'Insurance intermediaries should invest in digitalization'

12 March 2024 Consultancy.eu 3 min. read

Intermediaries (or brokers) play a key role in ensuring that businesses and individuals can seamlessly access the insurance services of large insurers. A discussion with Jan-Pieter van der Helm and Stephan de Jong from IG&H on the growing importance of digitalization for operations and a competitive edge.

What trends do you see in the intermediary market?

Jan-Pieter: As in many sectors, digitalization plays a hugely important role in the intermediary channel. It affects various aspects of their DNA, such as the customer experience (personal, digital self-service available 24/7), the proposition (product, pricing, services), the processes (AI, robotization) and optimizing the chain between insurer, intermediary and customer.

To keep up with this, making strategic decisions is crucial. In recent years, creating scale to make the necessary investments in digitalization has been a popular choice. This is one of the drivers behind the waves of consolidation.

Jan-Pieter van der Helm and Stephan de Jong from IG&H

Is digitalization the answer to everything?

Stephan: No, definitely not. But it is crucial to stay relevant and successful in this fast-changing market. We see many parties struggling with this issue because of the rapidly growing business and acquisitions that make their IT landscape more complex and systems that are no longer future-proof.

Many players make an important omission; there is often a lack of a clear business strategy which should be translated into an IT strategy. As a result, they make choices that seem useful in the short term but amplify problems in the longer term. Another important aspect of a successful digitalization journey is for the management to explain it to the employees. If this doesn’t happen or is only done partially, we see the execution staggers, sometimes resulting in outright failure.

What are the most important issues intermediaries need answers to?

Jan-Pieter: We see roughly five fundamental questions surfacing, often still without a satisfying answer. First: What type of customers am I targeting and with which products and services? Second: How do I become really good at this, far better than my main competitors?

Third: Which operating model and IT landscape will help me to achieve this sustainably? Fourth: What choices do I have to make now and what is the resulting impact? Fifth: What (business & IT) roadmap and investment calendar does this lead to?

Stephan: Indeed, many organizations struggle to answer most of these questions. Technology can help with some of these answers and must truly serve and improve the business. For instance, in an intermediary’s IT architecture, the mid office can be the orchestrator for intelligence and connectivity. The back office can act as a stable ‘system of records’. The front office should be able to cater to the various target groups; it should be flexible and work across all devices.

At IG&H, for example, we incorporated this into administration software and further developed it into the AllVida Insurance Solution for non-life and income insurance.

How does this combination help the insurance sector?
: It can fundamentally accelerate the digitalization agenda of the players in the sector. Connecting business and IT from a clear strategy perspective with state-of-the-art technology solutions will allow the customer, the insurer and the intermediary to seize the trend of increasing in scale.

Stephan: The sector is searching for a digitalization accelerator. One thing we know for sure: Change never went so fast, but it will never go this slow either. Speeding up digitalization in the sector will allow these companies to focus on innovation.