At Polaris, we look forward to the Insurance Times eTrading Survey each year as a good barometer of the state of digital trading in the Commercial market – and a roadmap for action.
Our head of imarket, Simon Bloomfield shares his top four take-outs from this year’s survey.
It has long been the case in distribution that there is a trade-off between speed (service in insurance terminology), quality (product coverage) and price. It is realistic to aim for two, not so much for all three. So for instance if you want great service and product the price is unlikely to be the cheapest, while a great price might come at the expense of service and/or product depth.
What I see in the eTrading survey – and across the wider media – is insurers doubling down on service, reducing referrals, and responding quicker. That’s a great outcome for both the broker and their customers.
What’s particularly fascinating this year is how that’s playing out with referrals, where speed of response has historically been a concern for brokers. But it looks like the gap between broker expectations and service-delivery reality is closing. In the graphs below we can see the blue and orange lines tracking closely for simple referrals, and for complex referrals the market appears to be exceeding brokers’ expectations.
Source: Insurance Times eTrading Survey 2024
This can be read in two ways. Either insurers have upped their game and are now meeting or exceeding brokers expectations, or, less charitably, brokers have become conditioned to historic service levels and reduced their expectations. I would tend to take the more positive view, backed by what we are seeing for the six insurers that we support with our Live-Chat solution on Commercial platforms (broker systems and extranets), where chat volumes are up 25% on last year – reaching 25,000 chats every month.
Does that mean we can expect insurers to rest on their laurels and dial down their focus on service? I’m guessing not, as in digital trading this seems to be the current battleground. But as I’m sure those insurers who ranked highly in the eTrading Survey will testify, investment in service levels will mean that other areas will be being impacted – especially price.
It is always worth paying attention to what brokers say in the survey about their use of extranets and/or SWHs. imarket can be used to support insurer extranets, but it is typically used by insurers to get their products into SWHs, so it’s good to understand what is reinforcing or blocking those choices.
Reasons Brokers use Extranets:
Source: Insurance Times eTrading Survey 2024
Reasons Brokers use SWHs:
Source: Insurance Times eTrading Survey 2024
The 2024 numbers haven’t changed dramatically since 2022, but there are a few areas where the variation is more than 2% (up or down).
Ease of Use, is still the most cited reason for using extranets, but has reduced from 52% to 46% in two years. It is unlikely that extranets have gotten harder, but it could well be that broker expectations in this area have risen. The biggest change in extranets is the broker belief that they will get a better price on extranets than SWHs. This rose from 23% in 2022 to 28% in 2024. I suspect this is more perception that reality, as to my knowledge insurers typically use the same rating engine to service both channels, with price differentials being mostly down to modified question sets being used on their own extranet against the standardised questions, that the Polaris Standards help to create, on broker systems servicing multiple insurers.
On SWHs, its good to see that ability to easily compare has risen 3% from 64% to 67% over the last 2 years, perhaps reflecting the additional products that have become available on broker systems from different insurers, including a number of imarket insurers, over that period. Only needing to key in risk data once has also risen as a reason for use, from 54% to 57% over this period.
The one that has taken a dramatic leap during that period is one process for staff training which has risen from 26% to 35%. Given the increased regulatory focus necessitating a more rigorous training regime for brokers, it is easy to understand why this is seen as an increased benefit and is likely to be an area where we will continue to see rises in future years.
This is another survey area to pay close attention to, because it potentially flags places where a Standard may be required to be created, or updated, to support insurers and increasingly MGAs to deploy into broker systems.
The graph below shows the products from the verbatims in the survey where at least ten respondents requested it:
Source: Insurance Times eTrading Survey 2024
The top four all featured last year, unsurprisingly, albeit in a different order, with Commercial Combined, Property Owners, Fleet/ Mini Fleet and Professional Indemnity being the most requested last year.
There is a cost for an insurer or MGA to deploy a product digitally, and therefore they must have some confidence that brokers will use it. So, it’s important that brokers vote with their keyboards regarding products they want – supporting those who make a commitment to deploy a product they want to their chosen platform.
With propositions from Broker Insights and Bravo Insights helping brokers to understand their book better, and understand the markets for different types of business, brokers (especially the larger broking groups and networks) have the tools to back up their requests with evidence.
I hope we see more of those insights being used to support digital product deployment with their partner insurers and MGAs over the coming years.
In imarket we have seen eTrading volumes increase from below 100k to over 500k in the last 10 years, as brokers and insurers adopt eTrading as a key part of their trading models.
For many package cases, like Property Owners and Tradespeople, digital trading has become the norm, with a relatively high degree of digital trading in the market and many insurers and MGAs making products available.
As insurers and brokers are increasingly prepared to digitally trade more complex business, I would expect to see more complex products coming to market over the next few years. This will potentially mean a higher referral level becomes an increasing necessity to ensure a risk is properly underwritten and both insurers and brokers ensure they have contract certainty.
But, there is a benefit to high referral policies to both brokers and insurers. For insurers a risk will be presented to them book rated to enable them to vary the terms based on the customers’ specific circumstances and thereafter the risk could be automated for future transactions, making this a more operationally efficient way of trading with a broker.
For the broker they benefit from an insurer’s referral process, which you would expect to be quicker than a manually traded response. Equally, they will also see speed and efficiency benefits from the higher automation thereafter.
With £35bn of commercial business in the UK market and probably no more than 10-15% being currently eTraded, there is plenty still to go for.
Permission has been given to Polaris to publish this article.
Read the story on Insurance Times here
