Copyright © 2004 Business Insurance

"Web tools helping make connections:  Producers, Insurers Building Bridges to Improve Workflow" November 15, 2004

by Roseanne White Geisel

 

In the business world, there is an enormous gulf between having a Web site and working in the Web services environment.

A Web site may smartly package information and certain conveniences for customers and business partners, but true Web services technology gets to the heart of productivity in the insurance industry. Bridging this gulf involves unifying disparate systems, opening pathways, forging links between databases and refining standards to allow insurers, brokers and agents to exchange information more efficiently.

"The vast majority of independent agents are not prepared (for truly Web-based operations), because their agency management systems are not equipped for the Web services world," said Frank Sentner, director of strategic technology for the Council of Insurance Agents & Brokers in Washington and an independent consultant to the industry. "From an agent/broker perspective, agency management system vendors are moving aggressively to replatform their systems in the Web services environment," he said. "They are doing that with differing degrees of success."

Currently, Mr. Sentner estimates that between 5% and 10% of the 25,000 to 40,000 agents nationwide have some connective technology that enables them to engage in Web service integration with an insurer. Those few insurers that are equipped to do so are mainly in personal and small commercial lines.

A key problem is that "the agent and broker workflow is extremely fragmented" because of insurers' many proprietary systems, Mr. Sentner said.

Ideally, a broker should be able to get the information or documentation needed to serve a client without leaving the system in which he or she is working or having to add telephone calls into the mix. Proprietary systems add such steps and, consequently, decrease producers' efficiency.

Insurers, agents and brokers must make challenging choices as to how to function effectively with their business partners in this new environment. For many companies, the decision to add the Web services technology layer to their existing legacy systems seems the optimal solution. But other approaches exist.

"I don't think there's any one solution," said Ken Fries, assistant vp for e-business and technology for The Hartford Insurance Co. in Hartford, Conn. "What we provide is a suite of technology tools" to agents and brokers, Mr. Fries said. "We look at every approach and assess it on an individual basis," he said.

The company's mission, Mr. Fries said, is to ensure that technology gives its brokers a competitive edge in "a rapidly changing marketplace." Toward that end, the company uses focus groups and user groups to ask agents about their technology needs. Among Hartford's offerings are a rating tool for small commercial accounts and the Hartford Expressway, which allows an agent to process a homeowners or auto policy directly from an agency management system without having to stop and enter a password. It provides real-time submission, quote and request-to-issue capabilities.

Another insurer that shares the multifaceted approach is The St. Paul Travelers Cos. Inc.

"We don't think it's in any insurance company's interest to mandate that we want to do business a certain way," said Patrick Gee, New York-based vp-select and personal lines operations for the insurer. "We work to ensure that we can do business any way an agent wants to do business," Mr. Gee said.

Technological developments at St. Paul Travelers have been in the making for eight years, with the financial investment amounting to tens of millions of dollars. "We started taking all the development we were doing on the Web and incorporated Web services into the process," he said. That has enabled the insurer to offer "a breadth of technology" to benefit agents, even multicarrier quoting for small commercial accounts. More than 30% of its e-service comes from agency management system inquiries, and that is growing, Mr. Gee said.

Meanwhile, vendors continue to introduce technological advancements. Xdimensional Technologies of Brea, Calif., earlier this fall introduced its Nexsure Instant Collaborator, an enhancement for users of its Nexsure agency management system built in the Web services environment. The NIC allows an agent or broker to send an e-mail request for information or action to an underwriter or other partner involved with the insurance account. The e-mail contains a secure link that allows that business partner to enter into that agent's Nexsure system and fulfill the request. An e-mail is then sent to the broker, indicating completion of the task.

And, Mr. Sentner points out, in addition to advancements by agency management system vendors, a whole new set of companies focused on connectivity technologies has emerged, making more seamless real-time processes possible between insurers and brokers in the Web services environment (see story, page 16).

Technological needs

As the technology advances, the parties involved must remember one critical step, according to the CIAB's Mr. Sentner: Insurers and agents must talk to each other about their needs.

"The biggest issue for insurers in keeping pace with the e-business environment is making the decision whether to invest their (technology) dollars in a proprietary approach or a more open platform," said Jann McCully, chief information officer and senior vp for broker ABD Insurance & Financial Services Inc. in Redwood City, Calif.

Insurers that opt for open systems need to select those systems being chosen most frequently by brokers, she said.

"In order to make any platform work, critical mass has to be there," Ms. McCully said. "One reason the insurers have been slow to act is they haven't seen critical mass line up with a particular technology partner. Everyone's waiting for someone else to do it."

It is exactly because there are so many different systems available that Mr. Sentner perceives the industry as being on the verge of far greater deployment of Web services technology. "When the pain gets bad enough, innovation happens," he said. Agents want to be able to upload data to insurer systems and download information from them.

Others assess the current situation differently. "From the standpoint of academic purity, insurers are probably not very well prepared" to do more Web-based business, said John Day, senior vp-carrier and industry affairs for AMS Services Inc. in Windsor, Conn. "But that doesn't mean much when you look at it from the real-world agency standpoint," he said.

His company's TransactNOW system enables agencies to access insurers' systems via portals or Web sites, even if the insurers are not yet able to respond automatically to extensible markup language or Web service requests. The company also produces the agency management systems Sagitta, for large brokers, and AMS 360, a system for midsize brokers.

"It's an incremental step in the right direction," Mr. Day said. "Our whole mantra with the connectivity solutions group is `workflow, workflow, workflow.' If we can provide a response to the agent while he's in workflow, it doesn't matter how it happens."

Several issues are at play along the industry's road to the Web services environment. Many insurers have felt that a proprietary Web site is an advantage. Insurers "are most interested in promoting their proprietary products in a proprietary way to their producers," Mr. Sentner said.

Another issue, Mr. Sentner pointed out, is that the insurance industry was one of the first to automate and has a huge financial investment in its existing technology. "Insurance deals almost exclusively in information," he noted. "In that sense, (the technology) is a manufacturing system. No one changes their manufacturing platforms lightly."

Scaling the walls

That barrier is understood by Neal Ruffalo, vp and chief information officer for insurer ACUITY in Sheboygan, Wis. "The difficulty is in transforming what has been defined as a behind-the-scenes batch environment to one that's a real-time data interchange environment," Mr. Ruffalo said.

Insurers' legacy systems have been advanced, but not to the point of handling the XML coding language that has been used in the development of data standards by the Assn. for Cooperative Operations, Research & Development, a nonprofit insurance industry group based in Pearl River, N.Y.

"To bring legacy systems up to speed requires a lot of programming and logic, and not all insurers have on staff the skill sets to do it," Mr. Ruffalo said.

The staffing problem is exacerbated by insurers' tendency to keep most of their information technology staff engaged in their companies' internal systems and Web sites rather than on working with agency systems, Mr. Sentner pointed out.

Insurer systems traditionally have been built "behind four walls," Mr. Ruffalo said, meaning that they are accessible only to employees. Agents and brokers were consigned to the use of mail, faxes and e-mail to communicate.

ACUITY took a leap toward preparing for Web services even before the technology was on the insurer's radar screen. With the goal of more efficient automation, the company used an approach called "modularity" to divide its programs into centralized modules that can be tapped into from a number of different requesting mechanisms. This approach helped ACUITY, a Mutual Insurance Co. avoid bogging down its electronic system with duplicate code, Mr. Ruffalo said.

Such efforts made it easier to begin connecting various electronic pieces to agents. In the late 1990s, the company built one common application that could be reused to offer other services through the Web services gateway. The use of both IVANS' Transformation Station and AMS' TransactNow connects the insurer to a majority of its agents, Mr. Ruffalo said. Agents can offer policyholders bindable quotes, conduct billing inquiries and issue and change policies right from their agency management systems.

In the future, ACUITY hopes to allow policyholders to make certain changes and look up basic information, Mr. Ruffalo said. "We will do that carefully, so that we bring agents along with us," he said. "We design our applications to support and enhance and help them do more and get rid of the more mundane, irritating tasks."

ABD also is forging into the Web services environment, Ms. McCully said. "While the rest of the industry is moving forward slower than we'd like, we're going to use the technology internally to get our hands around our entire database," she said.

Part of the broker's development team is focusing on learning the Web services environment, which will enhance its current Sagitta agency management system. The broker is using a new release by Redmond, Wash.-based Microsoft Corp. to move into the Web services environment. Sales, client records management systems and prospects all are being consolidated into a third database. That step will allow the broker to "see the value of the client all around" and conduct client profiling and cross-selling.

The client also benefits from faster service through ABD's use of the software and services of New York-based software company RiskClick Inc., Ms. McCully said. For companies already using Web services technology, RiskClick collects information that enters the system from various sources into a consolidated, consistently coded file and then routes such files to relevant parties.

Throughout the process, data is tracked and performance is measured.

"It's much better for everyone throughout the whole value chain, especially for the client," she said.

The investment in these new technologies, to date, hasn't really cost the organization more than what it spent to develop an online expense reporting tool, Ms. McCully said.

All of this technology must be based on a strong foundation of electronic data standards. ACORD began in early 2003 to develop and distribute new guidelines for specific business processes to ensure that core pieces of data are represented uniformly industrywide, according to Lloyd Chumbley, assistant vp-standards for ACORD.

ACUITY's Mr. Ruffalo said, "as we create additional efficiencies and more common pathways, it's going to make it easier for agents and for carriers."

© Copyright Business Insurance 2004