Seeking An ASP? Be A Smart Buyer

If youve ever bought a house, a car, a dog or an engagement ring, then youve probably discovered the importance of being a knowledgeable buyer.

Such knowledge will often safeguard against certain fiascoes, such as mistakenly purchasing a haunted house, a car that lacks a steering wheel, a rabid dog or a fake diamond. In other words, understanding your product is the best protection.

And this emphasis on product knowledge is what a significant number of insurance agents and brokers must adopt as they decide whether or not to implement an application service provider (ASP) to host their agency management system or other technology applications. In short, agents must assess both the benefits of using an ASP as well as the issues that should be addressed to assure that the ASP will provide their agency with a secure, dependable and responsive solution.

An ASP is any partner that provides offsite core technology solutions and support for your agency. They extend beyond online agency management systems and include other agency applications, such as rating, Web sites, e-mail, office suites and specialized insurance software, and can be hosted by the vendor providing the software, a third-party ASP vendor or a carrier.

First, agents must ask themselves, “Is an ASP right for me?” Secondly, they should ascertain the ASPs performance and service commitments. Third, they have to discover how problems are handled. Finally, they must school themselves on the methods of implementing an ASP.

Whether or not you choose to implement an ASP depends very much on your analysis of the respective costs of outsourcing the particular technology versus managing it in-house. It also depends on your access to technology expertise locally and your interest in dedicating your time or other staff time to performing ongoing technology maintenance functions.

At the end of the day, however, you do not want to move to a particular ASP unless you have a high degree of confidence that the ASP will provide your agency with a very secure, dependable and responsive solution.

The way you establish confidence in your decision is by studying every aspect of the ASP. Go through a mental checklist. What are the typical benefits? What agency applications will the ASP handle and which will I still have to run and maintain locally? Am I assured of the ASPs financial strength, dependability and commitment to this offsite technology?

Am I better off with an ASP if a catastrophe hits the agency? What have been the experiences of fellow agents using the ASP? The list goes on, but the effectiveness of your decision depends on how well you filter out any lingering questions. Knowledge is power.

Ascertaining the ASPs performance and service commitments is a two-step process.

First, you must understand the service and performance commitments offered. So request the following from the ASPgenerally recognized certifications and the requirements to obtain the certification, server performance levels, maintenance steps, server contingency plans for down-time, disaster recovery procedures, schedule of database backup, and virus protection policies and procedures.

Second, it helps to know what is covered in the ASPs service agreement and what service guarantees are given. And these items are only a fraction of what you need to request from the ASP, so you cannot hesitate to request as much as possible.

Knowing your ASP also includes looking into the future. Its important to familiarize yourself with methods of handling problems, should they arise, because with an ASP, you are completely dependent on someone competent being available immediately in an emergency.

You need to know the 24/7 procedures for ASP interruption if your ASP goes down, as well as create a back-up strategy to keep the agency functioning, in which case you should know your contractual rights. Find out if your ownership of the data and other information is clear and exclusive. If the agency uses another software program that relies on the data on the agency management system, can you still use that software if the agency data now resides in an ASP? If not, does the ASP provide an alternative?

If your ASP is an insurance carrier, educate yourself on rights to get policy information in the event of a termination of the relationship. Protect yourself from “stolen, lost” or “infected” data by determining the ASPs liability. Ask if the ASP will assume liability for your agencys business interruptionfor a period of timein the event of an ASP crash.

Finally, it helps to know if your agency can procure insurance to cover some of the risks arising out of ASP failures.

It would be tragic if you went through all the trouble of educating yourself about ASPs but couldnt implement one. Avoid this predicament by assuring that you have a dependable, high-speed communications link with the ASP, supported by a financially strong and committed Internet service provider. Also, know what training the ASP provides for your employees, so they can use it effectively.

In the end, your knowledge will help you make the right choice in purchasing an ASP. For more information, consult a new checklist by the Agents Council for Technology, titled, “Evaluating ASPs: Issues Agents Should Consider” on the ACT web site at www.independentagent.com.

Jeff Yates is executive director of the Agents Council for Technology, affiliated with Alexandria, VA.-based Independent Insurance Agents & Brokers of America. He can be reached at jeff.yates@iiaba.net.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 11, 2003. Copyright 2003 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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Seeking An ASP? Be A Smart Buyer

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