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Brokers Cast a Wide Net With Electronic Exchange

Pat Speer March 2007

Still in development, it doesn't have an official name, yet the ground swell for the electronic insurance exchange appears to be growing.

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.

Regardless of how it's perceived, the exchange movement is not unlike the proverbial freight train. It's chugging along and gaining speed. This is largely the result of the insurance broker network, which has quietly pulled together venture capitalists, a couple of heaving-hitting technology providers and a host of other stakeholders to create what they are calling the ultimate network solution for producers and for carriers.

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.

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