EASY STREET

Insurers also have struggled with how much to use technology to target the ultimate consumer, rather than the agent. There is a real philosophical difference about who owns the client, says Curt Rynties, vice president of information technology at M Financial Group, a life insurance producer association. We believe the person who owns the client is the producer, [but] some carriers believe they own that relationship.

While insurers undoubtedly would like to strengthen relationships with end consumers and create new selling opportunities, in trying to do so, they risk alienating the agency channel. And considering most carriers remain dependent on that channel, thats no small risk.

Insurers absolutely believe they will continue on an agent-distributed product approach. That is their primary and, for many, their only focus, says Saccocia. Also, insurance is still a product that needs to be sold.

Therefore, there has been little movement in consumer-focused e-commerce at carriers that use captive or independent agents as their means of distribution. Rather, insurers continue to look for ways to improve the way they do business with their agency force.

Were committed to the independent-agent channel of distribution, says Ben Salzmann, president and CEO of property/casualty insurer ACUITY. Our goal is to build an extremely efficient common technology platform that promotes the success of the independent agent.

Distribution Dynamics

While the common goal of becoming easier to do business with is guiding the sales technology projects at many insurers, there are differences in how this objective is being achieved among distribution channels and lines of business.

Anecdotal evidence would seem to indicate independent agents, including third-party distributors, make up the majority of agents that carriers use to distribute their products regardless of line. And Kimberly Harris, research director at Gartner, reports in her firms surveys that carriers expect to increase the number of independent agents used vs. captives over the next three years.
The greatest difficulty of extending sales technology to independent agents is carriers cannot insist agents use those solutions. In Gartners surveys, 56 percent of property/casualty and 44 percent of life carriersdidnt even create a standard for the technology or methods agents use to do business electronically with them, Harris says.

But agents share the blame, as well. Carrier-sponsored SFA and CRM applications also have faced obstacles because agents dont want to share their prospecting information with the insurer, Saccocia says. They really take ownership of their book of business.

The solution theoretically is simple but realistically complex: I think [carriers and agents] have to trust each other, Harris says, adding carriers should give agents the tools to do their jobs.
Most carriers have focused on the Web-based agent portal as the primary means of e-business, reports Harris. Although that method solves the problem of standardization by allowing agents to use the ubiquitous Web browser, it creates its own problems, according to Salzmann.

Building Bridges

The portal-only approach hurts independent agents, Salzmann maintains. Instead of creating a consistent experience for agents and a common approach to e-business, it presents them with a fractured, learn-my-proprietary-system-or-else quagmire. The resolution to this problem, he asserts, is for carriers collectively to support the systems agents already use to do business, such as by building bridges to agency management platforms and comparative raters.

Carriers are coming around to the idea of bridging, Harris reports, adding, as more of them support this method of e-commerce, it is changing the rules of the game. In fact, rather than being concerned with losing business through SEMCI efforts, she says, carriers are becoming more nervous that if theyre more difficult to do business with than their competitors, they will lose business.

Carriers that fear bridging efforts arent thinking about the future, Salzmann believes. The independent agent channel needs to be healthy for everyone to succeed. That means cooperating and communicating as well as supporting standards, all with the objective of boosting the efficiency and productivity of agents. In turn, we believe agents will favor companies that are building for mutual success and are advocates of the independent agents efficiency. Companies shouldnt be afraid to compete, he says.
ACUITYs efforts to connect its rating and application systems with agency management systems and comparative raters began in the 1990s with support for upload/download via IVANS.When the carrier first looked to the Web, it did not want toin Salzmanns wordsput lipstick on a pig by simply creating a new Web front end for its homegrown mainframe CICS rating engine. Instead, it developed Java-based applications, using IBM WebSphere, which would accept external data feedsboth from its own portal as well as XML-based third-party systemsand connect to the rating engine in real time. The insurer says it was one of the original three carriers to bridge with Transformation Station in 2000.

In 2003, the insurer completed its project to provide real-time quoting, application, and inquiry (including policy, billing, and claims) functions in personal and commercial lines via its portal, according to Neal Ruffalo, ACUITYs vice president of enterprise technology. Additionally, those functions can be initiated directly from several agent desktop applications, such as Applied Systems (via Trans- formation Station), DORIS, North American Software Associates (NASA), and MI-Assistants comparative rater.

Today, 70 percent of our personal lines new business and 25 percent of commercial lines new business come in electronically, Ruffalo says, with agents using a mixture of both the portal and management-system bridges to do so. He adds the e-commerce systems have been instrumental in helping the carrier achieve such operating results as adding $50 million in new personal lines business over the past two years with no increase in underwriting staff.

Agents also wrote $80 million in new commercial lines business over the past two years, which they rated in their offices and submitted electronically, Ruffalo says.

Paying the Bridge Toll

One issue that does need to be addressed in bridging is cost. This includes both the hard-dollar costs associated with individual transactions and multiple licensing fees (depending upon how many systems a carrier supports) as well as the soft costs associated with carriers completing the actual systems work.

Insurers most often incur the transaction cost, Harris adds, although carriers dont feel they should have to pay for it. Also, some larger agents are tech savvy and have the IT staff and budgets [to incur the costs], and some do not. So you get into the issue of how far down do you want to go in paying costs agents incur for using the systems.

Interestingly, not all the bridging activity is coming from the carrier side of sales. Some agents, such as the member firms of M Financial, have taken matters into their own hands. In 2003, Rynties explains, M Financial deployed E-Z Datas Enterprise CRM Platform (ECP) software. The Web-based system is designed to allow member agents to log on to a single system and obtain a better view of their customer relationships, which may span several different insurance carriers.

We may have one person who is the insured, but 60 or 70 policies around that individual, Rynties says. The idea is to understand all thats going on with the one person as the central piece of it as well as how to leverage all that information about it.

In late 2004, the ECPsystem also will begin linking to the illustration systems of the insurers with which M Financial does business, according to Rynties. It will take what used to be 20 to 40 clicks and reduce that to three, he says.

M Financial has used its leverage to get its carriers on board, Rynties says. Its member agencies represent the top producers for a lot of companies, so if those producers say this is something they need, it makes it easy for carriers to say yes.

Captive Audience

Unlike carriers that use independents, insurers using captive agents can control the technology of their sales force. According to Saccocia, most of the recent work in the captive agent arena has been on systems that help reduce the amount of service agents perform and to allow them to focus on sales.

This is one of the key goals of a recent initiative at Nationwide Financial, the life insurance, annuity, and retirement services division of Columbus, Ohio-based Nationwide. Doug Stafford, officer in Nationwide Financials Sales/Technology Services department, reports Nationwide for years has equipped its field wholesalers with laptops capable of accessing the carriers client-server CRM application from Siebel for producer information. Now the carrier is providing staff members, beginning with those responsible for wholesale life, annuity, and pension sales, with Bluetooth-enabled PDAs and mobile phones.

This capability, which currently is being piloted, will allow staff members the ability to carry with them critical information from the central Siebel database to work in both an offline and online mode. Online access presently is accomplished via cell phone connection and a VPN client for security and eventually will include public hotspot wireless connectivity, Stafford reports.

This project is aimed directly at maximizing sales time in the field, Stafford says. External wholesalers have an internal team of wholesalers to help them market and support the territory theyre covering and rely on their internal person to a great extent for information they dont have at their fingertips, he explains. Now [field salespeople] have the ability to look up producer, service, and other key relationship information. Our hope is it reduces their reliance on the internal support team and helps them from a sales perspective.

Being able to control the technology sales staff uses doesnt necessarily solve all the problems for insurers, Saccocia says. Many [agents] are happy with the way theyve been doing business for some time, and theyre not looking for a change, or theyre not tech savvy.

Kelly Cannon, a CIO with the responsibility for infrastructure at Nationwide Financial, reports among the 250 members of the companys wholesaling staff, there are different levels of adoption and usage [of the CRM application]. It varies from people who depend on it daily to those who are very reluctant to use it.

Continued trainingboth on site and through online meeting services such as WebExis important to encourage user adoption, he explains. We also have strong support from sales management that wants its wholesalers to use [this system], Cannon says. Everyone understands all our major competitors are doing something similar and [field staff] needs to maximize its time selling.

Putting It on the Line

Differences exist by line of business, as well. According to Joanne Galimi, research director at Gartner who covers the health insurance industry, the main concern of insurers is speeding up a traditionally slow sales process, particularly in group insurance. In the past, it has taken brokers days or weeks to try to get a quote, she says.

We are seeing many [insurers] implementing broker portals or [providing] broker applications to streamline the whole selling process. That includes doing renewals, doing proposal generation, online rating, and quoting, Galimi says.

In the health industry, improving the sales process for agents is a benefit that trumps any disadvantages the portal approach may have, she maintains. I havent seen [directing agents to the portal] being a problem, because producers have had such great difficulty using the previous systems, she says.

Chuck Cronin of Deloittes consulting group maintains its difficult for insurers in the medical field to integrate with agency management systems. Cronin also serves as interim CIO at Emergency Physicians Insurance Company (EPIC), a risk retention group offering medical malpractice insurance that retained Deloitte to consult on the carriers recent deployment of a policy administration platform from eAgency.

The type of data EPIC needs [to process business fully] isnt stored in a typical [agency] system. Doctor informationis on a paper application somewhere. It doesnt have a home in an agency management system, he says.

One of the first deliverables of the installation at EPIC in 2003 was a Web-based quotation and application system. According to EPICs COO and CFO, Ted Hall, the appeal of the system to EPICs agents is its ease of use and immediacy of processing over the paper-based applications that are typical in their industry. Weve departed from the traditional [sales] model, Hall says.

The eAgency system itself is completely Web based and hosted by eAgency on an ASP basis. This was done both to save money and be flexible, Hall reports. Our investment in systems is 25 percent of what it would be had we put in all the hardware, software . . . and additional people we would have needed to hire in order to maintain fully an in-house system, he says. EPIC also plans to add wireless support, he notes, but this function is not yet a pressing concern for its agents.

In the health insurance industry, there has been the effort to service and sell to individuals within group health plans after the sale to the group has been made, Galimi says. With the whole notion of consumer-driven healthcare and defined contribution plans, we are seeing the payers put out more self-service capabilities, so individuals can look at benefit plans and options and help the whole individual selling process, she says. Now individuals have the ability to pick and choose benefits, and payers can sell directly to the individuals after the employer group has been sold.

Get a Life (Policy)

In life insurance (including annuities), carriers sales technology initiatives have been all around getting business in the door, processing it faster, and tracking when incentives are going to be paid, Saccocia says.

Harris indicates because a lot of the life insurers are trying to move into wealth management, they need more robust technology that allows a salesperson to talk to prospects, understand what their needs are, and map that out through illustration-based technology that helps the salesperson do more financial or scenario planning based on what the [prospects] financial goals would be.

Such systems are a crossover of technologies that have been in the investment industry, such as financial planning software, and an improvement of whats been in life insurance, such as needs assessment and illustration, Harris says.

In property/casualty, carriers work on bridging technologies has pushed that industry farther down the path of straight-through processing (STP) than other industries. According to Saccocia, In P&C, we see the need to streamline and provide services to the agents around quotes, endorsements, billing, policy, and claims. Theyre trying to achieve at least the perception of STP or the ability to lower the number of transactions or services agents have to perform or at least give [carriers and agents] speed and accuracy in processing that business, she says.

For example, ACUITYs Ruffalo says the insurer has made obtaining an actual hard-copy policy a one-step process for both the agent and insured. When an agent submits a personal auto application, we automatically order underwriting reports, process the complete application through our expert system, and give the agent an approval within seconds, Ruffalo says. In less than five minutes, we also e-mail a link to the completed PDF [of the policy] that can be printed by the agent. Literally, a customer can come into an agents office to apply for insurance and leave with an actual policy in one visit. The insurer added the e-mail delivery feature for personal auto in early 2004 and will expand this capability to other lines of insurance throughout the year.

Unlike the health insurance industry, however, property/casualty carriers have been loath to provide either sales or service capabilities directly to policyholders. For instance, weve seen elaborate Web sites to go in and submit claims, Harris says, but I havent seen any companies that have [a substantial] volume of claims coming in through the Internet.

Part of that is consumer attitude, she continues. When [consumers] have an accident or homeowners claim, they dont want to sit in front of a computer and enter it. They want to pick up the phone and call the call center or agent.

Despite the numerous differences between industries and distribution models, insurers must consider supporting whatever means agents ask for to do business with them. To do otherwise is a very short-sighted view, Rynties says.

Not doing so becomes a reason you dont get business, he adds. So you either get on board or youre shooting yourself in the foot.