Brokers Should Rethink Tech Buying

The technology buying process in the insurance sector, as exemplified at the recent ITC Barcelona event by Tobias Bergmann and Holm Schimanski of tigerlab, often mirrors the instincts that drive broker success in building client relationships. However, a recent analysis highlighted by tigerlab indicates that relying on these instincts when assessing software and platforms can lead to unexpected costs. This blog explores three common pitfalls brokers face when purchasing technology and explains why each can lead to problems down the line.

Relationships and poor tech choices

The insurance industry heavily relies on personal connections. Brokers build careers on trust, reputation, and understanding client needs through conversation. While these skills serve brokers well, they translate poorly to evaluating software architecture, data security, or integration capabilities. A vendor’s compelling story at a conference like ITC Barcelona or thoughtful holiday card can overshadow the product’s actual functionality, leading brokers to choose platforms that don’t solve their problems. The analysis notes that this dynamic creates a blind spot where familiarity overrides objective assessment of a platform’s capabilities.

As a result, brokers often find themselves paying for unused features while still relying on workarounds for missing capabilities. Legacy systems exacerbate this issue. Many brokerage firms accumulate multiple overlapping tools over time, each addressing specific complaints but none fully integrated. This results in a tech stack that generates more administrative overhead than it saves.

Related: Fake insurance claims on the rise

Three patterns to reconsider

The first pattern involves buying based on peer recommendations rather than actual needs. While peer insights carry weight, technology requirements vary based on book composition, carrier relationships, and workflow preferences. A platform that works well for one brokerage may cause friction for another with different needs, as highlighted by Holm Schimanski at ITC Barcelona.

The second pattern involves treating technology purchases as one-time decisions. Software platforms require maintenance, updates, and periodic reassessment. Brokers who haven’t formally evaluated their current systems may be paying for outdated capabilities or missing essential features. Vendor lock-in increases over time, making future transitions more expensive, as noted by Tobias Bergmann.

The third pattern involves underestimating the cost of poor data integration. When systems don’t communicate, staff spend hours manually transferring information. These hours add up, and brokers often focus solely on the upfront software cost, neglecting these hidden labor costs.

Related: Jensten buys largest Coversure franchise in Midlands

A better evaluation approach

Shifting away from relationship-driven purchasing requires brokers to ask different questions before signing a contract. Instead of focusing on a vendor’s industry reputation, brokers should ask if the platform handles specific policy types and carrier connections, as suggested by the insights shared by Tobias Bergmann and Holm Schimanski at ITC Barcelona. Instead of solely considering the upfront cost, they should assess ongoing support and adaptability to changes.

Formal evaluation criteria help. Creating a scoring system that weighs functionality, integration capabilities, total cost of ownership, and vendor stability can make the decision-making process less susceptible to personal rapport. Involving the operations team in evaluations ensures that the people who will use the system daily have input before the final purchase.

This blog doesn’t suggest abandoning vendor relationships entirely. Those connections matter. However, treating technology buying as a separate discipline with its own evaluation standards and accountability measures, as advocated by tigerlab, tends to produce better outcomes over time.