The recent Advisory Services Research published by isolved paints a fascinating and revealing picture of industries in a state of rapid change. Whether those advisory services are being offered by banks, financial advisors or accounting businesses, the pressure to deliver more value, more fully, is clearly visible in the responses. However, it is perhaps the insurance broker industry that is facing the greatest pressure to adapt most rapidly.
Brokers often support the insurance advisory needs of small- and medium-sized businesses, in many cases their clients having less than 200-300 employees. Yet as these businesses themselves come under increasing pressure from relentlessly and rapidly changing employee expectations to an explosion in complexity for compliance and legislation, so they in turn are leaning more and more heavily on their broker partners for advice and support.
And many brokers are rising to the challenge.
While offering healthcare and other insurance services remains the core of many broker businesses, the more agile are offering a much broader set of products and consulting services to their clients. Brokers cite their clients’ biggest challenges, in order, as:
- Rising healthcare costs
- Maintaining compliance (tied)
- Keeping up with competitors (tied)
- Inadequate HCM technology
- Offering competitive benefits
- Recruiting and retaining top talent
- Improving employee experience
- Increasing employee expectations
- Managing challenges with benefits enrollment
As part of a recent 3Sixty Insights research project, I interviewed several very large insurance brokers to get their perspective on how their business is changing, why, and what the future looks like to address top client concerns.
Just as in the isolved Advisory Services Research, what was clear was that brokers are offering far more services at a more strategic level than ever before. Rather than simply relying on a more transactional relationship based on healthcare insurance, brokers are evolving to become part of the strategic planning process for their clients.
This growth in service offerings is driven by the need for brokers to respond to a greater degree of complexity in the demands of their clients, in order to offer products that both deliver more value to their clients and further cement their relationship to reduce the risk of losing a client to another service provider.
With the growth in complexity and the need to be more responsive to business issues, it’s no wonder then that investment in technology and technology-related services has become a clear and favored path by brokers to accelerate this evolving relationship with their own clients.
Often at the top of the list of technology to deliver both more strategic value and reduce business risk is HR technology, especially human capital management (HCM) platforms.
These platforms enable businesses to centralize functions such as payroll, workforce management, retention and so on, in one system. This centralization allows businesses to reduce risk and operational costs, and at the same time it allows their broker partners to more easily access accurate and clear information regarding employee-related risks
Rather than attempted to reconcile multiple sources of information in order to make business recommendations regarding operational and strategic decisions around insurance, risk management, and business efficiencies, HCM platforms enable brokers to work directly with their clients to build a complete, holistic view of every aspect of risk and opportunity.
This centralized capability to “see” into every aspect of the business is transformation for the broker and their relationship with the client, opening the door for the broker to continue to grow in their strategic advisory role.
Brokers are therefore investing heavily in their capability to offer advice and consulting on selecting HCM technology or actually helping clients implement and run these platforms. What makes this deeper connection most compelling for broker and client is that the analytic capabilities built into many HCM platforms enables brokers to offer prescriptive insights for their clients – insights that enable the client to avoid problems in the future and seize opportunities more rapidly as they arise.
Interestingly, as the Advisory Services Research also notes, while economic factors tend to sit at the top of the list of concerns for both broker and client (healthcare costs, economic uncertainty and so on) challenges around security, compliance, and competitive pressure make up many of the next tier of worries.
These are exactly the kinds of problems that HCM platforms are able to help address, centralizing and security employee data while presenting far easier management and reporting for compliance. Here, the connection between broker, client, and HCM platform delivers clear and compelling capabilities that benefit both sides.
Yet even as the landscape of employee expectations, legislative and compliance demands, and competitive dynamics continues to evolve, so do HCM platforms themselves.
Increasing investment in AI within HCM platforms is already presenting unique insights into operational efficiency and risk reduction. AI-enabled HCM platforms can automate and accelerate core processes like payroll, recruitment, retention, employee management, and of course benefits mix recommendation and management. Indeed, the isovled report indicates that 56% of brokers are actively investigating how to incorporate AI today in their offerings to clients. And they may be doing that by integrating AI-driven analytics for tailored employee benefits, which is what was identified as the top opportunity for brokerages over the next 12 months.
The relentless march of technical innovation, especially powered by the explosion of purpose-built AI tools, places further demands on brokers to stay ahead of the technology and risk-management needs of their clients, and at the same time presents a unique opportunity to further expand on the value they deliver, create strong differentiation to attract new customers, and deepen the relationship with existing clients.
In the end, such changes are beneficial to both client and broker, and given the energy and focus of brokers on investing in technology solutions, this is a trend that’s likely to continue for a very long time
