E-trading has not yet been widely adopted within commercial lines insurance, yet is becoming increasingly important as major insurers look to make it as easy as possible for brokers to do business with them whilst improving operational efficiency. The advice and experience of commercial lines brokers is still highly valued by small and medium-sized enterprises (SMEs), but brokers are having to adapt to the increasing number of direct and online purchasing options available to their customers – following the pattern already seen in motor and household and personal lines insurance. Commercial lines brokers and insurers need to react now to ensure they don’t get left behind.
SSP’s white paper examines the trends driving e-trading adoption, refutes misconceptions around integrated e-trading and looks at how insurers and brokers alike could benefit from the wide-spread adoption of e-trading. These benefits include:
For brokers and intermediaries:
- Putting customers first: Integrated e-trading provides brokers with an audit trail to back up the decisions made and demonstrate to the FCA that these have been taken in the customers’ best interests. This has become especially pertinent following the review of conflicts of interest and intermediary remuneration in commercial lines by the FCA, which means there is increasing need to demonstrate to the FCA that decisions have been taken in the customers’ best interests.
- Optimising processes and benefiting from straight-through processing: e-trading frees brokers from the activity that they don’t need to do – enabling them to provide the advice and support that customers want.
- Making cost and efficiency savings through the single keying of data: Using integrated e-trading removes the need to search multiple extranets and re-key data, removes the risk of errors and freeing up brokers and underwriters to focus on what they do best – providing excellent service to their customers
For insurers:
- Offering competitive advantage: by offering brokers the opportunity to purchase insurance products for their clients easily through integrated e-trading platforms whilst aiding broker compliance
- ‘No touch, low touch’: faster processing of relatively low value commercial policy premiums at the lower end of the scale – for example for microbusiness, classified as those with less than 10 employees, which typically attract premiums of less than £1,000
- Improving operational efficiency: A number of insurers have already selected e-trading as their preferred SME proposition due to gains in speed and efficiency when compared with insurers’ own legacy extranet sites. The process of multiple keying on the broker side is far more cumbersome and fraught with a greater risk of error.
Adrian Coupland, Head of Data Strategy for SSP said:
“There are many myths and misconceptions about integrated commercial lines e-trading, which can deter insurers from adopting the integrated e-trading systems. In trying to separate the facts from the fiction, we hope to demonstrate the opportunities e-trading can bring across the commercial lines industry, enabling insurers and brokers to maintain a competitive advantage.
It’s important that insurers don’t get left behind. 19 of the top 25 insurers in the UK provide commercial lines insurance in the micro and SME sectors of the market and 14 of these have delivered or will deliver new e-trading solutions to the market in the next 12 months. We have also seen some insurers starting to combine their personal and commercial lines businesses on e-trading platforms to maximise synergies. This means medium and smaller sized insurers and MGAs need to react quickly to keep pace with these developments.”
