Slow Cooker

The setting for SEMCI has been on simmer for the last twodecades, and new research by Gartner doesn't raise much hope it'sgoing to get any hotter.

The concept of a single-entry, multiple-company interface(SEMCI) has gone through cycles over the last 20 years, but forevery carrier that has supported the concept there have been asmany or more that have rejected it. The technology to make SEMCIpossible for carriers and distributors has matured, but the wideacceptance often predicted for SEMCI seems way off in thefuture.

In the past, one reason cited by carriers for their reluctanceto adopt SEMCI has been the technology and the standards that wereneeded weren't in place, according to Kimberly Harris-Ferrante,co-author with Stephen Forte of the recent Gartner research paper“SEMCI Presents a Real-Time Challenge for P&C Insurers.”

“Even as [carriers] talked theoretically about the concept [ofSEMCI], they never could achieve it because of the immaturity ofthe technology and the standards,” says Harris-Ferrante. “As thetechnology has matured and SEMCI becomes more possible, what youfind is a twofold problem.”

Although agents remain positive on the subject, Harris-Ferrantereports they acknowledge there is no one unified model today allinsurance companies they represent can go to. On the opposite side,insurance carriers wonder if agents aren't putting pressure on themto offer SEMCI, why should the carriers bother investing time andmoney toward it?

Carriers know not all independent agents are going to use SEMCI,so SEMCI adoption just adds more expense to carriers' IT costs ontop of the agent portals and other production systems carriersoffer agents, Harris-Ferrante points out.

“[SEMCI] is not replacing anything,” she notes. “For insurancecompanies, it's just another added expense to how they do business.If you also look at the way the insurance companies are consideringit, the more [carriers] use a standardized SEMCI model, the morethey are standardizing the process of doing business with theagent. [Carriers] are saying this is going to erode theircompetitive differentiation, which makes them less motivated tomove forward even with a concept that makes sense.”

Being easier to do business with has been the carrier mantra forthe last few years, but if the playing field is level–everyone isdoing the same thing–there is no pressure to do SEMCI, explainsHarris-Ferrante.

“All things being equal, the financial stability of the companyand the quality of the insurance product are going to be more of amotivation for an agent to sell than the ease of doing businesswith [a carrier],” she says. But if you have companies that arejust as financially stable and just as good with product qualityvs. price match, she contends other technology perks can motivateagents to choose one company over another.

Gartner studies have shown functionalities such as accessibilityto electronic documents and forms and thestraight-through-processing application are highly ranked criteriaamong agents and critical factors in how they select carriers withwhich to do business.

“All these factors are making some companies go out on a limb,”indicates Harris-Ferrante. “A lot of companies are guessing on how[SEMCI] is going to impact their business. But it's more of atheoretical model than a quantitative equation.”

Carriers have bigger technology issues to address, as well.“There are other things on the insurance companies' lists theyconsider a priority,” she says. “The investment in back-officesystems, for example, continues to be one of the top prioritiesamong companies.”

With carriers spending up to 70 percent of their IT budget tokeep the lights on, that doesn't leave a whole lot fordiscretionary–more strategic–spending.

“If you don't have the money and you have some things that haveto be done for compliance or regulatory support, claims processing,or a policy administration update, those are taking higherprecedence,” adds Harris-Ferrante. “Those things that can't bequantified from either a risk-avoidance or a profitability-gainperspective are just taking a back seat right now.”