Slow Cooker

Slow Cooker

The setting for SEMCI has been on simmer for the last two decades, and new research by Gartner doesn't raise much hope it's going to get any hotter.

The concept of a single-entry, multiple-company interface (SEMCI) has gone through cycles over the last 20 years, but for every carrier that has supported the concept there have been as many or more that have rejected it. The technology to make SEMCI possible for carriers and distributors has matured, but the wide acceptance often predicted for SEMCI seems way off in the future.

In the past, one reason cited by carriers for their reluctance to adopt SEMCI has been the technology and the standards that were needed weren't in place, according to Kimberly Harris-Ferrante, co-author with Stephen Forte of the recent Gartner research paper “SEMCI Presents a Real-Time Challenge for P&C Insurers.”

“Even as [carriers] talked theoretically about the concept [of SEMCI], they never could achieve it because of the immaturity of the technology and the standards,” says Harris-Ferrante. “As the technology has matured and SEMCI becomes more possible, what you find is a twofold problem.”

Although agents remain positive on the subject, Harris-Ferrante reports they acknowledge there is no one unified model today all insurance companies they represent can go to. On the opposite side, insurance carriers wonder if agents aren't putting pressure on them to offer SEMCI, why should the carriers bother investing time and money toward it?

Carriers know not all independent agents are going to use SEMCI, so SEMCI adoption just adds more expense to carriers' IT costs on top of the agent portals and other production systems carriers offer agents, Harris-Ferrante points out.

“[SEMCI] is not replacing anything,” she notes. “For insurance companies, it's just another added expense to how they do business. If you also look at the way the insurance companies are considering it, the more [carriers] use a standardized SEMCI model, the more they are standardizing the process of doing business with the agent. [Carriers] are saying this is going to erode their competitive differentiation, which makes them less motivated to move forward even with a concept that makes sense.”

Being easier to do business with has been the carrier mantra for the last few years, but if the playing field is level–everyone is doing the same thing–there is no pressure to do SEMCI, explains Harris-Ferrante.

“All things being equal, the financial stability of the company and the quality of the insurance product are going to be more of a motivation for an agent to sell than the ease of doing business with [a carrier],” she says. But if you have companies that are just as financially stable and just as good with product quality vs. price match, she contends other technology perks can motivate agents to choose one company over another.

Gartner studies have shown functionalities such as accessibility to electronic documents and forms and the straight-through-processing application are highly ranked criteria among agents and critical factors in how they select carriers with which to do business.

“All these factors are making some companies go out on a limb,” indicates Harris-Ferrante. “A lot of companies are guessing on how [SEMCI] is going to impact their business. But it's more of a theoretical model than a quantitative equation.”

Carriers have bigger technology issues to address, as well. “There are other things on the insurance companies' lists they consider a priority,” she says. “The investment in back-office systems, for example, continues to be one of the top priorities among companies.”

With carriers spending up to 70 percent of their IT budget to keep the lights on, that doesn't leave a whole lot for discretionary–more strategic–spending.

“If you don't have the money and you have some things that have to be done for compliance or regulatory support, claims processing, or a policy administration update, those are taking higher precedence,” adds Harris-Ferrante. “Those things that can't be quantified from either a risk-avoidance or a profitability-gain perspective are just taking a back seat right now.”