As brokers look to the new year, they can expect more consolidation and automation of processes, says Jason Liu, CEO of insurance broker software company Zywave.
In the past two years, the benefits space has seen acquisitions from big names like brokerage USI Insurance Services, which acquired Wells Fargo Insurance Services at the end of last year, and brokerage Brown & Brown, which acquired employee benefits consultancy Hays Companies in October. Zywave also struck a deal to acquire benefits consulting software company Code SixFour in October.
But it won’t stop there, Liu says. He anticipates there will be more consolidation on the horizon for both Zywave and the industry in 2019. Liu also says that there will be more of a need for brokers to adopt new technology to help streamline their client management.
Employee Benefit Adviser caught up with Liu to discuss these and other trends for brokers in the upcoming year.
EBA: What are some of the major trends you’re seeing moving forward for advisers?
Liu: In the health benefits world, there are a couple of major market shifts that are going on. First is in the producer world. In the past, producers could reply upon their book of business and be somewhat complacent, not having to pursue new customers. What we’re seeing is, the majority of their spend — both their IT spend and their resources — is focused on servicing existing customers.
The market is shifting; there’s a lot more change going on. Producers have to be much more focused on growing their business and adopting latest and greatest sales and marketing techniques. Adopting the latest technology is also important.
The other trend is the servicing of customers. It was historically done manually, and now there is a need to adopt best practices from an automation standpoint. Now with digital portals, you can automate the distribution of education content to your clients; you can also automatically enroll them from a benefits and administration standpoint, instead of doing it with paper. A lot of the backend carrier quoting process can now be increasingly done with automation. There’s a trend now toward automating your client management.
EBA: Do you think that brokers are doing a good enough job adopting new technologies?
Liu: We think it’s very early stages. There still needs to be more adoption and education. In the two areas — the trends of automation of the client delivery process and the movement toward growing your business and adopting latest sales techniques. I think we would argue there’s still a lot more adoption that’s required.
That is an area that is still very immature and needs to rapidly advance. I think in the automation world, there has been some more sophistication with the account management systems solutions, but there’s entirely far too many manual efforts going on that could be automated.
For example, we just acquired Code SixFour. The company builds out all steps of the engagement process with customers. [Code SixFour] automates presentations to customers, automates the building of proposals to customers and prospects, and automates the process of building quotes and pricing.
EBA: Did this focus on automation influence your decision to acquire Code SixFour?
Liu: Zywave bought Code SixFour to further the advancement of acquiring new customers and servicing their renewals from a selling perspective. Right now, the process is clearly manual and probably less sophisticated. So a broker might just have one presentation that they use to go visit a prospect. It doesn’t change based on a customer’s requirement, their vertical or business. And then when they do the proposal process is built from scratch. The quoting process is completely customized and when brokers have multiple sellers, the experience may differ based on the seller. We bought a solution that automates the whole process of customer presentation and also automates the proposal and quoting process.
EBA: Why should insurance brokers look to automate this process?
Liu: There are three benefits. The first is saving time — obviously having to build custom presentations, proposals and quoting can take a lot of time. The second one is building a much more professional look and feel. Instead of it being all handwritten on paper or built in Excel, you can create documents with professional formatting; you can pull in benchmarking information and have a much more professional experience. It allows you to have a much more consultative selling process. And the third is it allows brokers to have a consistent experience when you have multiple sellers.
EBA: What’s in store for Zywave moving into 2019?
Liu: It’s really three things. One is we’re trying to work with our partners to be much more customer-centric. We’re investing in customer relationships and increasing our customer success organization. That’s a big area of focus. The second big area of focus is in innovation; we’ve increased research and development by 30%. We’re going to be showing a lot more innovation, including things like artificial intelligence. The third area we are looking to increase is our M&A.
EBA: Are there any other trends you’re seeing in the benefits broker software space?
Liu: One thing that needs to happen is open platforms and open architecture. Too many software vendors in this space don’t want to work with each other. Ultimately, that creates a very difficult situation for brokers and producers because the tools don’t work with each other. They have to constantly reenter information in every different system.
EBA: Do you have any thoughts on how to achieve open architecture?
Liu: It’s the trend in the entire tech space. Quite honestly, part of it is cultural and part of it is technology. Culturally, [software companies] just need to understand that we’re not all competing. The word is ‘coopetition’ [a combination of cooperation and competition]. In every other software market I’ve been in, people understand coopetition. [For example], Google works with Microsoft, Microsoft works with Apple, Salesforce works with Microsoft. You have to learn to work together.
The other part is they need to open their technology with open API. With different platforms, you need to have built in an open API, an open system that allows technologies to interact better for different vendors.
EBA: Any other trends you’re seeing for brokers moving into 2019?
Liu: Consolidation certainly continues to be a huge trend in the marketplace. It’s not just the top 20 brokers consolidating, it’s now the top 100 consolidating. I think consolidation is gaining steam instead of losing steam. There are even bigger and bigger acquisitions happening.
This Q&A has been edited for length and clarity.
