Caliber Ones E-Commerce Solution Offers Wholesalers More Than Speed

At Caliber One, an e-commerce solution that the four-year-old excess-and-surplus lines insurer has built to ease its wholesale brokers through the hard market offers some features that might be more important than the prospect of hopping on the Internet to get a timely quote, its creators contend.

It's not that Alan Ogilvie, vice president, legal and e-commerce, will downplay the importance of the 15-minute input process of the insurer's online rate-quote system–or its capability of delivering policies to a broker's desktop within 20 minutes.

But there's more to Caliber One Management Company's “easySeries” than that, he insists–citing quick responses on referrals, ultra-simplified applications and a broad appetite for risk.

“Obviously, in surplus lines, you're not talking about a vanilla risk–there's quite a breadth of risks that may come in,” and some don't meet the underwriting rules built into a rate-quote system, he said, noting that Caliber One built a referral function into its system. If a risk doesn't meet certain underwriting rules, it will refer to a group of underwriters at Caliber One whose only job is to deal with the referrals from the system.

“Some carriers either have not had referral capability, or they've had referral capability which went to one of their many offices throughout the United States,” he said. He said that in the latter situation, a referral could end up “getting prioritized and, often, [put] at the bottom of a stack of paper.”

Ronald Austin, president and chief operating officer, said: “When someone goes online to get a quote, they're expectationis speed and convenience. Even if it gets referred, the expectation doesn't change. You can't take two or three days to get back to them.”

John Black, assistant vice president of product development, indicated that 24 hours is Calibers typical response time on a referral.

“I think our brokers are finding that just because something's referred for a quick look by a human underwriter, isn't a bad thing,” Mr. Ogilvie said. Those underwriters “wake up in the morning and that's all they do. That is their sole focus,” he added.

Caliber One's e-commerce solution, branded under the “easySeries” name, went live in February with “easyUmbrella” and “easyExcess.” The Yardley, Pa.-based company, a subsidiary of PMA Capital, plans to expand beyond excess and umbrella this summer by rolling out a similar product for general liability.

Giving “the basics” of the “easySeries” system, Mr. Ogilvie said it has “full online rate, quote, bind capability.” Beyond allowing wholesale brokers to complete applications online and to get quotes in “a matter of seconds” via a secure broker site, wholesalers can also obtain policy forms and endorsements, production reports, and loss reports, representatives said.

Mr. Black said the application typically takes brokers 15 minutes to complete, as he quickly demonstrated by running through a sample. Once a broker completes it and clicks “generate quote,” a screen pops up to let the broker know that the information is being processed. Typically that screen is up for only 30 or 40 seconds before a quote is generated, he said.

If a broker binds at the end of the process, then the entire policy is delivered to the brokers e-mail box within two- to three minutes, he said.

As he demonstrated the system, Mr. Black highlighted the fact that the company got some of its brokers involved in the building process, with seven wholesalers actively participating in a pilot group.

“They helped in terms of how we structured some questions,” he said, noting, for example, that the brokers didnt want to have to input three or five years of loss experience for each submission. Challenged to design a user-friendly way to get the necessary loss information, the company settled on a simple loss ratio which the online applications prompts brokers to calculate in most instances. (He said that loss runs are required roughly 15 percent of the time.)

“That's where the creativity had to occur,” Mr. Ogilvie said. “We knew there was certain information we had to have from an underwriting perspective.” However, the method by which Caliber One acquired the information didnt need to create a lot of work for the wholesale brokers, the two men agreed.

“Keep it simple. Keep it reasonable. Keep it consistent,” Mr. Black said, outlining the thought-process behind the system. Consistency helps on the underwriting end as well as the broker end, he said. “You know, were all human.” If the questions are consistent, then “you're not catching an underwriter on a good day or a bad day.”

Ease of use and consistent flow of information also comes from the fact that the company tried to follow the ACORD applications, since that's what the wholesalers are receiving, he said.

“We see this as enabling and enhancing our relationships with our brokers,” Mr. Austin said, going on to outline several advantages of creating the “easySeries” system for Caliber One.

For example, he said the system allows Caliber One to differentiate itself from the pack of competitors. By selling “speed and convenience” in a “very, very difficult marketplace, where people can't get answers,” he believes the system has enhanced Caliber's overall image and value in the surplus lines brokers office.

Instead of competing with eight or nine companies, “when you move into the e-commerce arena, there are only two that we know that we're competing against,” Mr. Austin said. Mr. Black identified the two companies Caliber views as competitors as American International Group and RLI, adding, however, that all three are also “competing with the fax machine.”

“If it's easier for brokers to jump on the fax machine, they're not going to come into our system and input the information,” he said.

He reports that competition from fax machines, so far, hasnt been an issue. “With so much business going through the market, service has been so poor that we're finding principals at brokerages jumping online,” emphasizing the word principals.

Mr. Ogilvie noted, however, that some people, “for whatever reason, will decide that they don't like the Internet and they're not going to use it,” adding that Caliber One still allows submissions by fax. “Thats absolutely the customers choice.”

He also said that the company strives to distinguish itself by maintaining “a fairly broad underwriting appetite.” Some people try to characterize these systems as being focused only on small accounts. But that really isn't the model,” he said. The system can accommodate accounts with “fairly significant sizes,” as long as the accounts have “readily identifiable exposures,” he said. Mr. Black said that the largest account quoted to date was $300,000.

“Every time the broker has to sit there and think about what fits into our system, we just lost,” he said.

Mr. Austin said that Caliber also differentiates itself by doing business through a very limited number of surplus lines brokers relative to its competitors. That was “a very conscious strategic decision,” he said. “To some extent, it gives the appointed E&S broker exclusivity, because his competitor doesn't have access to us.”

Even though broker partners are limited, the possibility exists that two different brokers will send in that same piece of business–through the online system or otherwise. “Whoever sent it in first would essentially control the account. So you don't get us issuing multiple quotes and human beings competing with online,” Mr. Black said, noting that accounts are cleared based on the phone number of the insured–one of the first inputs on the application.

Outlining a final advantage of the system for Caliber One, Mr. Austin said that as brokers are getting online quotes, “they're essentially populating our database.”

“There's no dual entry from our standpoint. Not only is it efficient for our broker, but it's also enormously efficient for Caliber One,” he said, noting that the database is populated by the distribution system “on a consistent basis.”

From an internal control standpoint, he said, it allows the company to track hit ratios and monitor underwriting risk by allowing up-to-the-minute online oversight of whats being written by class, by broker, and by geographic location.

The e-commerce system feeds the companys billing system, its policy management system and all of its management reports, Mr. Ogilvie said. “Its there. No one needs to do anything else.”

Caliber One Management Company underwrites on behalf of Caliber One Indemnity Company.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, May 6, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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Caliber Ones E-Commerce Solution Offers Wholesalers More Than Speed

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