Commercial Lines Starting To Catch Up On Web-Based Functionality For Agents

With business lines, agents often still have to complete and submit paper applications and fax, snail-mail or e-mail them to underwriters, who have to key the information into carrier systems, make underwriting decisions, produce quotes, then get back to agents.

But the future is here today in commercial lines, as carriers start to let agents do more business with them online.

The diversity and complexity of commercial lines insurance creates an environment of less automation, as well as inconsistencies in underwriting practices, coverage standards and even pricing.

To effectively enable the distribution channel (agents, brokers, managing general agents) with point-of-sale capabilities, insurers need to invest in improving the use of data along with technology. There are several key advancements in both technology and data utilization that can solve these problems today.

New Tech Architecture

Web services have allowed tech teams to deploy software as a "service." That lets a rating engine that may exist on a mainframe computer to be packaged in a way that extends that rating capability as a Web service through the Internet, eliminating the need for writing and maintaining both internal and external systems.

This allows the data to flow easily and transparently among different software applications through the Web. Now, agents can access underwriting systems via the Web and use them just as underwriters do.

Personal lines continue to master the use of data (credit reports, motor vehicle records and claims history) to dramatically change the way insurers underwrite and price policies.

However, by understanding their books of commercial lines business through effective use of data and analytical models, insurers are able to create a higher level of automation around the underwriting process and extend this automation out to agents for near-real or real-time processing. This results in faster, better risk selection.

Workflow software lets agents and underwriters communicate in real time and exchange information without having to make phone calls or send e-mails or faxes.

Easy-To-Use Systems

Insurers can't afford to send all their agents to weeklong training schools, so agents need to be able to learn software applications easily. The interface must be intuitive and customizable, and it should have easy navigation and simple error-message processing.

In such applications, the agent gets on the secure portion of the company site for rating and underwriting and logs in. The company system recognizes the agency and its authority level. (For instance, a "platinum" agency might have full issuance rights up to certain limits for all lines of business except commercial umbrella. A "silver" agency might have less functionality, and standard agencies might be limited to quoting.)

Let's say it's a simple risk–a businessowners policy–and the agent has issuance authority. The agent logs on to the carrier's system, enters the data, and the system triggers the underwriting rules. If the application passes the edits, the agent can bind and issue the policy immediately. The agent also can print the policy, or have the carrier handle the printing and mailing.

But what if a more complex risk is involved? Perhaps the requested limit is too high, or the business is in a hurricane zone. The system catches it and notifies the agent that it must be referred to underwriting for review. Now the agent can add notes and comments, such as "risk is in a wind zone but has a good loss history," or refer to a prior phone conversation in which the underwriter said the risk was acceptable.

Through the system, the application flows into the underwriter's work queue in real time. The underwriter can click on the application and view the comments, the policy data and the worksheet. Then the underwriter can decline, accept or accept the risk with changes.

If the underwriter needs additional information before making a decision–or if the underwriter decides to bind the policy subject to an inspection–all communication goes back and forth through the online workflow tool. Because of the need for follow-up, the software must incorporate a diary system for both parties.

Security is crucial. Agents will be able to view only their books of business and won't have access to confidential information.

While some carriers and agents are already reaping the benefits of doing business over the Web, a final ingredient is needed to get the bulk of agents on board–upload from the agency management system. This will let agents key the data into their systems and upload it to their carrier, either immediately or in a batch.

They can then use underwriting screens that are pre-filled with the applicant's or insured's data. Without upload, agents have to enter the data twice, making the process less appealing. Once policies have been completed and accepted, insurers send downloads back to the agents' systems.

In personal lines today, upload/download is common, but in commercial lines it's ad-hoc and sporadic. However, in 2006, policy-management system vendors should start offering it as a standard service–and commercial lines processing on the Web will move from a sometime thing to a common practice.

The benefits of processing commercial lines on the Web are great. There's a significant improvement in quality, with far fewer errors going back and forth. Instead of touching every piece of business themselves, insurers offload routine underwriting to agents. Since they're using the company's Web application, they don't need to buy software or maintain systems.

Agents get faster turnaround time, on-demand printing, better access to their data and the ability to view policies online.

Dorrie Pighettiis vice president and chief insurance officer with Hartford-based Insurity, a provider of property-casualty policy administration software and outsourced services. She can be reached at dorrie.pighetti@Insurity.com.

Caption for pix (Ara suggests a runner, looking strong, catching up with another runner, who looks a bit winded_:

In the race for faster turnaround time, on-demand data access and the ability to view policies online, commercial lines is running hard to meet the pace set by personal lines.

Quotebox, with mug:

"The diversity and complexity of commercial lines insurance creates an environment of less automation, as well as inconsistencies in underwriting practices, coverage standards and even pricing."

Dorrie Pighetti