Insurers Try Tech To Make Main Street Risks Into Easy Street For AgentsBut Some Producers Are Wary Of Webs Limitations

The “ease-of-doing” business catchphrase is definitely catching on with insurance agents placing Main Street commercial coverage for small-business customers, but the road to Easy Street can't just be paved with technology tools, they warn.

In addition, while agents are overwhelmingly pleased with the online rate, quote and issue capabilities that carriers bring to this market, in some isolated instances technology can make an agent's job harder, some told National Underwriter recently.

I think that the companies that are not jumping on the Internet rating and issuance bandwagon are the ones that will be left behind, said Robert E. Lynette Jr. of Bollinger Insurance in Short Hills, N.J. That's probably the way this class of business is going to go, he added, noting that among 16 carriers his agency represents writing small-business commercial insurance, only half now have Internet rating, issuance and underwriting capabilities.

We're having more success with the carriers that are allowing us to quote, underwrite and issue all on the same format, he said, indicating that such capabilities sometimes can be the deciding factor in choosing one carrier over another. It's a case of going to the carrier that gives you the least resistance in writing the business, he said.

Gary O'Brien of the O'Brien Russo Quint Agency in Watertown, Conn., also said it is helpful to be able to get an accurate online quote and to get a policy issued online without having to wait weeks for somebody to get back to say there's some information missing, only to have the process start over again.

From a speed and accuracy standpoint, it's probably easier to get a piece of business written than it used to be, as long as you know where you're going, said Mr. O'Brien, who said that 35 percent of his agency's book is commercial, and all of that is small business.

Explaining the qualification, Mr. O'Brien gave a hypothetical example: If I'm using ABC Company's Web site, I'm not going to be able to get a quote from XYZ Company out of the same process.

With an offline process, he said, you fill out an ACORD application, change the company name and send it out to two or three companies for a series of quotes, and you've done one thing and gotten several quotes.

Using insurer Web sites, he said, this is all do it once, and then do it again, and do it again, and do it as many times as you need to do it to get what you're looking for. You've got to get a pretty good handle on your markets ahead of time, otherwise youre spinning a lot of wheels just going through various companies' quoting engines. That just doesn't lend itself to efficient operation.”

Were supposed to know what they're doing anyway, but when a company has 200 or 300 classifications that are eligible and you're doing just one of them, unless you've developed some sort of expertise or target marketing for that specific class, you really don't know what company's going to be best for it. So you try them on for size, he added.

Going on to express another frustration, Mr. O'Brien–who is also an officer of the Professional Insurance Agents of Connecticut–said that one thing he misses that used to be around is relationships with underwriters. It seems to me that automation has pretty much taken over underwriting in the small-commercial arena.

Suppose, for example, a submission doesn't go through the insurer's automated process and its not necessarily something that the company doesn't want to write. It just hits a glitch in their system. There may be circumstances that make it an attractive risk to the company, but you're not able to communicate via a Web site. It's click this, click that, and all of a sudden, not eligible, “[when] it may indeed be eligible, he said.

Sometimes there are pricing issues, he added, noting that an automated system may not have the flexibility to take some good account characteristics into consideration.

James D. Sutton of the James F. Sutton Agency Ltd. in East Islip, N.Y., had a similar assessment as he spoke about placing the small contractors, retail stores and small service businesses that make up 40 percent of his book.

A lot of the automation that carriers have put in place has made it easy to do business. You can get quotes and be able to bind in a relatively short period of time, he said, noting that this is even true for really good-sized businesses having as many as 100 employees.

As long as it fits what the companies are looking for, they'll fly through the automated systems [and] ease of doing business is definitely there said Mr. Sutton, who is a regional director of the Independent Insurance Agents and Brokers of New York. But for risks outside of generic-type retail stores or offices that fit the profile, he said agents run into problems.

Theres not too many people you can go to, to get it easily resolved–to get the quote done or even get the approval process going. So that does slow the process, he said, noting that property insurance for restaurants and other small businesses located in coastal areas of Long Island is an area that many insurers won't touch, adding that placing contractors in New York is also very difficult.

The observations of these agents writing small-commercial business track well with results of broader surveys conducted by the Professional Insurance Agents of New York and Connecticut last year, even though the surveys relate to both personal and commercial lines. (Another survey is currently underway.)

One trend that the surveys reveal is that the technology issue has been a double-edged sword between agents and companies, observed Ellen Kiehl, assistant executive director for government and industry affairs for the PIA affiliate, who spearheads the survey effort.

On the one hand, the ease of doing business has gotten much better and the turnaround time has improved, she said, interpreting last year's results and discussions with PIA members. However, the result of automation has been to take away underwriting judgment in the agents' perception.”

The agent, at one time, was valued by the company for first-line expertise, she said. But with the development of grid underwriting, where everything fits neatly into little boxes, companies are really overlooking an aspect of their agency forces that is valuable and not giving it a place to be heard, she said, referring to individual knowledge of an individual risk.

Stephen Ruchman, president of Ruchman Associates Inc. in Rockville Center, N.Y., believes his diligent front-line underwriting can put him at a competitive disadvantage when other agents abuse automated underwriting engines. Some people send a line in, hoping it goes through. But we underwrite a risk. And if we have a question, we talk to the underwriter–that's where we can hit that underwriting frustration, he said.

The company will say we don't want it, and then we find our competition will send the same line and the company writes it because they've described the risk in a way that pushes it through the system, he added.

Explaining how that could occur, he recalled a pre-automation situation that existed just prior to Jan. 1, 2000, when insurers were afraid of writing any operation that did computer programming for banks or insurance companies. A competitor who described one such risk as a computer store got it placed, he said.

Thats the downfall when the companies give us all this automation. They've got to have some checks and balances, said Mr. Ruchman, who is president-elect of PIANY.

Reviewing the PIA state survey results in detail, Ms. Kiehl said, we found that there was an amazing correspondence between the two states, noting that the top problem listed in both was the lack of support of single-entry, multiple-company interface, better known as SEMCI. The systems themselves, with the exception of the SEMCI aspect, ranked better, she said.

Another factor in the tech area where companies are deficient in agents' eyes is follow-through training and support, she said. In a comment section of the survey, one agent commented that you can have the best system in the world, but it's like an anchor tied around a producer's neck if the training and support's not there, Ms. Kiehl reported.

Right behind support of SEMCI, she said, agents ranked carriers poorly in the degree of underwriting flexibility that carriers give them. Another big problem area was competitive pricing.

David Wyrch of the Van Dyk Group in Ocean County, N.J., is one agent who thinks ease of doing business means more than technology. The latitude they give you to go ahead and bind coverage without communicating back and forth is another factor, he said. That's where we see the majority of our business going–to the companies that are strong in that.

At his agency, commercial business is primarily Main Street risks with premium values of $25,000-to-50,000, he noted. Besides seeking companies that are easy to do business with, he said he looks for stability and consistency of the market, stable consistent pricing, and consistent internal communication.

I want to know that they're in this market and that's the market they want to be in. It's not something that they write today and they're not going to be there today, tomorrow or the next year, he said.

He said there needs to be a consistent level of communication, especially between the carrier's marketing and underwriting departments. It's very easy for marketing to say, “'We're going to write this. We're going to write that.' But the underwriters often respond differently, he noted.

Agents interviewed by National Underwriter also offered opinions about carrier product offerings in the small-business arena.

The businessowners policy package that a carrier offers is the most important ingredient of any small-business program, according to Scott Stanford of Britton Selg and Stanford in Roselle Park, N.J. All the BOPs have different enhancements or perks built into them, and some companies have better perks than others, he said, noting that coverage for a store's exterior signs or the availability of higher limits might distinguish one carrier's program from another.

In general, he said, policies could be improved from a readability standpoint, putting nice, clean-looking, legible, easy-to-understand policies on his wish list. These are small-business owners. They're not high-pressure businesses. A lot of them don't have an extreme amount of knowledge of the business. So when a policy comes into them, they want something simple, he explained.

There is little that separates one carrier's product offerings from another, according to Mr. Lynette of Bollinger Insurance. To be competitive, they're all offering the same stuff. There are slight deviations, but basically they all have increased valuable papers, accounts receivable, employee dishonesty coverages as part of the format, he said, noting that one of his carriers allows agents to quote employment practices liability for a small limit.

One trend Mr. Lynette said he has noticed is that carriers are expanding the classifications that qualify for BOP contracts. That, I think, is where the market's going now, he said.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, March 5, 2004. Copyright 2004 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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Insurers Try Tech To Make Main Street Risks Into Easy Street For Agents But Some Producers Are Wary Of Webs Limitations

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