All aboard: A smoother journey for commercial insurance onboarding

In particular, AI and cyber developments are causing emerging risks that many businesses are not adequately covered against. Client exposure is changing and more is expected from the insurance products purchased by commercial customers. Many companies have diversified their operations and income streams due to the pandemic and the current economic climate, creating challenges for brokers to ensure all their customers’ business activities have adequate insurance cover.

Underinsurance is seen as a significant risk: 44% of survey respondents stated their belief that insurable assets are undervalued by business owners by between 10% and 24%.

Commercial clients face huge cost pressures in their businesses with rising energy bills, staff and materials expenses. This is encouraging more firms to shop around, reduce cover and cut back on non-compulsory insurance products to lower their insurance costs.

The ability to engage, assess, advise on risk and price accurately is vital to remain competitive in today’s commercial insurance market. Brokers need to know as much as possible about their commercial clients if they want to add value in the face of these challenges. Insurers need absolute clarity around the risk they are pricing to offer competitive premiums and fit-for-purpose cover.

Another consideration is the FCA’s Consumer Duty regulation, which came into force on 31 July 2023, requiring that customers are provided with products and services that meet their needs and offer fair value. While the Duty does not apply to contracts of large risk, some commercial customers are included in the retail customer category, and must be carefully considered when providing commercial insurance.

Insurers and brokers have many similar needs and challenges when onboarding new commercial business. Survey respondents rated the length of time taken for the overall onboarding process as their top challenge (51.5%), followed closely by the ability to source relevant data to assess risk profiles (45.6%). Catching fraudulent activity early in the process also featured (27.9%).

With many different touchpoints and dependencies, the process of onboarding a new customer is often overly complex and slow. Insurers and brokers reported their top priorities for improving the onboarding process as the ability to create a frictionless journey, achieving streamlined automation between brokers and insurers, realising efficiencies through data pre-population and using automated and digital ID verification to speed up proving client identity.

Onboarding is the time to set clear expectations for the customer and introduce a strong level of engagement. Creating a simple digital journey with ease of collaboration and interaction between insurers and brokers is key to achieving fast and seamless onboarding. Firms can optimise this first contact with new customers by leveraging in-house and external open-source data, and taking advantage of the opportunity presented by powerful, real-time open banking data.

In this way, duplicated information requests can be avoided and, by pre-populating data, there is less reliance on error-prone manual data input. The result? A more friction-free process.

It is now possible to onboard new customers in a digital webex environment where users can upload documents, securely and robustly verify identity, conduct rigorous credit, anti-fraud and anti-money laundering checks, qualify company solvency – reported as the top criteria requiring additional validation checks – and digitally sign documents. The savings in time and operational costs for commercial insurers and brokers are significant and, coupled with an enhanced customer experience, can deliver real competitive advantage.

When underwriting commercial business risks, access to previous claims history was ranked as the most important factor, followed by industry, location and company solvency. These data streams can all be accessible in a digital onboarding solution. This comprehensive ‘one-stop shop’ digital approach provides a clear view of the customer’s business, where the emerging challenges of business diversification and the risk of undervaluing insurable assets also become easier to identify. This means the broker can provide the correct advice, the customer can make informed decisions and the insurer can quote for the right level of cover.

It is concerning that 69.1% of brokers and insurers reported they were only ‘slightly confident’ in the data they check as part of their current onboarding process. 

Many are using unstructured searches via multiple sources of data and are forced to repeat validation checks, which makes the process incredibly inefficient.

Surprisingly, Open Banking was not widely recognised as a valuable means of data verification.

The number of consumers and SMEs actively using open banking-powered services in the UK has reached 7 million.

This is predominantly in the online banking and personal finance sectors. The insurance industry has, by contrast, been slower to embrace this innovation to enhance its own services. Solutions are available from AISP-certified organisations that enable access to and sharing of open banking data and SME customer profiles with insurers and their broker partners.

The process is regulated and subject to SME consent, achieved through a tangible value exchange. Open Banking data can deliver a deep understanding of the behaviours of commercial customers through real-time data and insights. The data held by Companies House is up to 12 months old, and in the current economic climate, much can happen in that space of time. Conversely, Open Banking data, because it is real-time, provides clear insight into the current financial activity and stability of the business.

As noted in the survey, many businesses are facing cost pressures due to the macroeconomic environment, resulting in price sensitivity and a demand to only buy specifically what is required.

As well helping to accurately validate customer information, Open Banking data enables brokers and insurers to better understand the customer’s business status, evolving insurance requirements and emerging risks and to operate dynamically and proactively to demonstrate value and create a sustainable, long-term relationship.

Commercial customers are getting used to more powerful digital experiences elsewhere in their business which they expect their insurers to match. Open Banking data can help insurers and brokers to rebuild trust and value in the insurance proposition, using real-time data to deliver the best customer experience and a highly tailored solution. Combining this enriched data with a digital onboarding experience delivers a market-leading customer experience, reduces costs, increases efficiencies and creates synergies between insurers and their broker partners.

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