The modern insurance broker and the impact of COVID-19 – Interview with Hanno van Aarde
This interview with our founder and joint CEO Hanno van Aarde is about the challenges that brokers face in the digital age and solutions to bring about digital transformation. We are especially looking at how due to the COVID-19 pandemic and the ensuing lockdowns the modern insurance broker has to find digital ways of how to sell insurance.
With worldwide COVID-19 lockdowns the business of insurers and especially the insurance broker, many of whom sell face-to-face, has been affected severely.
Hanno, in your opinion, what is the impact of COVID-19 on brokers?
The impact is particularly strong in sales: With the lockdowns of COVID-19, from one day to the other, they couldn’t have physical meetings with their customers anymore and didn’t have workflows in place to support digital distribution. Many of the processes of brokers are manual. So you would see agents – or point of sale persons, how we call them, working the field with manual forms. They would then bring the manual forms to the office where they would enter the consumer data into legacy systems. In some markets, like the US and Hong Kong, the regulation even requires physical signatures.
Moreover, the requirement to work on-site due to outdated infrastructure is also a huge challenge for brokers. These legacy systems are not only old, but also slow and costly. As a result, we are seeing low productivity levels with brokers, especially in emerging markets such as India, Africa and Asia.
The insurance industry has arguably lagged in comparison with other industries in terms of its digital journey. What can you say about the digital journey of the insurance industry?
To put it simply: Customers expect to buy their insurance online by now. Academics refer to the point of mass adoption as the tipping point – the stage of development beyond which there is no going back and when all customers expect to buy insurance online. This was famously explained in Malcolm Gladwell’s book The Tipping Point: “The tipping point is that magic moment when an idea, trend, or social behavior crosses a threshold, tips, and spreads like wildfire. Unquestionably, the 2020 crisis will accelerate the world to the tipping point for digital adoption, as illustrated by the digital insurer:
Insurers and brokers have to act now and digitise their business in order to meet customer expectations and avoid InsurTechs chowing up their customer base and revenues.
If you could give advice on how to successfully digitise, what would that be?
McKinsey did a great research on this that I like to refer to. They summed up ten guiding principles of digital transformation, structured in three phases:
Stage 1: There has to be a clear value defined, the management has to be committed and targets have to be set. The right mindset is key.
Stage 2: Launch and acceleration – you need a great lighthouse project. A lighthouse project is a short-term, well-defined, measurable project that can pave the way for other similar projects within the broader digital transformation initiatives.
Stage 3, the last stage, is to scale up based on the successes, learnings and also failures of the first projects, applying Lean Startup methodologies such as Build-Measure-Learn. Eric Ries pioneered the idea of Build–Measure–Learn in his book, “The Lean Startup.” It is a learning and feedback loop for establishing how effective a product, service or idea is, and doing this as quickly and cheaply as possible.
From your experience, which challenges do Briisk’s clients face when driving digital transformation forward?
When driving digital transformation forward we are seeing that change always comes with a “Who moved my cheese” mindset. Once, the original cheese – in this case revenue – starts disappearing, there will be people that will very quickly “put on their jogging shoes” and move on to a new approach and another set of people for whom it won’t be that easy and who will wait for “the same cheese” to be presented to them on a silver platter. As Spencer Johnson explains in his classic book about change management “Who Moved my cheese?”:
We are also seeing low levels of digital skills and an understanding of operating models. For instance, just putting existing products on to a digital consumer front-end won’t sell insurance. You have to create unique and competitive insurance products due to increased transparency online and you have to build strong brands online and apply online advertising budgets to attracting consumers to your website to achieve conversion.
So how do you digitise in practice? How does Briisk solve these challenges and drive digital disruption?
At Briisk we have a Broker solution where the Broker is in the centre – connected to Insurers, Distribution and Customers via the Briisk Instant Transaction Platform or Briisk ITP.
Simply digitise & distribute Insurance with Briisk
Automate the complete insurance value chain, at a lower cost and higher speed than legacy systems with the Briisk ITP.
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