Why is a true Multi-Carrier Platform (MCP) important in Commercial Insurance, and what will it take?

Everyone in the insurance industry knows it: the pandemic has precipitated a massive wave of change in brokering.

The pandemic combined pre-existing undercurrents into one giant wave of change that put quote-bind-issue systems on C-suite agendas across the globe.

As a result, and just as they did in Home and Auto, insurance placements are now becoming increasingly digital.

In practice, it means that brokers in commercial lines use platforms to collect quotes for their clients. Almost invariably, multiple quotes are required, from different carriers: 3 to 5 on average.?

Securing such quotes is a painstaking process. In most lines of business, and until recently, it still required logging into some proprietary portal maintained internally by a carrier IT team, re-entering data (and mistakes abound at that stage), collecting the quotes and entering those back into a spreadsheet, which is in turn used to create a not-so-nifty-looking client proposal.

And in many cases, the portals refer the user to a human underwriter, over email. Or in the first place, since many lines and carriers do not maintain any automated portal. That means more manual cut-and-pasting.

Given all that, it is no surprise that commercial brokers and agents spend 90% of their time on that process.

Enter Multi-Carrier Platforms (MCPs)

Those platforms, which have grown a lot during the pandemic as you can guess from my introduction, provide access to all carriers and MGA-MGU quotes in one place.

They are at different stages of development, and rely on the availability of APIs (Application Programming Interfaces, or mechanisms that enable two software components to communicate with each other using a set of definitions and protocols) from carriers and MGA-MGUs.

Most of them focused on Small Commercial - for Business Owner Policies or Workers’ Compensation.

A few others, such as Relay, focus on Specialty Lines. And in particular, Cyber Insurance - one of the fastest-growing lines, with the highest API availability but also one of the hardest lines in which to secure insurance quotes for a client.

Needless to say, brokers prefer to log into an “Expedia of Commercial Insurance” to gather quotes, over logging into individual carrier portals. Just like passengers prefer to get flight quotes from Expedia over individual airline portals (in a short amount of time, Booking.com, Expedia and Trip.com captured close to 40% of the total global travel market). Keep in mind that this aggregation has benefitted carriers and consumers as well, by reducing the cost of distribution and thus the cost of flying, and growing the overall travel market.

The same is at play now in Commercial Insurance. And that is a great thing, because so many businesses still lack proper coverage.

Now, a clear winner has yet to emerge in commercial lines, with several platforms vying for this status.

What will it take?

First and foremost, the leading platform will need an unwavering focus and commitment to the vision of a true multi-carrier marketplace, which requires the financial stability to build it out, and a focus on providing the best placement technology possible to the market.

Second, it will need the backing and usage of leading brokerages, who all will benefit from a true MCP.

Third, it will need the commitment of at least a small initial group of forward-looking, broker-centric carriers, with the confidence that cooperation can lead to a better overall outcome for the market, which will also counter a race to the bottom.

The Relay acquisition by At-Bay and how it positions us for the future

As I write this, we are announcing the acquisition of our company, Relay, by Cyber and Specialty Line Insurance provider At-Bay. In other words, we “picked” one of our carrier partners to sell the company to.?

Why would we do that??

First, because we believe that carriers and MGA-MGUs can provide the best environment for Relay to grow. They have the most resources, a long-term view, and are used to collaboration on placements, given that so many are multi-carriers in large commercial placements. It also does not preclude us from serving multiple brokerages, which is most critical as those are our clients.

Second, because At-Bay has had a similar vision to ours, that a Multi-Carrier Platform is the future of small Commercial Insurance. They already have a proprietary quoting portal and do not need another. If they invested in Relay, that is because they want to accelerate the digitization of specialty insurance, which benefits them and all digital-first carriers and MGA-MGUs.

Third, because we believe that to realize the vision of a Multi-Carrier Platform, we need a strong executive function, not bogged down in fundraising or cat-herding, but expert at balancing the interests of both supply and demand, and federating other forward-looking carriers and brokerages around a common goal. We also need a commitment to cross-industry collaboration, which both companies hold dear.

That goal is simple:

"Increasing business access to relevant specialty insurance coverage and risk prevention services"

The real challenge in specialty insurance is low market penetration. Only 30 to 50% of businesses hold cyber insurance for instance, depending on geographies.

The industry must cooperate to accelerate the digitization of the quote and bind process.

To enable that cooperation, the leading platform must act?in a neutral manner and enable brokers and carriers to do business fairly.

That is why Relay, under new ownership, is set-up to optimize for the benefit of the participants on the platform and will provide assurances to its neutrality and the confidentiality of data that it processes

Please reach out to us if you would like a preview and/or to share your feedback.