Brokers Cast a Wide Net With Electronic Exchange
Insurance Networking News, March 2007
Depending upon whom you ask, the "exchange" is the best technology for the insurance industry since the Internet, a "me-too" service that will only add complexity to the supply chain, or a behemoth to be reckoned with by carriers and producers alike.
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The exchange takes the real-time, comparative rating, single-entry, multiple-company interface idea a step further.
Along with providing producers of all sizes with the ability to perform "once and done" transactions with any number of carriers simultaneously, it holds a bigger promise: as a content aggregator it can make exchange participants' data available in a variety of forms to subscribers.
"In the 10 years that we've been looking at this, we've moved from evaluating the inefficient nature of the linkage between A, B and C, to being able to gather aggregate data and information necessary for the industry," says Frank Sentner, director of strategic technology for the Council of Insurance Agents and Brokers, Washington, D.C. "Other industries have this, which means the insurance industry is operating in the dark."
The council's clout is not to be ignored: The organization claims that council members annually write 80% of all commercial property/casualty premiums in the United States and administer billions of dollars in employee benefits accounts. And CIAB is not the only party interested in climbing aboard the train.
More than 7,500 agency, brokerage, MGA and wholesaler professionals who took part in the ACORD Users Group (AUGIE) 2006 Technology Survey made it clear last year that dealing with various company proprietary interfaces, followed by duplicate entry, represented the group's biggest challenges (see charts, pages 8 and 10).
The Independent Insurance Agents & Brokers of America (Big "I"), Arlington, Va., which represents more than 300,000 independent insurance agents & brokers, has also joined the faction.
"The electronic insurance exchange will help address one of the two biggest issues our members face," says Jeff Yates, executive director of the Agency Council for Technology at the Big "I." "Our members care about reducing the complexity of proprietary systems so they can improve access to real time rating, and they want more effective commercialized downloads."
Yates is quick to point out, however, that the exchange may not be the only train on the tracks, especially in terms of supporting smaller personal lines agents across a number of lines of business.
"A number of comparative raters are doing work in this area and so are the agency management systems' vendors," says Yates. "There are a number of people working hard on this already."
BIGGER PICTURE
Sentner's vision, however, which is tied to middle market agents and brokers that focus primarily on commercial lines, is bigger than just transactional solutions.
"We're talking about supporting more than just the business process," he says. "It's about providing access to information that doesn't exist today. There is no place where information is aggregated to reflect agent, brokers or carrier performance, for example. None of the solutions out there address that broader scope."
The information Sentner believes is critical to this effort is a collection of marketplace data, such as an anonymous look at geographical regions that will enable members to identify market niches, and non-anonymous data to help them identify their performance against the marketplace. Brokers will track which carriers they are submitting to, the business they've already written with them or how long it takes a carrier to respond to a request. Sentner claims that, although the exchange initiative is "broker driven," carriers stand to benefit, too.
"The participating carriers will likewise have info on their agents and brokers and be able to better track their performance," Sentner says. "But they'll also be able to see which business they didn't write-for whatever reason. This is not something carriers do a very good job of tracking today."
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