Improving the ease with which retail agents and members of the excess and surplus lines industry work with each other electronically has been a significant focus of the industry for the past few years. Today we're moving to a era in which we can transfer data electronically up and down the insurance chain without having to rekey information at each level.
The recent announcement that Lloyd's of London joined the efforts of the Retail Agent E&S Initiative's working group is further evidence that various parties in the industry are joining forces to improve data transfer methods. As part of this initiative, Lloyd's will be coordinating efforts to improve the efficiency of electronically transferring data from its partners in the U.S. to the London market.
This interaction was the latest in the actions taken over the past few years by the National Assn. of Professional Surplus Lines Offices (NAPSLO), the American Assn. of Managing General Agents (AAMGA), ACORD, the Agents Council for Technology (ACT) and others in the industry to improve the electronic interaction between retail agents and the E&S industry.
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The importance of retail agents to the market can't be overstated. They are the lifeblood of the E&S lines industry, providing the link to the ultimate customer. This is a relationship that the industry must maintain and enhance. If dealing with the industry or individual members is too technically difficult, E&S customers will "vote with their feet" and look for other options to place business.
Although part of the retail agent/E&S bond is the personal relationship built to solve the specific insurance problems facing a customer, the E&S industry also understands the importance of quick response to meet the needs of agents and supply insurance to its clients and technology provides the facility to do this.
War on keystrokes
To improve its efficiency, the E&S industry has examined the various pain points in transmitting data electronically and what it could do to eliminate those problem areas. Often in the past when data moved from one level to the next, each time customer information would have to be keyed into systems by agents, brokers and carriers. Moving away from a situation where information is repeatedly rekeyed into systems has been dubbed "a war on keystrokes."
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The E&S industry's delay in developing solutions to transfer data with retail agents may be related to the specialized nature of the industry and that the E&S industry occupies a smaller but significant role in the industry, with approximately $34 billion in annual premiums or a little more than 13 percent of the commercial lines segment of the insurance industry.
As a result, in the early part of the decade, retail agents first concentrated on upgrading and improving the standards for transferring data within the standard market. Great strides have been made in that direction and the recent campaign to showcase operations in real time shows the results of the efforts. In the past few years, retail agents have been looking at ways to transfer the advances made in that area to the E&S industry.
A long-term goal for the industry is to operate with systems that can transmit data to provide real-time connectivity. Using ACORD XML may be the vehicle for the industry to meet that goal. In the short term, agencies are looking for ways to make immediate improvement in data transfer and many are looking at various bridging technologies to transfer the data.
In recent years, the subject of data transfer continually came up at industry meetings. In 2008, as part of the NAPSLO keynote address at the AAMGA Automation Conference, Jeff Yates, executive director of ACT, suggested that the industry form a working group to look further at this issue.
As a result of the meeting, ACT, AAMGA and NAPSLO formed a joint initiative to improve the efficiencies for retail agents interacting with managing general agents and wholesale brokers in the E&S market and to promote the electronic exchange of data between the various partners.
The initial objectives of the initiative included improvements in the E&S marketplace in the following areas:
- Concentrate on data transmission streams to/from retail agent systems to/from general systems with emphasis on automating data flow.
- Focus on E&S carrier supplemental applications to streamline non-standard data requirements and move the industry to use ACORD standards and applications as much as possible.
- Develop a roadmap of recommendations for general agent website capabilities. Generation 1 is a website with basic marketing information. Generation 2 adds login and inquiry capability. Generation 3 provides for straight-through-processing from the general agent website to its backend.
The working group was established with three subgroups, with one working on each of the above items. The first works with vendors to explore potential methods to transfer data electronically; the second works to standardize the supplemental applications used in the industry; and the third group recently completed a report outlining the process to move general agents from using static websites to sites with real time interface with retailers.
Representatives of retailers, wholesale brokers, MGAs and vendors are members of the working group and interested parties can join the group by registering at http://teams.acord.org.
The subgroup working with vendors on solutions has produced several webinar demonstrations showcasing the use of current system solutions, or modified solutions, to transfer data between retail agents and MGA/brokers. In addition, the group has made similar presentations at ACT, ACORD and AAMGA meetings, and carrier vendor forums. The group recently worked with vendors to include carriers into the transaction demonstrations.
While the current demonstrations feature existing or modified vendor solutions, these options may be viewed as short-term solutions. The long-term goal is to be able to transfer the data using XML or other methods.
By moving to or using a third-party solution, agents and wholesalers are finding that they have been able to significantly reduce the number of keystrokes used in uploading information from a retailer into their agency management system.
While getting systems to be able to communicate is an important step, one of the challenges in dealing with the E&S industry can be the number of supplemental applications required.
Many carriers have their own supplemental applications, but may request the same or similar information that carriers request, also may accept other carriers' supplemental application forms. Because of this, the forms group is reviewing supplemental applications with a goal of revising questions to make them more uniform while still providing carriers the information they need to write a specialized risk.
The forms subgroup has already reviewed a number of supplemental forms used in the industry and forwarded to ACORD for review by their working groups. The revised forms are then submitted for approval by the ACORD membership and if approved, made available to use.
As part of the revisions, the subgroup is exploring what questions could be moved from supplemental forms into the main ACORD forms and also see if questions under review are needed during the quoting or binding part of the process. If needed only for binding, the group is looking to determine if they could be left off the supplemental form.
The forms working group is currently finishing a survey of wholesalers and retailers to determine the next set of supplemental forms to take up and the results should be available this fall.
Work on developing a roadmap of recommendations for general agent website capabilities was completed earlier this year and the results were released and are available to download from the ACT website at http://www.acttech.org under the "Retail Agent E&S Joint industry Initiative" section. Since completing the report, the subgroup has undertaken the role of marketing and publicizing the efforts of the joint working group.
The global view
While all these efforts can affect the industry, it is also important to ensure that all segments of the industry are included in the process. Nearly 20 percent of the E&S industry is written through the London market, and North America is also an important component of business for the London market.
The working group was pleased to add Lloyd's to the list of U.S. retail agents, brokers, MGAs, carriers and vendors involved in the process as the goal has been to ensure that all components of the transaction are involved in discussions and Lloyd's joining the process helps meet that goal.
Lloyd's is working on improving the electronic transaction of data on both binding and open market business, and believes it is important to be part of this joint industry group. Lloyd's began by reviewing its efforts on standardizing data collection during a webinar organized by the working group in July.
This effort adds to the previous work done by ACORD and its London office on establishing standards for the reporting of risk information to Lloyd's. As early as 2002, NAPSLO was working with ACORD on publicizing efforts to develop reporting standards for the London market. In 2008, Lloyd's worked with NAPSLO and other industry groups to promote the updated standard, ER2001, to the industry.
The focus of the ER2001 binding authority standard is on the adoption of standards for U.S. property risks; however, there have been discussions to expand it to other classes of business and other geographic areas. Although a number of London firms have adopted the standards, several brokers are using their own format as it better meets their needs. However, discussions are taking place in London on ways to move to a uniform standard.
Other options
While the working group has made great advances in recent years, other groups are looking at options regarding data transfer that could impact the E&S industry and retail agents. The Council of Insurance Agents & Brokers announced in 2009 that it was working with LexisNexis to develop a Web-based insurance exchange. The exchange is intended to provide an on-demand electronic system through which agents and brokers submit risks in real time to multiple insurance carrier partners and wholesalers, and collaborate with them on the underwriting and placement of insurance coverage for those risks.
Representatives of CIAB and LexisNexis discussed the insurance exchange during a presentation in March at this year's AAMGA Automation Conference. The concept is to upload data from agency management systems to the exchange, and then within the exchange create a submission, which would be marketed to one or many selected carriers or brokers, depending on what the agent wants to do with that submission. Once the item is submitted, the agent would be informed, based on appetite rules established by the individual carriers and brokers, who was interested and if additional documents were needed.
Over the past few years, the E&S industry has made great strides in moving toward or adopting measures to facilitate the electronic transfer of data, lessening the need to rekey data and making the industry more efficient and also more accurate.
While the industry has not yet been able to eliminate rekeying information, today there are a number of options available that improve the situation and move us toward the day when information is able to be easily transferred between partners throughout the insurance industry.
