Business Process Integration Can Help SolidifyCarrier-Agency Partnerships Historically, insurancecarriers have struggled to keep pace with the demands of highlyproductive agents, who in some cases can single-handedly writeenough business to impact the carriers bottom line.

Agencies choose carriers based on their ability to generaterevenue by selling the carriers products. The specific products andpricing factor into this equation, of course, but if the carrierand agency do not have a good collaboration strategy, operatingcosts will eat into profits and reduce the carriersattractiveness.

Agencies have indicated that in situations where products andpricing were competitive, ease of doing business is the mostimportant factor in carrier selection. If the carrier cannotprovide good service, agencies may find other carriers who areeasier to work with. For this reason, carriers can missopportunities to add to their book of business if they are too slowto provide quotes, issue policies and endorsements, or respond toagency requests.

At the root of the collaborative issues is the inability tointegrate agency and carrier technology, including agencymanagement systems, as well as policy, claim and underwritingapplications. In addition to their internal applications, carriersrely on dozens of external systems or service bureaus for motorvehicle reports (MVRs), credit reports, background checks, and soon.

To illustrate how pervasive integration problems can be,consider the simple agency process of providing quotes from threedifferent carriers.

Typically the agency must log onto three separate carrier Websites and enter the same information three times, perhaps in threedifferent ways. Some quotes may be handled in real time, but otherquotes may take a day or two.

This forces the agent to wait before providing all the quotes tothe customer.

When it comes to more complex processes such as issuing policiesor certificates of insurance, these integration problems aremagnified tenfold.

To solve these inefficiencies, agencies are working towardsSEMCI (single-entry, multiple-company interface)in other words,using a single system such as an agency management system to senddata to multiple carriers. Critical to this effort is the ACORD XMLstandard for transmitting insurance data electronically.

Also assisting are intermediaries that provide value-addedcommunication mechanisms that use ACORD XML to broker transactionsbetween agencies and carriers.

Most carriers have not leveraged the full value that theseintermediaries and standards provide, but some experts believe itis only a matter of time.

It is not hard to envision how carrier-agency partnerships canbe improved dramatically by the ability to transmit dataelectronically.

Agencies that have made substantial investments in technologyrapidly are separating themselves from the pack. They are demandingreal-time or near real-time transactions, because they know theframework exists to make this a reality.

Carriers feel the pressure to improve service by making the sametype of technology investment. Carriers know that price is not theonly differential in a customers decision; customers want agentswho can provide professional counseling and top-notch customerservice. If the carrier takes three hours to give an agent a quoteor six weeks to issue a policy, the customer will consider this adeficiency on the agents part. The ensuing repercussions to thecarrier are obvious.

Where do these crucial carrier processes break down?

The answer is surprisingly straightforward. A carrier may beable to receive agency data electronically, but this does notmean the carrier magically can transfer the ACORD XML data into itspolicy administration system, rating system and other criticalback-end applications. The data must be transformed andentered into many different systems.

Each system typically holds only part of the answer for theparticular business process that will fulfill a single agencyrequest. Carriers generally end up handling these ACORDtransactions through batch jobs or by re-keying data, causing longlead times and driving up operational costs.

In the past, some carriers spent millions of dollars and monthsat a time on integration projects, scrambling desperately to writecustom code that attempted to tie together the back-end systems.But as soon as the carrier plugged one hole, a new agency wouldcome on board with a different set of business and technologyrequirements, and the integration dike would burst once again. Inaddition, standards changed frequently and carriers struggled tofind ways to handle new data requirements and transactions.

IT budgets are far more limited now, and carriers want immediateresults that will have long-lasting effects. They want a repeatablesolutionone that does not force them to start over each time a newagency or intermediary is introduced or a new external service isrequired.

What is needed is a straight-through processing (STP) frameworkthat helps automate typical carrier processes that involve multiplesystems. One such framework called business process integration(BPI) has been gaining momentum, based on its ability to addressintegration problems rapidly and show immediate results.

In the context of integration technology, a businessprocess refers to any multi-step activity (issuing a policy,for example) that manipulates data and coordinates business logic.Business process integration refers to the automation ofthese business processes and business logic, usually by interactingwith several different types of back-end systems.

BPI has garnered attention because it is a top-down,business-focused approach to integration. BPI technology is easyfor the business community to use and understand because abusinessperson can model a business process without worrying aboutspecific technology requirements. A typical business process modelmight look something like the figure accompanying this article.

Carriers can use BPI to automate business processes (such asissuing endorsements or certificates of insurance) usingfunctionality and data from existing systems, regardless of thetechnology with which these systems were developed. As the graphicillustrates, the businessperson does not need to specify whatsystem or database is used in each step. Thus, the process isreusable because it is not bound to a specific technicalimplementation.

This idea of reusable, repeatable integration solutions iscritical. No two carriers have the same back-end systems oridentical data requirements, but most have similar businessprocesses. Every carrier must accept application submissions, orderunderwriting reports and track them as they come in, providequotes, respond to agency requests, issue endorsements, and soon.

A good BPI solution can provide predefined processes that givecarriers a valuable jumpstart. For example, carriers can use BPItechnology to accept ACORD XML data streams from intermediaries,and based on the content of the data, route the information to theappropriate business systems. This routing is accomplished byconnecting to the various systems using point-and-click wizardsthat do not require coding.

A carrier who uses BPI to add a new agency or intermediary canreuse the same processes. If new processes are warranted, carrierscan create them rapidly and integrate them into the business tosupport new agency and intermediary transactions.

BPI is an affordable, simplified approach to integration thatallows companies to rapidly eliminate manual handoffs, complicatedbatch jobs and other inefficient processes that traditionally haveblocked the path to creating the real-time, round-trip transactionsthat carriers and agents have long been striving to achieve.

At the same time, BPI greatly simplifies the view of thebusiness. When dealing with multiple insurance forms, complexfunctionality and the endless nuances of proprietary systems, it iseasy for carriers to tumble into the abyss of technical details andlose sight of business objectives.

BPI can help give carriers the focus necessary to drive newbusiness by providing faster, better agency service.

Steve Nguyen is director of marketing and businessdevelopment for Metaserver Inc., based in New Haven, Conn. He canbe reached at [email protected].

Reproduced from National Underwriter Edition, May 19, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved. Copyright in this article as anindependent work may be held by the author.