The UK and global economies are currently grappling with unprecedented inflation rates. Interestingly, the insurance market had a precursor to this trend, with premiums soaring as the world emerged from lockdown.
InsurTech company Novidea has explored how brokers can demonstrate their value during a tough market.
It stated that the the increase in premiums may be a necessary adjustment following years of underpricing. However, it inevitably places brokers under immense strain. In the face of a hard market, brokers must emphasise their value in an environment increasingly sceptical of intermediaries.
With premiums on the rise alongside inflation, clients are seeking to curb expenditures. This situation raises the question, how can brokers augment their value proposition to clients, and more importantly, how can they validate it?
In January of the previous year, the Financial Conduct Authority’s (FCA) general insurance pricing reform took effect. The repercussions of this move are more expansive than many anticipated. Nevertheless, the mandate for all stakeholders in the value chain, including brokers, to demonstrate they are offering fair value to customers, can be seen as a potential advantage.
In a hardened market, brokers who can validate their value have the upper hand. As they are now compelled to do this for regulatory purposes as well, the issue becomes how they can achieve this. The solution may lie in the strategic use of technology.
Broker schemes, which often provide customised cover for specific demographics, are now under scrutiny. Schemes must substantiate that all policyholders are obtaining fair value. In the same vein, each new client policy now requires a marketing approach akin to new business. This shift is a novel concept for many brokers and intensifies the administrative demands associated with each client.
Though FCA rules may seem burdensome, placing more regulatory weight on brokers and requiring extensive reporting and data processing, they also present an opportunity. Brokers with a future-focused mindset can capitalise on this situation, or risk facing escalating costs of compliance.
By employing an end-to-end, cloud-based platform, brokers can dramatically cut costs over time. Additionally, this allows brokers to substantiate their value to clients, an essential characteristic in a tough market.
It explaianed that by adopting an all-encompassing software platform can minimise manual processing associated with reporting. The platform can automatically capture data, provide real-time insights, and simplify the creation of customised reports for each client account. This assists brokers in tracking, reporting, and justifying their remuneration by providing tangible evidence of the time and effort invested in serving client needs.
Just as leaner and fitter lions have the advantage when prey is scarce on the east African savannah, businesses that are efficient and agile succeed in a hard market. A modern cloud-based system facilitates such efficiency for brokers. It minimises rekeying, automates routine tasks, and captures metadata, providing valuable insights for users.
By adopting cloud-native, data-driven insurance platforms like Novidea’s Insurance Management Platform, brokers can obtain a comprehensive view of their customers and other stakeholders. Full integration between customer-facing policy transactions and the middle- and back-office operations are enabled, leading to more valuable insights from customer and policy data.
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