The electronic revolution

Recent advances in technology have transformed the business world. Here, Kate Hughes takes a look at how the insurance industry can benefit

Even as recently as ten years ago, if you had mentioned e-business in a conversation, some people would have given you blank looks. Today, technology has changed the attitudes of consumers and the functions of financial services to such an extent that we can follow stock prices from a hand-held device in the middle of the Australian outback, after buying travel insurance while queuing for a taxi at the airport.

The effect of recent technological advances on the world of business has been widespread and profound. The London Stock Exchange, for example, has spent a fortune on technology over the years and is now, along with the City at large, reaping the rewards. Without such investment, there would not have been the creation of derivatives, swaps or hedge funds, to name but a few. The average trade is now virtually instantaneous and widely accessible, so that retail investors wield comparable power to those on the trading floors.

And then there’s Lloyd’s of London. Its famously archaic paper-based system just isn’t viable if it is to keep its status as the world’s leading specialist insurance market. Take this example: every single day, four tonnes of paper – such as contracts and claims reports – are ferried in a fleet of white vans to a processing centre on the outskirts of London. CEO Richard Ward is well aware of this and has pledged to modernise the centuries-old institution. One of his goals is to ensure that all claims are processed electronically by the end of this year.

Everyday innovation
For brokers, the electronic transformation has the potential to be revolutionary. On the ‘shop’ side, there is a strong argument for the high-profile use of new technology: clients see the latest hardware and software and assume that the broker is clued up on the latest thinking and has faster access to the latest deals.

But on a more tangible level, client-facing technology has had a very real effect. Peter Staddon, BIBA’s Head of Technical Services, says: “The industry has been using EDI [electronic data interchange] for some time to turn quotes around quickly, but we are now looking to use an increasing amount of online dealing.

“As standard, brokers are now talking to clients via email, then sending them information and even the policy documents in PDF format,” says Peter. “This means the client is reassured – they are far more aware of what they are buying in advance and can receive the official documents immediately.”

Online advantages
On the surface, technology is about smarter, faster and more comprehensive communication for brokers, both for front-of-house operations and behind the scenes. But it is arguably in the realm of the back office that new developments have really come into their own.

For starters, switching to doing business online can reduce error rates – for example, on new business applications – by an average of 35 per cent in many cases. It is also widely acknowledged to have a hugely positive effect on costs and administrative time.

Specifically, by using intelligent software, with real-time integration to provider systems, brokers can improve the service they provide clients.

Above all, using a ‘straight-through’ processing model – integrating technology with a solid business process in a completely joined-up way – can help brokers compare information very quickly, from conversion rates to providing greater knowledge of payments and claims analysis.

With good data management, a back office system should be able to store the data and hold it in an easily accessible format – one that makes identifying trends a matter of clicking a mouse. It means that brokers can identify more opportunities in the market and cross-sell to their existing client base.

“Technology is now an essential and positive part of business life,” says Tim Eadon, Chairman of the Personal Finance Society. “Not only does it allow brokers to be more efficient in meeting the needs of their clients, it also offers opportunities for innovation in how business is conducted.”

Technology isn’t a panacea, however – it is merely a catalyst. Running a bricks-and-mortar business well and running an e-business well require exactly the same skills and talents. E-volution is not about replacing a person with a whizzy gizmo, it is about technology making that person’s life easier. In other words, you are not technology’s slave – it is yours.

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