Have we reached a turning point in carrier/agent technology? DebSmallwood, founder of Strategy Meets Action (SMA) believes so.

“For the past several years the focus—especially for the largecarriers—was to automate personal lines,” she says. “It wasstraight-through processing and adding predictive analytics in thepricing. Progressive really raised the bar and the industry had tofollow suit. Those that weren’t using predictive analytics with ascorecard were not pricing policies right.”

The large carriers began to split up their commercial markets,explains Smallwood, and took the concept of the technology frompersonal lines and tried to become the market leaders forcommercial lines.

While there are several market leaders for personal lines—StateFarm, Allstate, Progressive, Geico—there is no single insurancecarrier who can match that sort of dominance on the commerciallines, points out Smallwood.

“If [commercial lines carriers] could get automation they feltthey could go after market share,” said Smallwood. “Some were ableto leverage a lot of the platforms they had developed for personallines.”

While the middle market for commercial lines will be able toautomate their processes to some level, Smallwood doubts thatmiddle market underwriting will ever reach straight-throughprocessing because the underwriter remains involved in the finalprocess.

“There are ways to automate workflow, present external data tothe underwriter and run some models on the side and that’s where[carriers] are headed,” she says.

Smallwood believes every insurer that has both personal andcommercial lines has to set up an environment where they get paper,electronic faxes, pdf forms via email, or they have a portal orreal-time access.

“You have to create that multi-channel distribution and bring itinto your back-end system and be able to navigate depending on theline of business,” she says.

Smallwood also believes the carrier’s business process has to beable handle all of the various connectivity methods.

“There are still many insurers with policy administrationsystems that are legacy so trying to connect data from all thosesources into a legacy system is a problem,” says Smallwood. “I’mstill hearing stories [from carriers] about being unable to dostraight-through processing or real-time access or they can’t hookup to a comparative rater until they fix their legacy systems. Theinvestments for policy admin are just huge. Fifty-five percent [ofinsurers surveyed by SMA] say they still have to invest in a modernpolicy admin system in order to do underwriting automation.”

Resources and dollars have helped the larger insurers tacklethese issues, but Smallwood believes it is more difficult for themid-tiers and smaller carriers.

“When you go down to the midtier, there are some companies thathave made progress,” she says. “The regional carriers that aresingle state or single line of business have made progress, but Ithink those regional carriers that have both personal andcommercial lines are struggling because there’s just so much todo.

What’s My Line

When discussing how well a carrier connects with independentagents, Smallwood explains you have to differentiate based on theline of business. And even those lines get broken down as well.

“If you talk to one of the top 10 carriers, the agents forpersonal lines and small commercial lines are entering data intosystems with the ability to do real time,” says Smallwood. “Butwith other lines, even if they have modern agency managementsystems, they aren’t set up to capture all the data. When you startto peal the onion it becomes very complex.”

Smallwood estimates that only half of independent agencies havemodern agency management systems that can connect them to carrierswith real-time access. A higher percentage—80 to 90 percent—haveagency management systems, but they are either older oroutdated.

SMA research has also uncovered that for the market leaders, themajority of their business—80 to 90 percent for personal auto andsmall commercial—is coming through either an agency managementsystem with real-time upload, a portal, or a comparative rater.

“Those market leaders are probably pushing anywhere from 60 to80 percent straight-through processing,” says Smallwood.

But SMA also asked these insurers if they had mastered automatedstraight-through processing and only 15 percent of personal linescarriers believe they have reached that level. Another 20 percentindicate they are almost there.

“That leaves the rest in progress, just getting started orstruggling,” says Smallwood.

For small commercial, just seven percent have said they havemastered the technology and 14 percent report they are almostthere.

Reasons cited for these failures include workflow or thetechnology the agents have in place. On the back end, though, theones that report they have mastered the approach or are almostthere have built both real-time access and a portal.

“It’s not one or the other,” says Smallwood. “Depending on theirbook of business, some carriers have more coming business throughthe portal and some have more coming through real-time access, butthere is still a lot of room for improvement.”

As the risks get more complex, the slower the process, pointsout Smallwood. Her research shows that for middle-market commerciallines, about 80 percent of the carrier’s business is beingsubmitted via email with a PDF attachment.

“It’s not coming through the agency management system becausethe agents either don’t have a system that can upload or they arenot keying in all that extra data that is needed for the morecomplex risks,” says Smallwood. “They have more than theapplication; there are a lot of attachments.

Portals are not a good option for the agents because they don’twant to key in all that information into several differentportals.

What they have found is it’s easier to create an ACORD app usingPDF and send all the attachments by email to all the carriers,”says Smallwood.

Not surprisingly, SMA’s survey found just one percent ofinsurers claim they have mastered connectivity and 12 percent saidthey are almost there. Fifty-eight percent of carriers report theprimary method for receiving applications for middle market isemail and 16 percent report the data is still coming to them onpaper or through fax.

Of the remaining 26 percent, 20 percent is coming in through aportal and six percent through real-time access.

“To me, the middle market has stalled because it’s so much workfor the agents to key in data,” says Smallwood. They don’t have thesystems to accommodate that.”

Mobile Options

SMA’s research shows between 15 and 20 percent of insurers havesome type of mobile project taking place in 2011.

“Most are pushing it more on the personal lines for the consumerand not necessarily for agents or brokers,” says Smallwood,pointing to services such as self service, paying a premium, orfirst notice of loss. “Larger companies in the more complex linesare looking at how they can leverage mobile for the brokers, butthey haven’t figured that one out yet.”