Eventually, the connection between insurance carriers and theindependent agents that sell their products will become simpler,but until the two sides agree on what's best for each ofthem—individually and collectively—there remains a level ofcomplexity in distribution management, according to Deb Smallwood,founder of Strategy meets Action (SMA). SMA recently conducted asurvey of insurers and agents on distribution management.

“Insurers are offering portals, comparative raters, upload toagency management systems, email and PDF,” she says. “Depending onthe line of business and the sophistication of the agent, someinsurers allow agents to key data into their policy administrationsystem and then upload it. They either upload to a comparativerater for personal lines or small commercial, or upload in realtime to the carriers' rating systems.”

The technology platform puts a strain on relationships betweencarriers and agents because of what Smallwood sees as conflictingpriorities.

“When an insurer deals with many agents and brokers, they careabout profitability, their combined ratio, underwriting profit, andunderwriting guidelines,” she says. “When you flip over to theagent, there is just one of them and they deal with many insurers.Insurers are looking at agents with many different portals, butthey want just one system.”

The one-to-many relationship of carrier to agents causesconflicts for the agents because they are focused on top-linegrowth, getting revenue out the door, and renewals, according toSmallwood. For the carriers, though, much of the automation startswith new business and doesn't even focus on renewals.

“After digging into this for the last year or so it's easy tosee distribution channel in insurance is extremely complex,” shesays. “The conflicting objectives almost become an anchor inholding the industry back. Insurers are pushing technology and it'scausing business to be more complex.”

Insurers need to identify the capabilities they need to provideand understand the agents and brokers, explains Smallwood. Insurersalso need to recognize the maturity levels of their agents and theagency management systems, how the agents prefer to exchangeinformation, and give them the tools, she adds.

“The drivers for growth are the agents and brokers and they needto have ease of doing business,” says Smallwood. “That's a phrasewe've been talking about for many years. Agents will push businessto insurers that have ease of doing business. If carriers make iteasy for agents the agents will send good business, if carriersmake it difficult the agents will send not-so-good business. Agentsknow what business is profitable.”

Smallwood believes about 80 percent ofpersonal lines business is uploaded directly into policy systems byagencies, but points out there still remains a great deal ofre-keying of information into carrier portals.

“When insurers put portals out there it's usually for datacapture,” says Smallwood. “The minute you get an MGA in the middleof it with multiple systems, it becomes real complex.”

More carriers work through portals today, points out Smallwood,either building their own or buying a packaged solution. Manymid-tier insurers, she adds, are leveraging SharePoint or webtechnology to be able to build portals.

“I think the industry is immature in terms of portaltechnology,” says Smallwood. “When I interview insurers and talkabout portals, they immediately reply that it's for the agent orbroker to use to key in information for a quote.”

Smallwood then asks whether the carrier has considered using theportal as a platform.

“The analogy I use is the iPhone with lots of apps sittingthere, one of which could be data capture,” she says. “On a portal[carriers] should have what their risk appetite is, give the agentsa view of their book of business and portfolio, loss ratios oftheir book of business, forms, and other applications sitting outthere. Unfortunately, most insurers just think of the portal fordata capture for a quote.”

Smallwood believes portals remain immature because carriers arenot building a platform to do real-time upload rather than justconnecting the upload to the policy administration or ratingsystem.

“Why not have everything come through your portal?” asksSmallwood. “Why not let it be the hub that sits in front of yourrating and quoting systems? Everything would come through thatframework. Then, if the agents needed to do real time upload andadd additional information that also could be done through theportal. I like to think of the portal as something bigger than datacapture.”

The future capabilities for portals including social media, bookperformance, FNOL, bill payments, licensing, commissions,endorsements, according to Smallwood. “You can see when you look atportals today, it's about inquiry and the ability to quote—simplestuff,” she says. “When you look at the future it means adding morefunctions.”