Chapter 8: Technology & Brokerage Operations

Question 1

What does effective utilization of technology allow brokers to do? (5)

Answer 1

1. Improve client service levels
2. Store information safely and conveniently
3. Reduce operating costs
4. Handle larger volumes of work
5. Lessen likelihood of human error

Question 2

How does technology help brokerages enhance profitability?

Answer 2

Technology can result in reductions in labour cost as a percentage of total revenue.

Question 3

How does technology help with building client relationships?

Answer 3

Marketing effectiveness is significantly improved through faster turnaround times for responses to clients.

Question 4

How does technology improve the effectiveness of a brokerage? (3)

Answer 4

1. Reduces administrative workload, allows production members to prioritize selling insurance and serving clients.
2. The standardization of office procedures can drastically improve brokerage effectiveness.
3. Allows for better coordination regarding follow-up activities, and potential E&O will be reduced.

Question 5

What will an effective client file database provide to a brokerage?

Answer 5

A backbone for any & all client information that has been processed by the brokerage. The system would enable easy retrieval of:
- Past quotes
- Current active files
- Closed files
- Accounting information
- Client contact activity
- Abeyance process
- Renewal dates
- Claims information
- Business analysis information (for commercial-lines)
- Sales management reports

Question 6

What is product management in broker management systems?

Answer 6

Technology that allows for the harmonized quotation, proposal, and issuance of policies. This pertains to new business, renewals, and policy changes. The quotation process’ speed and accuracy is important in the brokerage’s mission to maximize client satisfaction.

Question 7

What is a technology that can be applied to assist a brokerage with administrative tasks?

Answer 7

Client database management software, spreadsheets, and word processors.

Question 8

What are the phases of a technology action plan? (3)

Answer 8

1. Understanding needs - analyzing current business situation, projecting the future.
2. Developing criteria to evaluate technology - reporting capabilities, capacity, support & training, cost.
3. Implementation - support from management/leadership is essential, contingency plan should be developed to tackle unforeseen problems.
4. Maximization - after an initial implementation period, utilizing technologies to their full potentials is important (estimated that brokerages typically utilize only 40% of their systems’ capacities.

Question 9

What advantages are there to having electronic data interfaces for brokerage and insurer communications?

Answer 9

• Ability to track client activities
• Reduction in work duplications
• Reduction in mailing costs
• Improved communications and working relationships
• Less manpower associated with processing insurance transactions/requests
• Single-data entry
• Faster turnaround from quote request to policy issuance
• Permanent record of communications and transactions

Question 10

What is a single-entry interface?

Answer 10

An obsolete system that involves batching together information inputs before being transmitted to the insurance companies for processing. While there are a few advantages to such a system (eg. standardized/fewer errors, reduced training costs/times), there are a number of disadvantages in terms of turnaround time on requests and quotes.

Question 11

What is a disadvantage to having an interactive interface?

Answer 11

Ongoing training and training costs would be required in order to keep up to date with system and product changes made by the insurance company.

Question 12

What are the advantages of having an interactive interface? (4)

Answer 12

1. Little additional investment by the insurance company to extend the platform to many brokerages.
2. Insurers are able to make changes to existing products, features, or introduce new products without having to depend on update timelines from brokerage technology vendors.
3. Enables brokerages to access portions of the insurer’s database in a seamless manner, allowing brokerages to provide better client service.
4. Insurance companies can automatically detect incorrect entries made by brokers, swiftly avoiding many E&O scenarios.