Barriers to technology adoption

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Brokers face a variety of challenges to digitizing their business as technologies become increasingly sophisticated. But cultural influences are also at play, an expert says

AS ARTIFICIAL intelligence and other technologies evolve, so do the challenges to adoption. For insurance brokerages, factors like legacy systems, resource constraints and poor interoperability remain significant hurdles to adoption. But are internal factors also at play? At least one expert told Insurance Business that cultural resistance could be holding brokers back in the digital transformation journeys.

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“Once you get into [technology’s] complexities, some brokerages discover that they don’t have the skills to fully leverage it. The relationships they have with their providers then become very important”

Ben Legg, Open GI

“The cultural shift towards technology adoption can be challenging,” said Ben Legg, chief product officer at Open GI. “Many brokers are not naturally inclined towards technology and may struggle to envision its role in their business.” Open GI is a leading provider of insurance software in the UK. It has been in business for 40 years and works with major players in the brokerage community. Its heritage centres on policy administration systems, with a third of the market relying on Open GI’s platforms.

Sharing his observations from working with different organizations, Legg pointed to common hurdles in integrating new technology. Often, picking solutions from a shelf is the easiest part. “It’s easy to see a shiny piece of technology at an insurtech event and think, ‘That’s great. I want to use that,’ but there’s lots of process governance and education that needs to go into it,” said Legg. One of the first real challenges brokerages face is identifying alternative business models to create operational efficiencies.

“Some larger brokerages have built their business around large call centres. However, with the rise in operational costs outpacing premium growth, this model is no longer sustainable,” Legg said. “How do you adjust your business to suit the technology that you want to use?” Many brokers, notably in personal lines, start by automating their quoting and binding process, increasing their business by a hundredfold. “Instead of picking up the phone to create a new policy, customers can go online, enter all their details and completely digitize that workflow. That’s less volume in the call centre, much fewer human hands involved, lower risk and better performance,” said Legg.

However, expanding that digital capability to other processes, such as underwriting and claims, becomes more complex. “No single provider can provide you with all the tools you need to succeed. That’s not how the world works anymore,” said Legg. “Picking and choosing the right ones and linking them together is quite a skill. “I think there is an assumption that technology is relatively easy, but once you get into its complexities, some brokerages discover that they don’t have the skills to fully leverage it. The relationships they have with their providers then become very important.”

According to Legg, part of the cultural resistance is that traditional insurance brokerages aren’t inherently focused on technology, having grown their business through sound underwriting, distribution and branding. Pressures like inflation, higher operating costs and changes in consumer behaviour accelerated by the COVID-19 pandemic have become powerful motivators for brokers to invest in their digital capabilities. “I think the world’s moving faster than brokers are keeping up with,” Legg cautioned. “There needs to be a mindset shift.” How can brokers break through cultural barriers to technology? The Open GI leader advised them to “take more ownership of their business goals” rather than seek out specific software. “Technology providers understand their technology better than anyone else,” he said. “Brokers should focus on articulating what they want to achieve and allow their providers to propose solutions that align with those goals.”

At the same time, Legg acknowledged that the insurtech industry is still working through its own challenges, including improving interoperability between systems. He stressed that the technology providers must prioritize interoperability to keep pace with evolving consumer dynamics. API standardization, which enables easy connectivity and flexibility in integrating different technology solutions, will be critical to the industry’s growth. As one of the leading insurance technology providers in the UK, Open GI strongly advocates interoperability. Its latest broking platform, Mobius, was designed to be cloud-native, open and API-rich, allowing brokers to connect with existing software and systems seamlessly. “Our North Star is to empower brokers to write more and better-quality business,” Legg said. Ultimately, both brokers and technology providers must collaborate to drive better technology adoption. “The industry must prioritize interoperability to keep pace with evolving consumer dynamics, while brokers need to leverage partnerships and technology solutions to meet consumers’ changing needs,” Legg said.

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Published May 20, 2024

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“Brokers should focus on articulating what they want to achieve and allow their providers to propose solutions that align with those goals”

Ben Legg, Open GI

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Interoperability and collaboration: The keys to better adoption

Brokers lagging in digital skills

UK insurers

UK brokers

Personal-lines insurers leading in digital

Best-in-class tech giants

Employees with any digital and analytic skills, %

Source: McKinsey & Company

At 32 companies analyzed

Motivations for digital transformation

Improve customer / channel experience

Not a motivator at all

Somewhat of a motivator

Significant motivator

20%

40%

60%

80%

100%

Implement advanced data and analytics

Achieve process excellence

Increase process automation

Modernize workforce

23%

77%

41%

55%

47%

46%

16%

38%

58%

26%

16%

Source: Celent