Is Comparative Rating Dead?

Before we delve too deeply into the problems of today, allow me to draw on my experience regarding some of the first comparative systems and the problems they faced.

Not long after the proliferation of the PC had made the early comparative raters a resounding success, they faced an adversary equal or more threatening than the real-time Web system of todaythe dreaded "company diskette." At that point in time, the burning question was "Why would someone pay for a comparative program when they could get the company disks for free and they (the carriers) stand by the quote if you use their software?"

Another strong parallel between the past and present is the similarity between many of todays carrier Web portals and the old company "green screens" that dominated the 1980s and early 90s. Agents were forced to go to each companys propriety system and re-enter the data.

The problems facing modern agents, and consequently comparative rating, are not new. This doesnt mean, however, they are not real. Company-supplied diskettes were a real threat, as are real-time rating and credit scoring today. But, the agents desire to comparatively quote their available markets and their subsequent reluctance to re-enter data will drive both the carriers and software vendors to address their concerns.

Most agents complain about the extra work and time required to re-enter information in each companys sitenot to mention the challenge of keeping track of multiple passwords and workflows. Agents want the ability to enter the information once, get multiple accurate quotes and then not have to re-enter the data in the prevailing companys Web site. What they want now, and have for several years, is SEMCI (singe-entry, multiple-company interface).

It is simple to identify the problems with this endeavor, but I will go one step further and offer possible solutions. As mentioned, the problems are nothing new. What is new, however, is the technology and infrastructure to support SEMCI in a way that makes it truly viable.

Several capable parties have tackled the issue with varied levels of success, but none of them has garnered the acceptance needed to truly affect a change. This all changes, however, with readily available high-speed Internet connections, XML, instant credit information and the carriers ability to provide real-time quotes.

Efforts are currently under way to provide real-time credit score information as part of the comparative rating process. For years this has been complicated by the need for instant availability of the required credit information, the fees associated with such an effort and the lack of high-speed connections at the agency level.

Today, though, the costs of high-speed connections have greatly decreased, and consequently, the vast majority of agents now have this capability. There are also reporting bureaus now offering this information as an affordable Web service, making real-time scores a possibility.

Once the connectivity required for scoring is established, the door is open for the next big advancement in the comparative software marketreal-time rating. In addition to scoring, vendors are racing to be able to connect directly to the carriers during the comparative rating process. The programs would utilize the companies own rating engines, rather than the vendors having to reproduce them.

This means accurate quotes, and with the availability of credit and MVR information, there also shouldnt be any underwriting surprises. Granted, the insurance industry has been known to be slow in adopting new technology and there still are states that are not able to provide real-time MVR information, so this may not happen overnight.

I would venture to say, however, that we have never been closer to the reality of SEMCI than we are today. As for the question of whether or not comparative rating is dead, I feel strongly that if the independent agency market is to survive, then comparative rating must also. The day is coming when an agent will be able to call up the comparative rater, have it quote their companies utilizing the carriers Web-enabled engines, with the customers credit/MVR data, and then bridge the information directly to the carrier of choice.

Bruce Winterburn is vice president of company sales at Rackley Systems Inc., a rating software vendor based in Pulaski, Tenn.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, July 28, 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.