Today’s digital innovations have significantly changed the Indian insurance landscape, this has not left behind the insurance broker market. The drastic changes due to digitalization have changed how brokers interact with insurance companies and their customers. The market is particularly driven by the integration of IT Solutions and Analytics.
As the role of insurance brokers in the country’s thriving insurance market remains significant, there is a huge opportunity for innovation and technological advancements. Nonetheless, insurance brokers today face several important challenges and the best possible solution for it comes from technology.
A good insurance broker software will not only help insurance brokers overcome the challenges, but it will also set them apart in the highly competitive market.
What Are the Challenges Faced by Insurance Brokers?
Although insurance brokers in India are thriving in the rapidly growing insurance sector (CAGR of 5.3% between 2019 and 2023), there are still many challenges to overcome. Some of the challenges faced by Insurance brokers include ever-evolving customer expectations, quote management, lack of clarity and increased competition.
1. Changing Customer Expectations
According to a study, increasing customer retention by 5% can increase profits from 25% to 95%. Yet, customer retention remains a major challenge for insurance brokers.
The principle of putting the customer at the center of everything is timeless but customer expectations are not. They are always evolving. For the longest time, customers have wanted an efficient, reliable, and friendly service from their insurance brokers.
However, access to technology has raised customer awareness very high, and with that, customer expectations have also risen. They expect insurance service to be 100% flawless and efficient, and they want the service to be not just friendly but personalized.
Additionally, customers quickly reset their expectations at new levels and demand the market to be met with them immediately.
2. Challenges with Quote Generation
A broker has to collect and gather data and relevant information, record it and validate it before generating quotes. This means the customer has to wait until the broker finishes the process and reverts. Traditionally, it will take anywhere between a few minutes to a few days to generate quotes. It may vary depending on the type of insurance, whatsoever it will take long enough to make the customers wait.
To keep up with customer demands and stand out from competitors, insurance brokers must ensure fast and accurate delivery of quotes.
3. Complications in Commission Management
Although commission management is not much talked about, it is still a challenging process for insurance brokers. Insurance brokers work with multiple insurance companies and each company provides its own commission policy.
Managing all of them together is a complicated undertaking. The processes can get further complicated when it comes to managing commission splits and sales incentives. Without a proper management system, keeping track of the policies can lead to confusion and errors.
4. Competition is Tough
The overall penetration for the insurance industry was over 4% percent in 2021 (3% life insurance & 1% non-life insurance). Given the penetration rate and the total number of insurance brokers in India (about 500), it is a highly competitive market. So, it is not surprising to see competition as an enormous challenge insurance brokers are facing.
5. Onboarding PoS Partners
Onboarding PoS partners is an elaborate and time-consuming process. Typically, it takes about a week to complete the entire process.
IRDAI introduced new regulations for PoS, to increase insurance penetration in the country. PoS hired by insurance brokers can sell insurance products with minimal underwriting, for multiple companies. Furthermore, IRDAI mandates due diligence of a prospective agent/ PoS to ensure a fraud-free work environment for the companies. These regulations can increase the time taken to onboard a partner and start selling insurance policies.
How Can a Good Insurance Broker Software Help Overcome these Challenges?
Insurance Broker Software are designed with these specific challenges in mind. For instance, several InsurTech companies provide software that bundles together components that are designed to help brokers with specific challenges in the industry.
Technology Keeps Up with Changing Customer Expectations
Insurance brokers who take their customer’s demands seriously and deliver them precisely will definitely stand out. They will also be rewarded with a better customer retention rate.
Brokers can leverage software that enhances the customer experience across many channels. By picking a software solution that comes with a pre-built customer-centric buyer journey, brokers can ensure that they are delivering the best for their customers.
Enhanced Quote Management
Many advanced insurance broker software solutions offer modules that enable instant quote generation.
Furthermore, commission management modules will help insurance brokers streamline the process and manage commission shares and even payment processes.
Quick & Smooth PoS Partners Onboarding
Solutions for insurance brokers automate the PoSP onboarding process and manage the channels. These solutions can bring down the time taken for onboarding from weeks to only a matter of hours.
In addition to making the process smoother and faster, these solutions can help insurance brokers adopting IRDAI guidelines.
What Else Can the Insurance Broker Software Help With?
Beyond instant quotes and commission management, high-quality insurance broker software comes with features that can drastically enhance operations.
It can improve the overall efficiency with modules that simplify PoSP onboarding & management, a user-friendly interface, and dashboards & reports that give a clearer picture. Plus, it can include regular feature upgrades to stay relevant in the ever-changing market.
Is it Better to Buy or Custom-Build the Software?
What’s next? Buying an insurance broker software or building one, which is better?
This is an inevitable question insurance brokers must face when they choose to invest in software to improve their business. So, here’s a quick comparison that will help decision-makers arrive at the right decision.
Building custom insurance broker software comes with many benefits such as tailor-made features and no hidden costs. Also, it will be built with the specific business requirements in mind, and nobody else in the industry will have an identical one.
Although it can be a good differentiator, custom-built software has higher upfront costs and requires a long time to implement and start using.
On the other hand, ready-made insurance broker software comes as a complete package that can integrate seamlessly with any core. It does not involve any development and testing as an external vendor will take care of everything from implementation to upgrades. Plus, the upfront cost will be far less.
For an insurance broker, deciding whether to invest in an out-of-the-box solution or custom software development remains quite a challenge. To get more insights on which approach is better, ‘build vs. buy,’ please click here. Nonetheless, there is no doubt that investing in a cutting-edge insurance broker software is essential.
There may be many challenges for insurance brokers, but Insurtechs has solutions for every single one of these challenges. From improving customer experience to drastically increasing efficiency.
Insurance brokers can explore their options and pick the software that is most suitable for their individual business needs and budget. Plus, brokers need to look for integration features that will help them expand their business in the future.