Can The Right Insurance Broker Platform Help You Survive a Soft Market?

16 Apr 2018

Technology and Infrastructure, Insurtech

I'll give you the bad news first: the insurance industry is in the midst of a soft and still softening market. In most industries, a soft market simply means more sellers than buyers. 

While this means that the insurance pie — of relatively fixed size — is split into more and typically smaller pieces, the good news is that if you're hungry, smart, and aggressive, there are things you can do to grow your slice.

During a soft market, brokers are often scrambling to keep up with churn — even as insurers loosen stringent underwriting in flexible coverage areas and roll out new policy types in an attempt to keep top-line sales intact through a soft market. Each new customer offsets one that left the day before.

Globally, renewal rates fell for the 17th consecutive period in Q2 2017, according to the Deloitte 2018 Insurance Industry Outlook. At the same time, J.D. Power’s reported a second straight year of stagnant auto insurance sales in 2017 while premiums remained essentially flat. Quote volume, a primary driver of new sales, was also unchanged from the previous year.

It's not just auto insurance, either. It’s a soft market nearly everywhere, casting a pale-gray shadow over nearly every line of insurance business.

Speaking at Advisen’s Property Insights Conference in New York, Michael Nardiello, Senior Vice President at CNA Insurance, struck the defining chord of the conference, remarking that “it’s been a soft market for a long time, five years by most measures.”

Using a Cloud Insurance Broker Platform to Boost Your Firm in a Soft Market

The pressure is on to grow sales, but brokers can’t control broad market conditions. Marketing outreach can help and often produces a healthy list of leads. However, without a good way to organize those leads — tracking closing rates and progress and identifying cross-selling opportunities — your marketing dollar just doesn’t go as far.

And sometimes — as every broker knows — servicing existing business can interfere with the best-laid plans for building new business. Service needs often come in waves, and they can’t be turned away.

Deloitte points to an “increasingly crowded and commoditized insurance market”, suggesting technology improvements as one way for insurers to differentiate their value in a soft market.

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Intelligent insurance brokerage platforms put a fully-integrated spin on brokerage management.  They provide rich CRM functionality so you can manage new leads and existing business more effectively. They also offer seamless interaction with existing data systems, so you can service customers more efficiently and identify cross-selling opportunities.

Brokers understand that business opportunities slip away every day, no matter how well-trained your staff is. Productivity is lost to inefficiencies in existing systems, some small and some larger — but they add up — stealing time and focus.

A smart management platform provides a solution that can help with soft-market woes by streamlining processes and helping you to identify those opportunities that might otherwise be missed, giving you the competitive edge you need in a challenging market.

Choosing the right insurance brokerage platform can be a game-changer, adding not only efficiency, but also bringing keen insight, the ability to highlight key performance indicators and filter data to identify hidden opportunities.

Improve Your Sales Process. Anywhere.

A smart platform enables intuitive front end integration but also puts a powerful suite of reporting and CRM tools at your command, on any device. This allows cross and up selling, and fast access to reports and notes. It’s customer intelligence working with marketing insights to drive new leads and boost sales — and it’s mobile when needed.

In the old days, brokers had to go back to the office to generate a quote. A rapport is established, the conversation is going great, you’ve established trust, and then — wham — you can’t finish the sale without returning to the office to build a quote. Don’t chalk up that sale just yet.

A cloud-based and modular platform brings all the office functionality you need right to the palm of your hand. Finish that quote on the spot, wow the client, and make the sale without interrupting your flow or allowing your customer to get cold feet.

Now, imagine if your entire sales team had the data and quoting tools they need to close every sale on the spot.

Reduce Operating Costs

The right insurance brokerage platform provides a new level of transparency over the entire business. This enables managers to measure the success of initiatives and to spot trends that lead to operational streamlining of the business.

Improve process efficiency.

Soft markets affect premiums and even commission rates (more on that below) as insurers look for ways to pay for claims amid stagnating industry sales. Less man-hours spent on daily tasks and housekeeping means more time to work with new and existing customers. Better data means your time spent with those customers is measurably more effective. For a given volume of work, that also means that your overall labor requirements (read expenses) are lower.

Eliminate unnecessary expenses.

Intelligent management platforms’ data insights and detailed reporting help you to understand which initiatives aren’t working quite as well as you’d hoped. Some data-guided fine-tuning might be in order. In other cases, it’s time to reallocate money and people to a new approach or to initiatives that are consistently reaching their objectives. With the facts at your fingertips, you’ll easily be able to know the difference.

Reduce customer churn.

Every business has attrition —  a sometimes hidden cost — and most businesses don’t know why their customers leave. Superior operational connectivity and data insights allow you to more effectively serve the customer, helping to improve customer relationships and keep more of the business you worked so hard to earn. Additionally, you can spot patterns and commonalities among customers who leave. Now you have the information you need to fix any problems that might exist.

Increase Revenue and Improve Focus

insurance-broker-platform-soft-market-quoteThe same data accessibility that helps you reduce costs can also help you maximize the productivity of processes and initiatives that are working — so they can work even better.

Invest resources where ROI is highest.

Measure the effectiveness of new initiatives and study the results of established processes. Truly understanding why an initiative is working is arguably even more valuable than the simple fact that it is working. You can use that data to build out other business lines or marketing pushes, replicating your successes and investing resources where there’s a proven return.

Prioritize your efforts and initiatives based not just on what’s working, but on what’s working measurably better than everything else. There’s gold in the data from projects that proved  home-run successes. Not only can you be assured that you’re investing wisely, but you can take the knowledge you’ve gained an apply those lessons throughout the business.

Managing costs isn’t just about slashing expenditures. Optimizing spending and reallocation are key to sustainable growth.

Improve the sales process and prospect management.

Clunky sales processes hinder growth and steal efficiency from all areas of the business. If every prospect management task takes longer than it should, the whole business suffers — sometimes quietly — because you just weren’t aware of a better solution. Couple increased efficiency with detailed reporting and you have a clear target for marketing and sales drives.

For example, if your sales calls are based on the same spiel, how do changes to that spiel affect the sales cycle? That type of subtle data insight can be just what you need to unlock the full potential of your sales team through continuous data-driven iteration. In marketing, the equivalent process is called A-B testing — and it’s a powerful optimization tool that allows you to find out what works and then fine tune your approach further until you’ve found the best of the best.

Optimize for new business and find cross-selling opportunities.

With a comprehensive data repository, rich with data points for specific markets and with built in analytics, you can build new core competencies and market insights to help you differentiate and provide added value. This is the hybrid brokerage-consultancy proposition through which you leverage your expertise not just as a policy facilitator but as a risk management advisor. 

Most agents or brokers, without the benefit of an intelligent management system, don’t have an easy way to pull, process, and leverage data to build expertise. Instead of following your gut on marketing decisions, imagine if you could ask for a roadmap that showed the best route to your destination — and even recommends a destination based on real-world numbers.

Enhance employee communication and management.

Shared data, available on any device and wherever employees may happen to be, makes teamwork more than just a slogan. Understanding team member performance helps you to identify money-wasting roadblocks and to refocus efforts on the fly. You need to communicate effectively with your team, providing not just a new directive, but a dataset that illustrates why a correction or new direction is needed. Never underestimate the value of employee buy-in and always be mindful of how a shared point of view and joint data analysis will impact that buy-in.

Nothing motivates a sales team like understanding why. Of course, the extra commission they can earn will provide added inspiration as well; which brings me to my next point...

Negotiating Better Commissions From Carriers

Data-driven-ops-courtesy of insurance-broker-platform

Insurers watch stats closely and measure every metric for brokers, but often without transparency. An in-depth understanding of performance trends gives you the ammunition you need to enhance revenue with existing carriers or to forge a profitable alliance with new carriers or groups.

You know your team has become a market leader and that top-line performance is only part of the story. Loss ratios, product mix, add-on sales, and other elements of your business are all important to your bottom line — and to the insurers you’ve partnered with.

Your employees come to you when they want a raise. If their work is solid, and they have the numbers to merit the reward, they’ll often get a welcomed boost through payroll or goal-based incentives. Your brokerage deserves the same — if the numbers are there.

Insurance is based on sound underwriting, so it’s no surprise to learn that insurers are numbers-driven when it comes to broker compensation. Now with the ability to demonstrate your brokerage’s success in key metrics, you can speak intelligently about specific numbers, explaining how you achieved top results and how you’ll keep performance higher.

Insurers know that top-performers have other options and both brokers and insurers have a lot invested in each other. It’s often in everyone’s best interests to keep the partnership alive and well. Now you’ll have the data you need to prove you’re worth more.

The peace of mind that comes with knowing your value and being able to quantify your value is priceless in a soft market. When cost-conscious insurers start to reevaluate brokers, you have the data in hand to show you’re hitting every goal, something competitors without an insurance broker platform can’t show as easily.

Final Thoughts

There is a continued soft market for the insurance industry as a whole, with no catalyst for a market change in the foreseeable future. Looking for efficiencies within agencies and brokerages may be the key to surviving or even thriving through an extended soft market.

Possible changes to help right the course at the agency level can be discovered by having team meetings where honesty is encouraged, but suggestions will be limited and changes can’t be easily tested for effectiveness without an objective way to analyze results. Smart management platforms promise to help you identify the optimization opportunities that even a seasoned team might overlook by pulling and comparing data that isn’t easily available by other means — or at all.

From reducing costs to improving customer retention and boosting sales, intelligent insurance broker platforms pledge to make your brokerage a finely-tuned machine. Add in the ability to test your processes and marketing initiatives against each other and you have a powerful synergy of technology and human insight that can carry you through any type of market, soft, hard, or anywhere between. 


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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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