The independent agency system used by most insurance carriers has been a successful means for insurers to distribute policies, but agents and their representatives indicate things could be better if carriers would recognize agents typically work with multiple insurance companies. Agents believe the key to maintaining those multiple relationships lies with the carriers' willingness to allow agents real-time access to every carrier's Web site.

Jeff Yates, executive director of the Agents Council on Technology (ACT, part of the Independent Insurance Agents and Brokers of America), claims the dominant message he hears from agents is their frustration with having to rate a policy on multiple carrier Web sites. "It's not efficient," says Yates. "It reminds [agents] of the old days when they had separate PC terminals for every one of the companies they represented. A lot of agents are saying we're going back to those days."

Yates doesn't want to paint a bleak picture, though. "There is a lot of activity happening, and I think the efforts of companies to have real-time rating available through comparative raters and agency management systems are accelerating rapidly," he says. "Agents have reached the point where they're going to understand the need to jump on board themselves."

Independent agent Robert E. Dunn III agrees proprietary Web sites cause too much work for agents and delay the process of supplying real-time rates to customers. If agents want a rate from more than one carrier, they have to enter data into their agency management system and then reenter the same information into each individual carrier's Web site, he explains. "This movement by the carriers to have proprietary systems to try to control the process really runs in the face of business process trends, not just in our industry but throughout the business world," says Dunn, vice president and agency manager for Hotchkiss Insurance in Houston. "I've chalked it up over the last few years to the fact the carriers that don't want to do [real-time rating] are the ones that just don't know who they are. They don't know what distinguishes them from other carriers. They don't have that knowledge to say their products, services, and reputation are better, and their financial strength is greater. These are the things agents should be selling."

Len Brevik, executive vice president and CEO of the National Association of Professional Insurance Agents (PIA), contends carriers could move away from proprietary Web site systems if they wanted to. He reports the average PIA agency represents more than a half-dozen carriers, and that means customer service reps in the agencies literally have a half-dozen screens open to rate new business. "To have a standard interface certainly is achievable," says Brevik. "The bottom line is if you can make the job [of an agency CSR] easier because of technology, [carriers] are going to win. When you have proprietary-based systems, you are not making it easy. If you look at the companies with the fastest growth and what their CIOs are doing, those posting the biggest numbers are the ones that have that ease of doing business."

When carriers talk about ease of doing business, points out Brian Bartosh, president of Top O'Michigan Insurance agency in Alpena, Mich., they view it as a one-to-one relationship with the independent agents. "[Carriers] don't think necessarily of the agency being able to do business easier," he says. "[Carriers] talk about integration to their Web site directly, or something to that effect, in place of the real situation agents have to deal with–multiple carriers as an independent agent. We constantly have multiple workflows we have to deal with, train from, and associate with."

The lack of real-time rating is a workflow issue, notes Stuart Durland, vice president of operations for Seely & Durland Inc. in Warwick, N.Y. "Every single [carrier Web site] is different–where you put the data and the different questions that are asked," he says. Durland's agency represents about 15 companies with seven of those accounting for the brunt of the agency's business. Of those seven, four are working actively on real time.

"The agency needs to stay in a consistent workflow with its agency management system," says Durland. "Getting there has been tough because every carrier has been doing things differently. Some of them are more aggressive in working toward a real-time solution. Some are taking a wait-and-see attitude."

Three Issues

There are three requirements agents need from carriers regarding technology, Brevik believes. "Number one is ease of doing business," he says. "The second is sharing information about shared customers. The third area is to use technology to break down the barriers between product lines."

Brevik understands a seamless connection between carriers and agents is not an easy achievement. "You have a lot of legacy-based systems in the company, and getting them to talk in an easy fashion with all the different agency management systems out there is a challenge," he admits.

The issue of privacy rules can stifle the sharing of information, but Brevik asserts carriers that want to grow their business need to find an answer to this issue.

"If there's a way we can share that information about a customer–the data mining aspects–we can grow the revenue from the agency side, and the company's balance sheet will look better at the end of the year," he adds.

A big hurdle for companies that have both life and property/casualty lines, Brevik maintains, is how to leverage life sales with P&C sales. "If you can do that, you're opening a gold mine," he says. "There are a lot of silos in the insurance industry–not only the silos of the agents and companies but the silos of the different product lines. There are huge silos for life and P&C."

On the life insurance side, Craig Weber, senior analyst in the insurance practice with Celent, explains few agents emphasize agency management systems. "[Life] agents are OK with using carrier systems," he says. Data upload and download and SEMCI concerns are not as big an issue on the life side. "The life business is less commoditized, so the products are harder to compare," he says. "Most life agents have a pretty good idea which carrier has the product their client needs before they write the business. Property/casualty writers spend more time comparing those carriers for an individual piece of business."

Getting Better

Bartosh does most of his business with eight carriers, and today five of them show up for comparative rating on BOP, workers' comp, personal auto, and homeowners. A year ago there were no more than two that could connect with his agency management system to offer real-time rating, so the situation is improving.

But there still is plenty of work to be done, Bartosh indicates. He envisions round-trip transactions where the agency can move its data into real time, get a real-time rate back, issue the policy, and get a policy number back all in one quick move. "We do have carriers that offer that service, and we like it," he says. "It just would be nicer if they all were moving closer in the same direction."

While the goal is to have all companies working in real time through the agency management systems, Durland knows agents have to be realistic. "That's not going to happen right away," he says. "So, if I get one company that has that ability, it's still saving me keystrokes. If I can key in my application and send it in–even though that company might be the only one doing it that way–I'm not double-keystroking into the system. That's a philosophy I don't think a lot of agents have grasped."

There are a lot of carriers that haven't been able to identify their core strengths internally, Dunn believes, and are uncomfortable working with technology as something they can take advantage of with their agents. That is the reason many carriers tend to stick with their proprietary systems, he suggests.

The percentage of companies with which it is easy to do business is small but growing, according to Dunn, as more carriers adopt real-time transactions and become truly automated. "There's certainly a perception on the company side carriers are automated," he says, "but when [carriers] are entering data two or three times themselves, that really doesn't count.

"While there are [regional carriers] that are leaders," Dunn continues, often the problem is a matter of budget and sophistication. Smaller carriers typically don't have the infrastructure for such a task or the sophistication to meet the ACORD standards. "It is a very big industry, and you run the gamut of a mom-and-pop insurance carrier to a multinational," he says. "Most of the multistate regionals have the ability to implement this. It's a matter of getting on the radar and understanding why it's good for them to devote those budget dollars upfront and understand where the return is going to be."

Reaching an ACORD

Many carriers are interested in the same things as agents, Bartosh has discovered. He chairs a subcommittee with ACORD that is exploring a new application to support the company-unique screens. "The reason we're having delays in getting this real-time transaction to move through is, unlike industries such as travel and banking where they've identified transactions, each insurance company still wants to ask for all these additional pieces of information," he says. "The project I'm chairing is to get ACORD forms to accommodate more of these questions that appear to be general."

When he brought the idea to ACORD, Bartosh was trying to get agents involved in the committee and discovered the carriers are just as frustrated with trying to support all the different questions. "Now, half of the committee is made up of company people," he says. "What we did find out was in most cases there are very few company-unique type questions; it's just the fact the forms never support that."

It is important for the agency management systems vendors to make things as easy as possible for the carriers, Yates comments. To do that, both sides need to implement the ACORD XML standards. "If the vendors are using XML, that will allow the carrier to reach more of its agents," he says. "It's important for the vendors to make this as easy as possible and at as reasonable a cost as possible for carriers to implement real-time rating."

All companies have additional underwriting questions they like to ask and unique edits, continues Yates, suggesting companies need to review those edits to see whether they need them all. ACORD can offer valuable assistance on this, he points out. "If there are additional questions most companies are asking, then incorporate them into the standards so it becomes easier for the interfaces," he advises.

As for agency management systems vendors, there needs to be a way to handle these edits in as efficient a workflow as possible for the agents. "Vendors also need to make it easier for carriers to enter their unique company information because companies have to do the unique company information for multiple vendors, so that process has to be as easy as possible," Yates says. "There always are going to be unique company edits. Carriers must go through and make sure they need the additional information. Companies have made underwriting more complicated, and we don't see signs of that changing. In fact, with technology, [carriers] probably are going to make it more complicated."

Encouragement

One of the main missions of ACT is to encourage agents to think with a process and technology mindset. "There are a number of agents who stay current with technology," says Yates, "and they are seeing the benefits of those implementations really start to snowball and put them in a very efficient position."

Yates also acknowledges many agents are not fully utilizing their Web sites. "It's very important for agents to have a Web site and begin to have more functionality on it," he says. Once that is done, the next issue agents, carriers, and vendors need to address together is extending functionality from the carrier Web site through the agent Web site to the customer. Security remains the biggest issue with that advancement. "Most customers want to come to the agency site when they want to look at their information electronically," he says. "We need to create a seamless process where they can do that and pull the information from the carrier site when needed but access it through the agent's Web site."

Another issue holding back adoption is some agents don't have agency management systems. Durland indicates such agencies work more with the regional carriers than with national carriers. Those agents have one or two key companies, and they can go to those companies' Web sites and do their business. "That's why the companies will argue they still need their proprietary system," notes Durland. "I say, Where is the old top-20 rule? Where is most of [the carrier's] business coming from? If it's coming from the automated agencies, that's where [carriers] should be concentrating their automation dollars in trying to make life easier for those agents."

Weber reports carriers seeking to differentiate themselves are determining who their best agents are and providing those agents with high-end service. "They reward agents who send them a lot of business by giving them dedicated underwriters or dedicated case managers, for example," he says. "Those service-oriented strategies are very important for independent agents. They speed up the process and make information more accessible."

Other Changes

Another change Brevik would welcome is for carriers to allow agencies to download policy information in a useable format. Most carriers currently send information to the agencies in PDF files, he explains. "You can't manipulate the data within those files, and what it does is push [agents] back to paper," says Brevik. "If the company would change that one thing, it would make a dramatic difference in the day-to-day ability of our agents."

Sandy Clark, a consultant to PIA and founder of the Insurance Technology Coalition, would like to see both agents and companies become savvier on what's going on from a technology perspective on Capitol Hill. There is a wide variety of issues that center around privacy, he reports, which on one level or another, touch technology, the companies, and their agents.

Clark is concerned with the inadvertent impact of laws. Legislation starts out with one idea, he contends, and sometimes ends up almost by accident causing a disaster because businesses have to comply with unintended consequences. "You don't have to look very far to see that," says Clark. "If you are an agent, you know what it has cost to comply with Gramm-Leach-Bliley." The amount spent for GLB compliance across the U.S., he estimates, is somewhere around $1.4 trillion. In the future, he believes Congress is going to step in to examine the issue of data loss. "The problem isn't [the government's] intent, it's what ends up happening as the result of its actions," he says. "There are any number of horror stories out there about legislation that started out as a good idea and ended up trying to bring e-commerce to a screeching halt."

Do the Right Thing

One of the pluses in dealing with user groups, Durland comments, is the opportunity to observe the number of carriers that participate. "There are a lot of companies out there that believe [real-time initiatives] are the right thing to do, they've just got to get to it," he says. "If all the companies set aside a certain amount of money to invest in real time and got it implemented with their agents, they would see the growth. I feel I'm so close to having four of my top companies in commercial lines being there. We keep using them. I have to send them data in different ways, but it's still a lot less time than keystroking everything twice."

Durland's advice to other agents is if the carrier they represent offers real-time rating, the agents need to use it. "Two companies I talked to this week said they monitored [usage] on a daily basis to see how much activity is going on in real time," he says. "If the agents get one [company with real-time rating], they have to use it, and then the second and third [carriers] will come along."

The solution to the challenges facing carriers, agents, and vendors comes down, Brevik believes, to one word: cooperation. "In order to have integrated technology, you have to have cooperation–between the back room on the company side and the front side with the agents dealing with the customer," he says.

On the other end, companies and vendors are disappointed with the degree to which agents have implemented real time when it's become available, Yates asserts. The reason agents have hesitated is while they may have a few of their companies offering real time, the rest use the old workflow. One of ACT's initiatives is to encourage agents to implement real time as soon as it's available. "There are efficiencies [agents] can get even though they don't reduce themselves to one workflow immediately," says Yates. "There are efficiencies inherent in real time [agents] can take advantage of. Plus, it's the best measure carriers and vendors are looking at to see the extent of agent demand for it."

Dunn claims he has struggled to comprehend why carriers continue to perpetuate their proprietary Web sites. He suggests agents need to help carriers understand what makes each carrier unique. "We're closer to the market than they are," he says. "We can help them understand how we distinguish to the consumer what makes a difference."

Many carriers have presidents' councils and agents' councils, but Dunn remarks these are often one-way communication vehicles, and the direction of the communication is not toward the pertinent parties. "A lot of times the people who are involved in that communication chain are not the people who really need to get the information," he says. "One of the issues we run into that is frustrating is trying to get the common message up from the agents to the right people in the carriers and making sure people understand real time is of value to everybody. It's not just an agent tool. Carriers collectively are leaving hundreds of millions of dollars in productivity on the table. If they would allow [agents] to focus more on sales and less on processing, they'd have a lot more business from us."

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