One year ago, the LexisNexis Insurance Exchange—resulting from an alliance among LexisNexis Risk Solutions, the Council of Insurance Agents & Brokers (CIAB) and Marketcore Inc.—was launched in an early adopter release to 16 brokerages and five member carriers. The system’s goal: to simplify the submission of midmarket commercial-lines risks by enabling agents and brokers to enter application data once and send it electronically to multiple markets.
Although the Insurance Exchange was a new utility, single entry was far from a new concept in insurance. “There have been at least 14 other attempts [at single entry] that have not been successful, and I’ve been involved with seven or eight of them over the last 20 years,” says Ken A. Crerar, CIAB’s president and CEO.
Yet the Insurance Exchange’s proponents believed that this effort would be different. “You had the biggest brokers in the country [in pilot], LexisNexis had the money and expertise, and bigger carriers had signed on,” recalls Bill Henry, CEO of McQueary Henry Bowles Troy (MHBT), a pilot brokerage in the exchange.
The new system also promised neutrality. “From day one [the Insurance Exchange] has adopted anything in the standards area that it could,” including eForms, XML and messaging standard AL3, says ACORD VP/Standards Lloyd Chumbley.
To further promote neutrality, LexisNexis created the Insurance Exchange Trust, a governing board that consists of broker, carrier and industry trustees, including representatives of CIAB, the Independent Insurance Agents & Brokers of America, Assurex Global and ACORD.
By The Numbers
Since its launch, the Insurance Exchange has gone through more than 200 iterations and a dozen formal releases. It has also expanded its reach so that any insurer, not just member carriers, can receive submissions via email.
“That was a big fix to something that would have held it back,” says David Pruett, vice chairman and chief administrative officer of BB&T Insurance, one early adopting brokerage.
To date, more than 15,000 submissions have been processed through the Insurance Exchange, and weekly submissions now average 1,000. Nearly 300 markets receive submissions, with more than 2,000 individual brokers and underwriters using the platform.
However, those numbers are not as high as some had hoped. Peter Lynch, head of the LexisNexis Insurance Exchange, says, “We wish we could move it along quicker, but it’s an evolution,” and he attributes the pace of adoption to old habits that die hard. “We’re changing workflow behavior,” he adds. “There are people who are simply more comfortable printing out a form, marking it up with yellow marker, doing multiple conference calls and sending it back to a carrier.”
“Let’s just say the number of submissions we get in a month isn’t meaningful for us yet,” says Clyde Fitch, senior vice president and chief sales officer at State Auto, one of the original five member carriers.
However, Fitch remains optimistic. “I’m not discouraged,” he says. “As with everything else, the adoption starts slowly and then takes off.”
Since its 2010 rollout, the Insurance Exchange has added partners and forged alliances. In October, it acquired the MarshBerry Sales Portal, and in August announced plans to integrate with the Assurex Global Passport—a process anticipated to be completed by early November. The integration means that Assurex Global partners can collaborate during the sales process through Passport and then utilize the exchange to manage the submission process to place the risk.
The partnership between Assurex and the Insurance Exchange was driven by brokers. “We have at least half a dozen partners who were part of the pilot,” says Assurex President/CEO Jim Hackbarth. “They said it would make their lives easier if there was integration.”
Now, with a year under their belts, early adopting brokers agree that many of the promises of the Insurance Exchange are being realized. “The exchange is definitely the first operating system to bring the promise of efficiency through technology to the middle-market insurance consumer,” says MHBT Marketing Vice President Ann Forkner.
Proponents cite benefits in the areas of simplicity, security and consistency. Simplicity comes from single entry. As Forkner points out, “Sending data via LexisNexis is much easier than sending multiple encrypted emails to carriers.”
Security has been a top consideration of the Insurance Exchange from the outset, according to Lynch. “We understand our role as an industry player,” he says. “One of the things we did [to ensure security] was that we gave up control of the data to the Exchange Trust.”
Some brokers say using the Insurance Exchange adds a level of security they had not had with traditional email. “With the exchange, underwriters get an email with a link to obtain the submission in a secure environment, which is a real improvement,” says Crerar.
“More and more large clients are asking that their proprietary information be encrypted,” says Fitch. “The exchange can be a meaningful standard for that.”
The Insurance Exchange also adds consistency to the broker-underwriter transaction by consolidating risk information in a central location, a feature that benefits the audit process as well. Says Pruett: “Now, there’s a permanent repository of all the communication between producer and carrier.”
From a technology standpoint, some remaining bugs being worked through include in-progress integration between agency-management systems. Among leading vendors, Vertafore and Nexsure report real-time upload with the Insurance Exchange, while Applied Systems, which has in the past considered the exchange as a competitor, did not provide information regarding any integration capability. Additionally, using an integrated platform is no guarantee that integration has been enabled at a particular agency by default.
“As the upload feature between our agency-management system and LexisNexis is still not operational, we cannot enjoy the potential benefits of this feature,” said Forkner of MHBT, which uses Vertafore’s Sagitta platform.
Brian D. Bartosh, president of Top O’ Michigan Insurance Agency Inc., says the “Insurance Exchange” hasn’t quite lived up to its name.
“Right now, most of the carriers getting [an exchange submission] can see the information, but they need to extract it,” he says. “It’s an application exchange, but not a data exchange.
“Some of the things that are nice are the way [the system] puts the submission together and allows us to track submissions, but we use our agency-management system [Applied’s TAM] for that,” he explains. “The LexisNexis solution, the way it was presented, is that you can present submissions to carriers, and they don’t have to be members. But once they do that, it creates a ‘super PDF.’ We felt it was too disconnected from the process.”
But brokers report that the biggest obstacle to greater adoption of the exchange is the reluctance of carriers. Although any insurer can receive data via email through the exchange, whether they will is a different story. “In the beginning, some carriers told their underwriters not to accept it, but we don’t have that situation anymore,” says Pruett. “No carrier is fully bucking us.”
“This is an industry that can always find reasons not to do something,” adds Crerar. “There are no real impediments [to the Insurance Exchange] other than will and fear.”
“Carriers need to get over their mentality that brokers are going to go to a bunch of different Web sites,” says Henry, adding that he has contacted all MHBT’s carriers about being Insurance Exchange members. “I’ve said, ‘You are going to put yourself at a disadvantage compared to other carriers that are cooperating,’” he explains.
Rather than worry about being “spreadsheeted,” carriers should look to the advantages of the system, its proponents say. “It comes down to self-interest,” Fitch explains. “The exchange positions us in the industry where we might not have been positioned elsewhere because we have a product in midmarket commercial lines that some of the bigger brokers and agents would not [otherwise see]. This puts us on [their] radar.”
Fitch points to the exchange’s Market Finder feature, with which brokers can gauge State Auto’s appetite for a particular account before sending an application, and the insurer can disseminate new information more quickly. “It allows us to do that differentiation and marketing at the speed of light rather than rely on sending reps into the field,” he says.
Additionally, future development is planned. “We’re starting to aggressively go after all the brokers and agents out there, and as we do that we will be adding capabilities to the system,” says Crerar. That includes expanding the system to multiparty transactions, such as larger and more complex commercial lines, as well as small commercial and personal lines.
Time will tell if this effort will ultimately succeed where others have failed. But while current usage may be less than hoped for, proponents point out that the adoption curve is steady.
“Thought leaders in this market are very supportive and believe it has to happen, and users [of the exchange] have high satisfaction,” says Lynch.