Platform technology lowers the cost for insurance distribution. Platforms enable Real-Time collaboration, reduce inefficiency and improve service delivery. The platform is a cloud native shared platform underpinned by robust automation for all stakeholders in the insurance distribution vertical.
The shared platform should not be confused with a cloud version of a Policy Administration System or Broker Management System that can be called a platform. An ecosystem platform combines elements of many systems as well as automation to foster collaboration and Real-Time communication between industry vertical stakeholders.
Platforms can instantly transform insurers, mgas and insurance brokers into Real-Time collaborators able to deliver incredible service improvements to the insurance buying experience. Even more, platform technology can do so, while reducing expenses for both insurers and insurance brokers. This is something the industry desperately needs today to avoid becoming less relevant in the future.
Insurance stakeholders won’t see major savings until investment is redirected into more meaningful projects like platforms
There is significant investment in both new Insurtechs and by incumbent insurers, agents and brokers in distribution technology. Where is this investment going and what is it doing: creating new customer growth, increasing profit margins and profitability or better customer experiences? Or at least opportunities for such innovations?
A glance at the consolidated acquisition expense ratio is a good gauge to assess past and present insurance industry distribution efficiency. The consolidated industry acquisition expense ratios as reported by OSFI (Canada) shows that there has been little change in the past 10 years. The trend is slightly upward (not good). The short analysis is that industry innovation efforts have not had an overall positive effect on collective distribution expenses.
Platforms democratize savings for smaller insurers without the capital for a technology arms race
One could argue, why care about the industry if we are taking care of our own efficiency? This should be a wake up call to smaller insurers, in particular, a recent article in Carrier Management observes that smaller regional insurers can’t win “Tech Arms Race Favors Giant Commercial Carriers“. Platform collaboration will do more for the industry because insurance isn’t done in a vacuum. Direct writers still work with reinsurers and customers. Brokers and agents work with customers and multiple carriers who, in turn, work with multiple reinsurers. Success will be best achieved when a larger complementary set of stakeholders are prepared to participate in innovation.
If you want to see a demonstration of an insurance ecosystem platform, click here.