What future role will brokers have within insurance marketplaces?

by Joe Bayley

Every year, dozens of eager startups emerge to ‘reinvent’ the insurance marketplace, believing that a direct-to-consumer model will eventually displace brokers. And for good reason. The Institute of International Finance recently observed that “customers, particularly Millennials, now expect on-demand, high-touch, and rapidly services focused on user experience.”

But despite these trends, many buyers, especially small to medium sized businesses, continue to rely on brokers. According to industry sources, direct technologies have had difficulty penetrating insurance markets, particularly commercial markets. Brokers will likely remain key to insurance marketplaces for years to come, with technology facilitating their activities rather than replacing them.

Given that, we used Alpha’s on-demand user insights platform to go directly to brokers and decision-makers in SMB insurance marketplaces, and evaluate opportunities for technologies to improve key workflows and experiences. You can read the full report here.

The wants and needs of the market

To begin, we surveyed brokers about their pain points around quoting and origination. Overall, brokers primarily complained about the inefficient and time-consuming process to input client information. This in turn, led to a slower turnaround time in generating quotes for clients.

We asked brokers about how they’d improve workflows and tools and received numerous ideas. We’ve included some of the most interesting below:

“Fast generating quotes > After acceptance of offer, e-signatures allowed for clients to sign required documents > Easy access to insurance certificates”

“Make everything online and available to me through websites. I want to be able to quote when I am right in front of the client and secure prices and enroll as soon as the premium is agreed on as to not waste time or give the decision maker time to go back on their word or not answer a follow up call and never get the policies.”

“Encourage digital self service for quotes, and only strong interest leads come through to me.”

Additionally, brokers indicated that there are no streamlined systems for inputting client information when generating quotes, which results in brokers having to redundantly input client information for each insurance carrier.

A market for the marketplace

After the initial phase of customer discovery, we began prototyping potential solutions. Even though our focus was on building tools for brokers, our first concept, which you can click through here, is a direct-to-consumer insurance marketplace.

Business owners reacted positively to the idea of a “one-stop-shop” for insurance shopping and more specifically, comparing insurance options. In fact, 71% of small business owners we surveyed indicated that it was the most useful feature of the marketplace prototype.

One SMB owner remarked: “I like the idea of a hub where you can put in select information and compare rates from several different insurance companies. I do have some reservations about how accurate the rates are or whether or not the site aggregates every possible option, as opposed to just showing companies that are working with them.”

Additionally, over 50% of business owners indicated that they were either likely or somewhat likely to use the product.

We then tested the same marketplace prototype with insurance brokers in order to see how it could affect their workflow. Brokers indicated that the functionality of the prototype would cut down on time spent sourcing information from each carrier individually and then putting a comparison together for clients.

Although brokers responded positively to the prototype, they felt that the most value would come in the form of an internal-facing tool (rather than client-facing). Such a platform would need to enable them to collect and process client information and compare regional insurance companies and rates.

Brokering a compromise

With the second round of user insights, we iterated on the initial prototype to develop a platform for brokers. The new prototype featured the ability for brokers to manage their clients, policies, and invoices.

From an aesthetic perspective, brokers enjoyed that the prototype was easy to use and would be quick to learn for new brokers with fewer clients. Respondents outlined that the best use case for such a platform would be for managing day-to-day processes and tracking status of outstanding policy proposals.

In order to do a gut check with SMB owners, we simultaneously revised the initial prototype, adjusting the concept, experience, and terminology to better focus on the types of insurance that SMB owners purchase. Most indicators rose, as respondents confirmed that the prototype met their needs better than the previous iteration.

Reacting to the changing needs of the marketplace

Experimentation is a continuous and iterative process. Combining insights from the above tests and from conversations with global insurance organizations that we work with, we prototyped two additional solutions for SMB owners and brokers. Both are designed to accelerate key workflows and enable users to evaluate information side-by-side.

Joe Bayley

Joe partners with complex product organizations at UnitedHealth, Aetna, and Liberty Mutual to provide them meaningful insights and actionable data, throughout the product development cycle.