Over the last year, Ive had a chance to talk a number of times with Klaas Westera, president of CSIO, a Canadian broker/carrier association, about its new industry Internet portal. Although the CSIO portal and the strategy behind it have relevance for the U.S. insurance industry (at least the independent part of it), I suspect that few carriers or agents know much about itor even who CSIO is. So heres a short report on the ambitious and suggestive efforts going on north of the borderand what it might mean to you. (By the way, in Canada independent agents are called brokers, to distinguish them from one-carrier agents.)
CSIO, the Centre for Study of Insurance Operations, is a cooperative broker and carrier association focused on improving the efficiency, effectiveness, and competitiveness of the independent Canadian insurance distribution system through the use of technology. Its a bit like ACORD, IVANS, and a national rating vendor rolled into one.
Over the years, CSIO has created electronic data interchange (EDI) standards such as AL3, form standards (paper and computer formats), Web-screen standards, XML standards, terminology standards (including an English to French glossary), and developed an industry extranet (CSIOnet).
Its done all this with a staff of nine.
Like IVANS in the U.S., CSIO early on used Advantis to provide an industry-wide communication network. Then two years ago, the industry switched to CSIOnet, a private IP network put together by Canadian Bell. According to Westera, the industry now enjoys a 70 percent savings in data communication costs. Its now standard practice for brokers and carriers to communicate with one another via CSIOnet.
Whats particularly interesting about CSIOnet is that it appears to have all the advantages of the public Internetwithout the problems. Because the network is private, it can be managed for performance and security in ways the Internet cannot. As I pointed out in my December column, increasing U.S. industry dependence on the Internet creates risk it would be wise to acknowledge and mitigate. And thats exactly what the Canadians have done.
What Was the Plan?
In 1999, CSIO recognized that carriers would want to begin to make their rating, policy, claims, and other systems directly available to their brokers through a network. That was a good thing, because it would result in greater responsiveness and lower expenses. But CSIO also recognized that were all carriers to do this on their own, theyd spend more money than necessary and create a chaotic situation for brokers.
According to Westera, CSIO had six key principles in mind when creating the portal:
Industry solution: One common approach that is owned and controlled by the industry. Multiple, multi-carrier portals would not do the job. Nor would leaving this critical effort to the vagaries of any particular vendor.
Single point of entry: A foundation for brokers to access company portals and other Internet-based services. Brokers should be able to log on once and then have access to all the Internet-based systems and functionality theyre entitled to. Further, look-and-feel should be consistent across disparate systems.
Issuable quotes: Guaranteed quotes should be provided to the broker on behalf of the consumer based upon company underwriting filters and rating enginesthat is, real-time rating. Most comparative quoting today is a non-issuable estimate, and that creates problems for everyone.
Accommodating to technology: An all-inclusive approach for all CSIO member companies and all brokers regardless of current technology. The portal has to work with existing carrier and broker systems, hardware, and operating systems.
Single-entry: A single entry solution (SEMCI) for the broker, with point-of-sale forms printing. Data entered into the portal should flow to broker and/or carrier systems and from them to the portal.
Migration to XML: Supports the use of existing EDI and batch technology while encouraging movement to XML and real-time technologies. It will take carriers and vendors a while to migrate from AL3 to XML; the portal must be useful todaynot just sometime in the future.
What Will It Do?
To begin with, the portal will focus on two areas: personal lines point-of-sale support and single-logon to multi-carrier policy systems.
Point-of-sale refers to everything needed to comparatively price and document a saleincluding upload to the carrier (submission) and/or downloading to the broker management system (BMS). In addition, CSIO has created screen layout standards carriers are expected to use when presenting Web pages to the broker. That means brokers should not have to deal with unique layouts carrier to carrier.
The CSIO portal will pass broker identity information to carrier systems as the broker clicks through to them. With the CSIO portal verifying the broker, it shouldnt be necessary for the carrier to require an additional broker login process.
For the future, CSIO is looking at hosting carrier rating manuals, publishing an API for remote Web service tie-in, linking to other industry sites and services, connecting to specialty markets, and providing a simple policy change form.
The CSIO portal is not a panacea, although its a significant step in the right direction. There are some issues.
Doesnt comparative quoting work to the disadvantage of carriers? Wont brokers sell on price? Wont the system hide carrier-by-carrier product differences?
Brokers do comparative quoting today. Its part of the value they provide their customers and theyre not going to quit. The portal will allow carriers to provide accurate quotes to the comparative environment as well as explicitly describe the special characteristics of their product offeringsneither is possible with current comparative quoting.
What about carriers who feel they need their own broker Web sites, separate and apart from the CSIO portal?
Thats fine. They can be both participants in the CSIO portal and have their own broker siteswith their unique look-and-feel, structure, or whatever.
Some carrier systems cant support real-time rating. What do they do?
Westera suggests that these carriers contract with rating vendors. Some now provide ASP services that can be custom-tailored by carrier. CSIO provides standards for the conversations between the portal and carrier (or their designee) systems.
Why should a carrier be part of the effort? Why not go it alone?
If a carrier doesnt yet have a broker site, being part of the CSIO portal will be less expensive than duplicating the effort. If the carrier does have a site, it should be easy to open its functionality to the CSIO portal. If CSIO achieves critical mass (and it appears that will happen), carriers that dont participate will be at a competitive disadvantage.
What happens to existing comparative rating vendors? Wont the CSIO portal put them out of business?
Westera believes their future lies in providing private-label solutions to carriers rather than retail solutions to agencies. Rating vendors have expertise with interactive rating many carriers lack. Smart rating vendors have provided solutions to carriers for years. With the CSIO portal theyll have a venue through which they can finally provide the accuracy, timeliness, and quality theyve always sought but found difficult to achieve.
Who will pay for the development effort?
CSIO from its current surplus and carriers and brokers via a modest assessment. Ongoing development will be funded out of current portal operating revenue generated from brokers who will pay fees comparable to what theyve paid for comparative quoting.
Will the portal work?
The general rollout is scheduled for early spring 2002. Although CSIO has designed the portal, it is being implemented by IBM and DWL, a Canadian vendor that focuses on the insurance industry. (See Top Dogs, page 24.) Technology is less of an issue than industry cooperation, and the Canadians seem to have an ample supply. Seventeen carriers with 55 percent of broker-generated personal lines premiums are aboard and implementing their parts of the solution.
What Does It Mean?
Although Im certain some carriers (but not many agents) would disagree, something like the single-point-of-entry concept being implemented by CSIO would benefit the U.S. independent agency distribution system by making it more competitive. Carriers would spend less, perhaps much less, connecting with agents. And agents would have more orderly and consistent access to carrier functionality.
Even though it might make sense, is the U.S. likely to follow the Canadian lead? Not without leadershipand theres no one in sight to provide it. Smart carriers might lobby their associations as well as producer associations and agent vendor user groups. Agents could motivate producer associations to step up to the plate. And the press should provide more coverage of this Canadian future-making process.
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John Ashenhursts company, Sound Internet Strategy, provides consulting, Web site evaluation, and seminar services to carriers and their trading partners. He can be reached at johnashenhurst@soundingline .com or (978) 318-1944.
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