This piece is by Christan Wright, Head of Market Development at SSP Broker, and it looks at the importance of collaborating on data when it comes to complex risks.
It is now around 20 years since imarket launched as a multi-insurer commercial quotation service. Yet e-trading capabilities in commercial SME remains a focus of much debate. Just in the last few months, I have seen concerns that complex risks are being forced through this route while others feel too many risks end up in the hands of underwriters, thus negating the efficiency gains offered by etrading.
The issue is that the vast majority of e-traded business is conducted using insurer extranets or through exclusive insurer/software house agreements. The commercial products available for e-trading have not grown to meet the expectations of brokers. As such, commercial etrading is not functioning as it should – that is as a tool for any broker/MGA, however big or small, to leverage to secure much needed commercial insurance income in an efficient, touchless manner.
The time for change is ripe as feedback from the market suggests insurer appetite for commercial business – scheme and non-scheme business – is growing again after a period of uncertainty. The emergence of innovative broker groups such as Bravo Networks is evidence of this appetite, with barriers to placing business being broken down through greater collaboration.
This is an opportunity brokers and MGAs need to grasp given the challenge of operating profitability in personal lines. But we hear time and again how brokers feel they have one hand tied behind their backs when looking to secure quotes in an e-traded environment. In fact, we are just about to embark on a major survey of our broker customer base on this precise issue.
The challenges in commercial e-trading are not new. It is well understood that auto-rated commercial products have been difficult to develop due to the complexity of commercial covers compared with personal lines. But what is new is the erosion of profitability in personal lines that has made commercial so vitally important to broker/MGA survival. Fresh investment in the technological capabilities of software houses is also new, opening up fresh possibilities to propel e-trading forward.
Coming back to collaboration, a way ahead could be through greater cooperation between all software houses to agree on a communication standard for commercial etraded products. In this way, when choosing how to place business, brokers need only concern themselves with the quality of the software, rather than the quality of products. This would make competition for commercial business amongst brokers fairer, allow insurers greater opportunities for market penetration and product innovation in commercial and will help ensure the end customer benefits through more choice in products and pricing.
It’s a bold suggestion agreed, but history has shown that collaboration can work for the good of the sector and its customers as a whole.
Be the first to comment