Ramping up for real time; roundtable: carriers and independent agents are challenged to handle electronic transactions as they occur.

Real time is the new frontier for carriers and independent agents as they find better ways to work together electronically, according to three insurance professionals who participated in a roundtable discussion on the topic.

Progress is occurring at both ends of the distribution channel--primarily in the personal lines and small commercial policies. "I think we're going to look back at 2003 as a major turning point in improvements in interfacing," said Jeff Yates, executive director, Agents Council on Technology, Independent Insurance Agents & Brokers of America. "With the development of the ACORD XML standards and the ability to process in real time using the Internet, there's been substantial progress made in the ability of agencies to inquire for information from their carriers electronically through their agency management systems. With things such as billing inquiry, claims inquiry, electronic policy view and the ability to get loss runs from a carrier, there has been significant progress.

"The ramp up of real-time functionality is at a higher pace than virtually any other technology that's been implemented," Yates said. "All the user groups and the agents' associations are in sync on the need for these real-time interfaces through the management systems," he said.

While agents have often adopted a "wait-and-see" attitude with previous technological advances--holding off on implementing them until several carriers are onboard, agents "can get instant savings by implementing real-time functionalities as they become available," Yates said.

Standardization Moves

Insurers and agents are placing considerable focus on the possibility of using the ACORD XML standards in integration activities. "We have a great deal of hope that those standards will have wide acceptance and be used by the agency vendors but also some general agents with proprietary environments that we're dealing with," said John B. Deibler, director, project administration, Scottsdale Insurance Co.

"There's a huge opportunity with managing general agents and retail agents to have more efficient interfacing as well," Deibler said.

Scottsdale, a member of the Nationwide Group, specializes in excess and surplus coverage distributed through general agents, who perform much of the rating, quoting and issuing in their own electronic environment, Deibler said.

"Our general agent plants have a huge appetite for real-time processing or any technology that's going to make them more efficient," he said. "We have an agents' technology committee that meets twice a year at our corporate headquarters and the entire focus on that group has been to make the process more efficient and certainly a big part of that is real-time processing. These guys are making significant investments in their shops as are we."

Agents share the responsibility to keep their systems current and to implement real-time functionality when it becomes available, Yates said. Implementing the new functionality is the best way for the agents to get more of it, he said.

"Right now we have a proliferation of proprietary company Web sites. That's the dominant thing that's been built and agents are getting more and more frustrated about that," Yates said. "But the good news is that the carriers which have taken the steps to be able to do real time through a Web site are going to be able to take the next step which is to be able to handle the inquiries and transactions through the agency systems.

"That's what we want to see--real-time processing where the agents can use their system and have a standard way of doing things with multiple carriers," he said.

Over the next two years, the industry needs to make significant progress in the ability to quote and rate policies and then to issue them in a real-time way, Yates said.

The next major horizon in this area, which is starting to happen, is to be able to quote and issue policies with the carriers in real time through the agency management systems, he said. "These transactions become complicated because you must take into account all of the unique company edits in these processes and every company has them. Another key area where agents would like to have real-time capability is in making policy changes, which represent a high percentage of agency transactions."

Competitive Edge

The stakes are high. Many carriers have been focusing on their proprietary systems to give them a competitive advantage by making it easier and less costly for agents to work specifically with them, said Steven Landberg, managing partner, Alpha Financial Services Consulting.

"There has been a hesitancy for carriers to move away from proprietary environments that they've invested lots of dollars in, and have more or less required agents to use their software as opposed to putting resources into developing a more generic common kind of base," Deibler said. "We're certainly moving toward a more generic processing environment and I believe we are going in the right direction. We've seen substantial progress toward efficient real-time interfaces in 2003. And we're looking to see a lot more broadening out of this in the coming years."

"Our full focus is on providing the tools and the capabilities to our general agents to sell our products," Deibler said. "The tact that they represent other markets is recognized and we certainly want to provide tools that differentiate Scottsdale from our competition and put us in a positive light. If that is being part of a comparative rater product or having a common front end, that's not a tear, but it's a matter of being in a positive position to provide superior service."

One hurdle continues to be whether the carrier's system interfaces with the agency management systems so that agents don't have to enter all the information more than once and so they can comparison shop more easily. "There's been a fair amount of carriers doing a great deal to further enable their agency interfaces by building the portals and starting to get information online," Landberg said.

Two prominent agency management systems, Applied System's Transformation Station and the AMS TransactNow, are better enabling that to happen. But for that technology to be beneficial, agents have to use it, Landberg said. "Adoption by the agents has been relatively slow despite its availability over the past one to two years," Landberg said.

Lightning Rod 

SEMCI--Single Entry, Multiple Company Interface--continues to be a lightning rod in any discussion of agent-carrier interface.

Yates described SEMCI as a workflow system for agencies that has evolved with changing technology. The problem, he said, comes from the different meanings different people have attached to the term. "From an agency standpoint, we look at it as a workflow and it evolves as technology changes. And the workflow basically is that in my office as an agent I want my staff to be working in a consistent way through the management system, and to be able to quickly find all the information I need to do business through that system. So, it has to provide a gateway to my trading partners, my carriers that I deal with."

SEMCI, a concept that has been around for more than two decades, looms larger than it really deserves, Landberg said. "A lot of times it's used as an excuse to avoid doing some of the things that both agents and carriers need to do. A bigger issue, that SEMCI is part of, is for agents to be able to upload information from the carriers' databases about their customers so they can market more effectively for renewals and cross-selling," he said.

Personal lines and small commercial business are the easiest to conduct electronically because the underwriting process is not usually complex. That's where the most progress has been made with carrier-agent interface-download of data from carrier to the agent, Yates said. "That's been a major success," he said. "There has been relatively little upload ha personal lines."

The complexity of medium-to-large commercial business does not generally allow it to be submitted, quoted and bound online, though real-time interface into the existing policies and claims is available, Landberg said.

Looking Ahead

There is a need for a broad, consistent set of tools that agents or general agents can use to complete the transactional process, whatever it may be, Deibler said. "Tying in the accounting process, the inspection process for commercial lines, integration with document management systems, are all key elements. Overall consistency of the exchange process has to be accomplished in the next few years."

Participants:

John B. Deibler

Director, Project Administration, Scottsdale Insurance Co., a specialty insurer that is part of the Nationwide Group.

Scottsdale's Agent Information Exchange project received honorable mention in the E-Fusion 2003 award competition.

"Our general agent plants have a huge appetite for real-time processing or any technology that's going to make them more efficient."

Steven Landberg

Managing Partner, Alpha Financial Services Consulting.

Landberg is a frequent Technology Insight columnist for Best's Review and spoke of producer interfaces at the E-Fusion 2002 conference in Washington D.C.

"There's been a fair amount of carriers doing a lot to further enable their interfaces by building the portals and starting to get information online."

Jeff Yates

Executive Director, Agents Council on Technology, Independent Insurance Agents & Brokers of America Inc.

ACT September 2003 report, "Best Practices Guide to Agency Electronic Information Management," identified emerging issues in agency handling of electronic information and in the growth of electronic transactions between carders and agents.

"The ramp up of real-time functionality is at a higher pace than virtually any other technology that's been implemented,"

Moderator:

Paul C. Tinnirello

Executive Vice President/Chief Information Officer, E-Fusion Conference Chairman, A.M. Best Co.

"The next E-Fusion conference will be held in Baltimore Oct. 17-19, 2004."