THE dizzying pace of technological development can leave many agencies wondering what system they must purchase next, just to keep up. But that's the wrong question to ask, according to a panel discussion held at the CPCU meeting in San Diego last fall. Hugh Anderson, of AMS Services, and Mike Byam, vice president of property-casualty eBusiness & technology at The Hartford, agreed that insurance-industry participants must commit to improving workflow and then determine what technology will help them do that, rather than develop and acquire new technology and then decide how to use it. They also concurred that future technology will help the industry only if agencies, carriers and system vendors work together to determine industry data standards. An edited transcript of the discussion, including questions from the audience, follows.
Hugh Anderson, AMS:
Any discussion about connectivity between agencies and carriers is a discussion about technology–about moving bits of data back and forth between computer systems. But it primarily is–or should be–a discussion about doing business more efficiently. It's more important than ever for agencies to stress, both to their staffs and to their carriers, that implementing new technology is no longer optional. This must be a top-down business decision that includes training and support, not just an IT-driven choice to acquire a new computer system.
Historically, insurance technology has been developed by different players in the industry with the seeming belief that if you just create a system and plug it in, you've done your job. This pattern has led to a series of developments that served the needs of their creators quite well, but not those of others in the industry: client-based systems for agencies, policy-based systems for carriers, and numerous workflow problems for both. Regardless of how "slick" any new technology is, it's either something that improves communication and workflow between agencies and carriers or it's a failed investment.
Some carriers at least initially focused their "ease of doing business" efforts on building greater functionality into their Web sites. The functionality may have been cutting-edge, but the proprietary nature of the technology meant that agencies representing 15 to 20 carriers had to remember 15 to 20 sets of user names and passwords and perhaps go through 15 to 20 training sessions.
Carrier download has been more useful for agencies–more so in personal lines than commercial, though we're seeing more progress lately on the commercial side. The real opportunity, which the industry is still working at, is on the other side of this process: enabling agencies to process transactions from their end and have those transactions processed on the carrier side in real time, in a way that lets agency staff feel as if they've never left their management system.
A big challenge today for automation vendors is to bridge this gap between a carrier's proprietary technology and agencies' desire for a true SEMCI environment. For example, some carriers have focused their Web-site functionality on new-business quoting, since that's important to them. But most of the transactions an agency's CSRs process are service transactions such as billing questions, claim status, or verifying coverage particulars and adding endorsements. Or an agency may shop what is a renewal for them but new business to a potential carrier, and the CSR would like to avoid re-keying data for that new carrier. Agency management system vendors can play a role in addressing these issues.
Mike Byam, The Hartford:
From a carrier viewpoint, I think developing innovative technology continues to be an important part of serving our agencies. But carriers' innovations must fit into agencies' workflows to provide a benefit. We've found that some agencies love using our proprietary technology, and others are more concerned with being able to connect directly through their management systems. The challenge for all carriers is to find the best way to address both methods of communicating.
The ongoing development of Web-based services and XML data standards, which enable real-time servicing transactions, is one of the most significant trends in the industry. In particular, I foresee real improvement in comparative rating. Carriers will also increase the ability of agencies to "push out" some carrier services from the agencies directly to their policyholders. As everyone in the industry works together to develop and improve our standards, I think carriers will both continue to build their proprietary technology and work to better integrate their services with various agency management systems.
In addition to expanding real-time transaction capabilities, other challenges confronting our industry are the continuing effort to go paperless and the issue of information security–especially regarding passwords. We've made great strides on the road to a paperless environment, but work remains to ensure we're all at the same place on that road; when we're not, we contribute to differing workflows within an agency, which means the move toward a paperless environment may actually be making things more difficult. There's no perfect solution right now to the multiple-password issue, so it's critical that groups such as ACORD and the IIABA's Agents Council for Technology continue their work on this issue.
The phrase you hear a lot these days is that technology development is the three-legged stool. We must have input from carriers, agencies and vendors. Most important, we must ensure that as technology evolves, it's not just evolving for its own sake. We must always use developing technology to support our business strategies, not the other way around.
Q: How does the development of new data standards affect a carrier's own technology development?
MB: Like many carriers, we've been working over the past several years to restructure the architecture of some of our legacy applications. As we do this, we take advantage of the opportunity to integrate ACORD standards into the internally oriented architecture. Thus when we "push" some of these parts of our system out to agencies, our early standards integration means that it's not a huge leap to include ACORD XML in that external item. That makes it easier for a wider group of agencies to interface with us.
Q: What exactly is the status of ACORD and XML data standards? Are they helping the industry?
MB: My view is that the current standards are good, not great. One example of how developing standards improve things are the online "insurance malls" some organizations have created. In the past, a decision about whether to work with such a venture might have been largely determined by the IT costs of the project. In today's more standardized data environment, we can just say, "Here's our standard interface, our XML stream." The IT concerns are less of an issue, and such decisions are properly driven by what makes the most business sense.
The challenge for carriers will come as certain groups ask carriers to adopt new standards that extend into the realm of service transactions. This can benefit agencies, but there are also costs associated with the changes. From a business standpoint, it's not always a good idea to jump to a new standard. If only one carrier or vendor adopts a standard, it won't be of much use to agencies representing multiple carriers–and thus might not be worth the expense of using it, since it won't improve agencies' workflow.
HA: I agree that the new XML technology and standards continue to evolve. But standards are a prerequisite to enabling real-time work flows. I understand Mike's point about the costs and perhaps limited benefit of being among the first to adopt a new standard, but I still think it's important to do it. Among automation vendors, the competitors watch each other closely. If one organization adopts a standard that could make business easier for agents, the competition will feel pressure to follow suit.
Q: Will document management systems be increasingly integrated into agency management systems?
HA: Certainly agencies must have some sort of document management process–agencies can't grow today without a process that is different from what it was a few years ago. The decision of whether to integrate our systems with document management systems–or other types of third-party applications–depends on whether it will help an appreciable number of our clients. Outside vendors see an advantage in being able to say that they integrate with large agency management systems. But if they don't serve very many agencies to begin with, it might not make sense for us to dedicate resources to working with them.
Q: As technology continues to change, do you see carriers skipping the agent and allowing the insured to do more with his policy through Web-enabled services?
MB: Not really. I think carriers will move toward letting insurance agencies themselves extend that power to the insureds. Carriers might become more involved in helping agencies make their own Web sites to help insureds.
Q: How do all these changes affect the need for training and support?
HA: Almost all of our largest agencies have at least a full-time IT person, if not an IT staff. Some of the smaller agencies we work with seem to rely on us and on their carriers to fill some of their IT needs. But the midsize to larger agencies certainly need to have some IT expertise to succeed, not just with our systems. Their options include having an in-house IT person or retaining a consultant.
MB: Continuing to train agents is an important part of our challenge as carriers. As we enhance our technology, we have to let agents know how to use what we have created.
HA: Keeping agencies up-to-speed with the latest technology enhancements and how to use them is a struggle for carriers and systems vendors. As an example, we send newsletters and blast e-mails every few months. We get a lot of responses saying, "Take me off your list." But then we hear feedback at other times that we're not communicating enough. The challenge is getting to the right person in the agency at the right time.
Q: What is the status of commercial download?
MB: Insurers have rather low usage of the commercial download that's available right now. I know the ACT is continuing to work on this. Again, it can't be just one carrier or one agency management system that provides commercial download–we have to come together as a group and figure out how to bring standards to bear so agents will see the value of commercial download and embrace it.
HA: The industry is coming together to address improvements to commercial download. I think it is where personal lines download was 10 years ago. It has not been widely implemented, and in many cases where it has, it has not been implemented effectively by agencies. This is because the businesses being insured–and thus their data–are more complex, and because of the variation in systems that carriers and agencies use.
[This article was derived from a presentation at the 2004 CPCU Society Annual Meeting and Seminars, which was held in October in Los Angeles.]
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