus. The insurance industry is one of the last industries to adopt technology. And, maybe except for the banking industry, they’re the last to update their legacy systems, some of which run ancient software from 10+ years ago.

    Consumers are demanding more and more from their insurance brokers. It won’t be too long before brokerages are forced to upgrade just to have a basic level of communication with their customers and clients.

    Do you want to be ahead of that curve or behind it?


    Contact us at Novidea today to upgrade your brokerage’s technology stack.

    insurance-distribution-technology

    Posted by Roi Agababa

    Roi Agababa is the CEO and co-founder of Novidea since January 2009. Prior to this Mr. Agababa was a senior executive with SRL software group, where he held a number of senior management positions, most notably as the global Vice President for Research and Development and the Chief Technology Officer. Under his leadership, Novidea has been revolutionizing the working patterns of insurance and financial services organizations and has become a leading global provider of top line software to this market.

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