Insights for insurance intermediaries: 2023 is the year for intermediaries to get under their bonnets
With modest global growth on the cards and a subdued outlook for M&A, Theunis Viljoen, CEO of Prodinity, explains why 2023 is the year in which insurance intermediaries must give their internal insights a full MOT in preparation for the expected 2024 rebound
The global insurance intermediary market is expected to grow from US$98.82 billion in 2022 to US$105.33 billion in 2023, with a CAGR of 6.6%. However, economic headwinds, including interest rate and inflationary pressures, are inevitably impacting intermediaries’ balance sheets.
The M&A market is expected to decelerate in 2023, following a post-pandemic boom, and insurance businesses will need to balance uncertainty with optimism. Insurance brokerage is expected to be one of the first sectors to recover, with high deal volumes and appeal to PEs, but overall insurance M&A activity is expected to be subdued in frequency and at lower prices compared with the higher valuations in 2021.
Based on current forecasts by economists, the insurance M&A market may begin to recover in late 2023 or early 2024, but with so many macroeconomic factors in play, the exact timing is difficult to predict.
That said, now is the time for insurance intermediaries to invest resources internally to face the range of challenges in today’s complex and rapidly evolving marketplace. In order to succeed, they must navigate a maze of regulations, technologies, and data sources, while also meeting the needs of their clients and other key stakeholders. At the same time, they must generate diverse revenue streams, manage risk, and maintain compliance within strict regulatory standards.
Tools and techniques
One of the key ways that intermediaries can meet these challenges is through the use of sophisticated enterprise insight solutions. These solutions provide a powerful set of tools and techniques that enable brokers to gain deep insights into their operations, identify key areas for improvement, and make data-driven decisions that can drive growth and profitability.
It is critical to focus on insight solutions that are specifically designed to meet the needs of insurance intermediaries. As the leading provider of insight solutions to insurance intermediaries, our solutions are used by some of the world’s leading firms, including Aon, Arthur J Gallagher, Lockton and Tysers, and we continue to refine and improve our methodology to ensure that our clients can stay ahead of the curve and remain relevant.
One of the key advantages of our insight solutions is the ability to load, transform, consolidate, analyse and report data from all current and legacy insurance systems, including those from major providers such as Acturis, Capital, DXC, Ebix, Open GI, SSP and Verisk. This allows our clients to gain a consolidated view of their data regardless of the systems they have in place, which can be used to drive insights and improve decision-making across the organisation.
As they face down the headwinds of 2023 and prepare for growth and increased deal volumes, it is vital for insurance intermediaries to get accurate insights across a variety of key areas, including credit control, revenue generation and retention, product line profitability, pre-acquisition due diligence, post-acquisition integration, and ongoing compliance requirements.
For example, our credit control reporting solutions provide detailed aged analysis of counterparty exposures, as well as daily FCA CASS5 Client Money Reporting. This helps our clients to reduce credit risk and bad debt exposures, increase working capital resources, and enhance compliance with regulatory requirements.
In addition, our solutions provide enhanced insight into revenue generation and retention, including analysis of revenues by client, market, product and profit centre. The intermediaries we work with also gain valuable insights into premium, claims and fee/commission trends across comparable regions, markets and products to aid margin growth and improvement.
One of the benefits valued most by our partners is our automated end to end process, sourcing and transforming daily data from diverse transactional systems facilitating automated reporting and helping to improve the audit trail from transactional systems to reporting, and enhancing regulatory compliance.
Our solutions also provide valuable support for pre-acquisition due diligence, post-acquisition integration, and ongoing compliance reviews, as well as other areas such as claims analysis, placing efficiency, operational efficiencies, and complaints handling.
By leveraging sophisticated enterprise insight solutions offered by Prodinity, intermediaries can gain a consolidated view of their data, identify key areas for improvement, and make data-driven decisions to drive growth and profitability.
As the industry prepares for a rebound in 2024, now is the time for insurance intermediaries to get under their bonnets and invest in the tools and techniques to help them become even more resilient in order to fuel growth and position themselves for long-term success.