Technology, in the era of the Fifth Industrial Revolution (5IR), is evolving at a rapid pace, and the onset of the COVID-19 pandemic has accelerated that pace even more.
The question is, however, how do brokers keep up and what are the benefits to them in embarking on the digital transformation journey?
The current theme in business sustainability briefs and research are all the same. Adapt or die, digitise, and innovate using technology or face certain business failure.
The challenge is that no one can quite advise brokers, most certainly not in the short term insurance space in South Africa, and most certainly not at a price they could afford, on how they go about doing any of this.
What are the risks?
With the increase in regulatory requirements, in terms of the Protection of Personal Information Act (POPI Act) alone, the risk of not embracing technology means potential fines and reputational damage.
Consumer behaviour is also changing, and insured clients are becoming more demanding. So, if you cannot compete with various direct models that provide instant cover and instant service, you may not be able to compete at all.
You may also find yourself facing the Ombudsman because human error or inefficient processes led to an error or omission.
What are the benefits?
With the speed of technology, comes the evolution of insurance distribution and access to a much broader network, almost instantaneously.
Process automation does not need to be expensive and has cost saving implications that are often overlooked, when an initial costing is done, but when considering the over life of business cost saving and potential PI risk reduction in eliminating errors, the savings way out budgets the initial capital layout.
In our consumer driven world, insight into our client and future client demographic, understanding what our underlying client base is made up of and maximising on those insights is, in my opinion, invaluable. Data driven decision making means meeting consumer driven needs.
Embracing technology
The challenge most brokerages face is managing a database of client information, without paying exorbitant policy administration platform costs. Without policy administration platforms, many brokerages resort to antiquated paper files or excel spreadsheets for keeping track of commissions due from insurers and client information. This hardly lends itself to any process automation or data insight, and potentially poses risks in terms of POPIA and errors and omissions.
Brokerages that collect premium or have outsource agreements are obligated to utilise policy administration platforms, but often also find themselves working both on their own platform, as well as various other insurer platforms, where they do not collect premium or do not have a mandate. This also hardly lends itself to efficiencies or automation.
It is not all bad news though. The digital broker of the future will enable more efficient operations, more informed business decisions, better insurer relationships, improved customer service, and accelerated growth and profitability across all lines of business.
The starting points are automation within the business, to drive extreme process efficiency, and using digital connectivity, to drive an enhanced customer experience.
Starting with just these four key points can make the step into digital transformation easier:
- Overview processes to streamline efficiencies;
- Make sure your data is in a format, and of quality, so that it can be used to drive data driven insights;
- Embrace the power of having a controlled digital presence to maximise digital marketing; and
- Choose the correct technology partner.
At some point we will have to start giving more attention to technology. Brokerages need to stand up and empower themselves and perhaps more collaboration is the answer.
Bernice van Leeuwen
General Manager
VCIB
