35 Years of Insurance Technology and Its Impact on Brokerage Operations

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May 29, 2024

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By

Greg Purdy

35 Years of Insurance Technology and Its Impact on Brokerage Operations

As someone deeply involved in the insurance industry for the past three-plus decades, I’ve witnessed the incredible transformation driven by technology. From basic digital tools, PCs, and dumb terminals to today’s more sophisticated solutions, the journey has been remarkable.

Thirty years ago, technology spending by insurance brokers was often less than 2% of revenue. The turn of the millennium brought the internet and more advanced software solutions. By the mid-2000s, technology spending had increased to 5-7% of revenue. The 2010s saw the rise of big data and analytics, with technology spending rising to 10-12% of revenue. Today, technology expenditures by insurance brokers are estimated at 15-20% of revenue.

Private equity (PE) firms have played a pivotal role; their investments have provided stability, operational efficiencies, and professional management. Despite these advancements, there is a perception that the industry has stagnated in the last 15 years. This sentiment can be partly attributed to factors associated with PE ownership, such as emphasizing short-term profitability and cost-cutting measures that stifle innovation and long-term strategic investments.

The market has seen consolidation across the board, from brokers to carriers to technology providers. This has resulted in reduced competition, leading to fewer choices and potentially slower innovation as dominant players have less incentive to advance.

At Rival Insurance Technology, we’re looking to change these trends. It’s time for creativity, imagination, and innovation to take full advantage of AI. The industry needs competition, and we welcome it. Smaller or newer tech companies tend to be more agile, quickly adapting to changing market needs and regulatory requirements. Their ability to pivot and innovate rapidly can set new industry standards. Collaboration, once a bad word, can be a strategic win, creating ecosystems that provide brokers with more flexible and scalable tools to manage their operations.

Rival Insurance Technology is focusing on user-friendly, intuitive platforms that can raise the bar for customer expectations, forcing all players to improve their offerings. Enhanced digital interfaces and seamless user experiences will become the norm.

While the journey has been long and interesting, I believe we have entered the most exciting period. New categories of solutions will emerge that offer productivity enhancements that truly justify the expenditures that brokers are asked to pay. They may even save brokers some money…