We're 'not in 1995 anymore' - digital distribution is here to stay and offers opportunities for growth, specialization

By Erin Ayers, Front Page News

Digital distribution is here to stay in insurance, but it will be up to the humans of the insurance world to effectively use technology to reduce friction, make the buying experience more pleasant, and free up brokers to do what they do best: help clients understand and transfer risk.

That was the message of the “View from the Top” panel at Zywave’s inaugural Digital Distribution Insights Conference in New York City on Sept. 9, with industry leaders opining on the intended goals of digital distribution.

“We’re trying make clients feel like they’re not in 1995 anymore,” said Kenneth Slattery, national broking leader for NFP. “We’re not using fax machines. We’re trying to deliver a better product to these clients in the way we capture and harness their data and how we deliver that to the carriers.”

It’s not just inputting details into AI, he added, but rather “adding context” to information and streamlining the process.

“It’s giving brokers and colleagues the opportunity to go out and broker because they’re not spending time cleansing data, reviewing apps taking a handwritten supplement and putting it into a PDF. They’re spending time talking to markets and really analyzing the risk that’s in front of them,” said Slattery.

Tom Ruggieri, CEO of XPT Holdings, agreed, commenting, “We have to be able to push information to our clients as well as consume information from our clients … That sets the efficiency level so our people are freed up to add the expertise … [then] you can apply analytics to understand the business better and create new product.”

Marya Propis, executive vice president of retail distribution for RT Specialty, emphasized the continued need for human interaction, pairing “digital trading and very talented humans.”

“The human-led interactions combined in an integrated way with trading digitally, where it meets the retailer’s appetite for trading, is the not-so-secret sauce,” said Propis.

Ruggieri recommended staying open to a blend of different technologies and finding out the best fit for each use case.

“We’re all still learning and there’s no way to pre-agree what’s going to work and what’s not going to work in the space, and I think that flexibility is important,” he said, adding later during the discussion, “Nobody’s going to dominate this industry with a single platform that we all have to log into. We’ve seen the industry waste a billion dollars trying to do that and they all failed. We have to be nimble in applying the versatile technologies that are out there.”

Propis agreed, commenting that many of the new technologies flooding into the market can be too one-dimensional and focused on solving just one element of friction.

“I wish they would leverage more of the available technology,” she said, adding, “Where you integrate the human side of our business and it becomes leveraging of technology and a platform combined with customer experience and real underwriting acumen -- that’s where I think we’re still always going to have an advantage.”

According to Ruggieri, the “flexible technology” of AI promises to meet many of the industry’s long-term goals “across the spectrum of what we do” from finding clients, claims, data intake, developing products, loss inspections, and more.

“We’re in the first inning of AI,” he said, adding, “Worry about applying AI because that’s the opportunity and it’s in front of us. It’s a race. It’s going to be a marathon and a sprint.”

Data ownership and analysis

James Riviezzo, head of North American distribution and strategy for Resilience and moderator of the panel, queried the group on the “lifeblood” of the industry-buyer relationship and a prominent focus of digital distribution: Data. Who owns it?

“The client owns that data. It’s their business, and it’s their exposures,” Slattery asserted. “And ultimately the brokers have to earn the right to be the trusted steward and guardian of that data and deliver it to the appropriate carrier or MGA.”

“Our challenge is taking the data that used to be in file cabinets, or people’s brains, or in a submission and aggregating that so you can use it,” said Ruggieri, adding, “I think the industry should adopt an approach of sharing anonymized information. At the end of the day, it’s what we do with the information, the analytics we do in the marketplace and the creativity that we have – that’s the proprietary advantage and we as an industry will be more powerful if we share anonymized data.”

Along the theme of data, Propis highlighted the industry’s need to develop more capabilities around benchmarking, particularly for smaller commercial clients, integrated with coverage comparisons and price.

“We see a lot of those requests in our brokerage division for larger and complex risks. Why isn’t the small commercial client also entitled to the same type of benchmarking, showing what other insureds with similar risk and insurance needs, how they’re buying, the coverages they want, the limits they’re buying?” said Propis, adding, “That type of digitized enablement around benchmarking and comparative buying patterns could really be the way to go.”

Benchmarking for smaller clients is a “huge opportunity,” Slattery agreed.

“Allowing our small and middle market clients the same kind of risk and analyzers that the Fortune 500 companies have at their own disposal is a huge opportunity to sell more insurance and sell the correct insurance to the correct clients,” he said.

Propis also suggested digital tools may also be able to enhance retail brokers’ ability to sell effectively and track their clients throughout the market.

“Market segmentation is important, but so is industry specialization,” she said, adding, “That’s where you really can step into much more consultative, specialized selling, understanding the business needs of your client, not just the insurance needs.”

Slattery agreed, noting that NFP undertook an effort to integrate offices across the country onto one agency management system to manage its portfolio more effectively.

“The ability that we’re now able to say exactly how much premium we have with Chubb, Travelers, RT Specialty, at the click of a button is amazing,” he said. It also allows the broker to manage its portfolio and identify appropriate markets more easily.

Small commercial is an “extraordinarily viable” sector for the U.S. market, Propis explained.

“It’s tough, it’s challenging, it can be complex, but no doubt about it, it’s growing explosively,” she said. “If you want to grow your firm and you’re not playing in the micro, small, and personal lines segments, at least as a retailer or a wholesaler, I think that’s a little bit of a shortsighted strategy in terms of sustainability over the next decade and beyond.”

Managing Editor Erin Ayers can be reached at erin.ayers@zywave.com