Top 10 Stories of 2002: Agents Go On Attack In SEMCI Battle

In April, AMS Users' Group President Pam Parry said that carriers "have no excuses anymore" when it comes to cooperating on SEMCI. She said the industry's major user groups are united in their desire for single-entry.

"Just look at the market share that represents," she pointed out, adding that "if I have six companies, and three of them buy into [single-entry], my business is likely to be shifted to the companies that buy in. Money talks."

In September, the Agents Council for Technology called on agents to become front-line troops in the SEMCI battle. "It is critical for agency principals to become directly engaged in the agent-company interface issue," declared an ACT "Call For Action" paper released during the annual conference of the Independent Insurance Agents & Brokers of America, which assembled the ACT coalition of agents, carriers, user groups, vendors and related associations.

ACT said that "agencies need to reward those companies which respond to agency needs for more efficient interfaces with a growing book of business, so that these company investments yield an appropriate return to the company."

In October, Applied Systems announced the "Light 'Em Up Campaign," aimed at installing real-time interface transactions between all agencies using its systems and participating carriers. The new president of the Applied Systems Client Network, Sally Knighten, said the user group would be putting on a full-court press to educate agents about the benefits of the SEMCI initiative.

The Bottom Line: While the pressure is certainly on, and producer group leaders are more vocal than ever in their call for agents to take action to make SEMCI a reality, don't expect a popular revolt by rank-and-file agencies as long as the insurance market is this hard. Beggars can't be choosers, and with carriers turning away business, agents are often in no position to make demands when it comes to technology.

Still, the winds are shifting. With sustained leadership from user groups, agent associations and vendors, the cooperation of a growing number of insurers, and new technologies making the transition easier, the Holy SEMCI Grail is a lot closer than it was a year ago.

Healthcare Costs: A Bitter Pill

For awhile there, it looked like managed care was the silver bullet that might restore some cost sanity to the healthcare system. But the silver bullet turned out to be a blank.

At a time when employers are struggling to make ends meet in a bad economy, health insurance premiums are again soaring, and one of the chief culprits is the incredibly rising cost of prescription drugs.

Group health insurance is becoming far more expensive, and employers are responding by cutting back on coverage or passing more of the premium costs onto individual workers. However, workers' compensation is also being hammered by rising healthcare costs–particularly skyrocketing drug bills.

Malpractice premiums are also exploding–prompted, in large part, insurers say, by out-of-control jury awards. These costs are passed along through the system and inevitably end up forcing health insurance premiums higher.

The Bottom Line: The country seems unable or unwilling to come to grips with a crisis that is leaving more and more individuals uninsured. Expect Congress to focus on a bill to provide prescription drug coverage for Medicare patients, and perhaps some medical malpractice reforms, but the bigger debate over the dysfunctional health insurance system should be delayed until the 2004 campaign for the White House.

Meanwhile, look for a growing number of desperate employers to experiment with defined contribution health plans, rather than be on the hook for defined benefits. This could be an opportunity for independent agents to help individuals make the best use of their health insurance dollars.

Will Uncle Sam Expand Insurance Oversight Role?

The question of whether the federal government will regulate the insurance industry is now academic, thanks to the passage of the Terrorism Risk Insurance Act. The U.S. Treasury Department is up to its neck in insurance industry oversight now that it must dictate how to implement the law that provides a federal reinsurance backstop on terrorism losses.

The question is whether the federal government will dive further into insurance regulation now that it already has its toe in the water.

The Bottom Line: Congress will certainly be monitoring insurance regulation–particularly when it comes to implementation of the terrorism reinsurance program. However, a Republican Congress is unlikely to pursue a direct regulatory role beyond terrorism. The furthest they are likely to go is setting federal standards of some sort that leave actual oversight authority in the hands of the states, but even that is far from likely. State regulation advocates can probably sleep soundly–for the coming year at least.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, December 30, 2002. Copyright 2002 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.