No Debate: SEMCI Technology Is Here

It is "extensible" because XML is not a fixed format. In other words, its users may design customized languages for an unlimited number and type of documents and then write, manage, transmit and share those documents over the Internet. XML makes it possible to store any kind of structured information and encapsulate it so it may be passed between different computing systems which otherwise could not communicate.

ACORD XML is a standard for the p-c industry that was released in July of 2001. This industry-specific language defines various p-c transactions and supports personal, commercial, specialty and surety lines of business. It is also the foundation for ultimately achieving real-time SEMCI exchange of data (also known as customer information) between agents, carriers, rating bureaus, service providers and others.

SEMCIan acronym formulated by the insurance industryenables the single entry of data into an agencys management system. Then, in real time or batch mode, the data are sent with a single keystroke via the Internet or a leased or direct line from the agency to multiple carriers mainframe computers. Proposal data is returned, again in an electronic format, to the agency for review of policy terms and subsequent purchase.

SEMCIs benefits are far ranging. Single point of entry of customer data is far less time-consuming. It reduces errors caused by retyping the same information into different carriers mainframes. It eliminates duplicate entries, and real-time or batch mode transmission of the data to and from multiple carriers ensures the quick and consistent response necessary for agents who are writing a final policy.

The ultimate value of SEMCI to both agents and those they serve is that it very cost-effectively allows them to access a much wider market and lets them quickly identify which p-c carriers will cover what type of business.

How close or far off is the p-c industry to achieving consensus on XML and SEMCI?

An often-quoted prediction is that XML standards will be in extensive use within the next three to five years, and that achieving a true p-c industry SEMCI solution is also close at hand.

But dont hold your breath for that broad-based XML and SEMCI prediction to come true that quickly.

XML will not become the core of carriers business technology for the foreseeable future for several significant reasons.

First, the majority of p-c carriers are already writing as much business as they want with the current technologies they employ. Retooling their current data collection systems to XML-based technology to ultimately support industry-wide SEMCI is an expensive proposition. Why then would, or should, they make the capital outlay needed to switch over to a new technology?

Second, there is a general industry resistance to or apathy about the new. Why change when things are good? There is no burning platform or perceived need to upgrade to XML. Most carriers have their own proprietary systems and unique underwriting requirements. Their overall attitude is this: Since my site and technology is the easiest for ABC Agency, I will continue to write this agencys business. ABC Agency may want access to technology that is more state-of-the-art and more efficient, but the time needed to do the search isnt in their best interest, so theyll stay with me."

Finally, there is internal resistance from carriers business units. These are the profit centers of any carrier and the revenues they generate are what typically support and underwrite the additional staffing, training and capital outlay need to handle the carrier IT departments request for new technology upgrades and service offerings.

Does all this resistance and feet-dragging mean that industry-wide SEMCI is an unattainable or far-distant goal? Not at all.

A few major p-c carriers have already developed, or are in the process of developing, XML and SEMCI systems for agents. However, those carriers may well pull out of the XML arena within the next two to three years, because its not a value proposition for them. Several technology vendors and providers are also working diligently to get carriers to buy into XML standards.

Yet, no single carrier or vendor can be, or wants to be, all things for all agents and business owners. And having only a few companies on the XML bandwagon does not an industry-wide SEMCI solution make. Without complete industry acceptance of underwriting requirements, XML and compliance with these standards, SEMCI can never truly become a reality for the industry.

What scenario might tip the balance? If a major carrier not currently offering small business p-c coverage decides to aggressively come into the market with an XML platform, other currently complacent p-c carriers may realize they could lose their business to another technology if they dont adjust their systems for easier access to quotes.

Because nature abhors a vacuum, during the past few years, several Internet-based insurance brokers have stepped in to fill the current void. Those that have survived because of solid, strategic business plans are revolutionizing the way the insurance industry quotes, binds, and distributes its products, especially to small businesses. And through their SEMCI-based technology applications, they are making it possible for agencies of all sizes and configurations to implement a platform on which they can access these streamlined products and provide value-added service for their small commercial customers- all from a single point of entry.

These online agencies have also taken the guesswork out of accessing and utilizing Internet technology and are giving agents a host of unique, new service and selling capabilities and tools.

These new Web-based, industry-specific distribution processes and tools and network-style business models make writing small commercial business much less cumbersome and give agents access to leading national brands through a single application system providing bindable quotes.

For the thousands of agencies that are utilizing Internet-based technology, SEMCI is a reality, right now. And they are reaping its benefits by not only saving time, but expanding their services and the coverage options they take to their customers. In fact, some of these Internet-based agencies have already become very successful in attracting large numbers of agencies and have built impressive premium volume with major insurers.

Will the p-c industry buy into the XML standard? Will SEMCI become an industry-wide reality? Yes, eventually. But in the meantime, those agents and p-c carriers who dont want to wait for the final tally and are taking advantage of the single-entry, multiple-company interface applications already available may well be those who ultimately come out on top.

Don Urbanciz is CEO of InsuranceNoodle (www.insurancenoodle.com), an e-commerce insurance agency for small business.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 13, 2003. Copyright 2003 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.