Insurer/Agent Connectivity Advances Across LOBs
While connectivity improves, conflicting financial priorities and rekeying data is still a problem for many insurers and agents, SMA finds.
Insurance Networking News, March 7, 2013
For insurers, investments and priorities are shifting beyond exchanges of transactional data with their agents, brokers and MGAs to informed interactions that drive better decisions and improve service, according to “Distribution Management – Connectivity Plans and Priorities, ” a survey from Strategy Meets Action.
The survey was designed to understand IT investment priorities, business drivers and barriers in distribution management, as well as to assess the maturity level of agent/insurer connectivity and better understand how those requirements are influencing technology investment decisions.
Results revealed conflicting interests in the financial drivers among insurers and agent/broker survey respondents. More than half of insurers (51 percent) ranked the combined ratio as the most important financial metric for growth, followed by underwriting profit (43 percent). However, agents and brokers are more focused on top line growth (60 percent), and retention/renewals (53 percent). As insurers develop distribution strategies, it is increasingly important for them to understand and incorporate the needs and priorities of agents and brokers, SMA said.
Insurers, agents and brokers share more common ground when it came to connectivity challenges. Rekeying information into multiple systems was ranked as the no. 1 challenge by both groups, (39 percent of insurers, and 43 percent of agents/brokers), which SMA said has been a big challenge for more than two decades.
Insurers and agents/brokers also agreed that conflicting priorities between agency and insurers was the second biggest challenge (33 percent of insurers and 35 percent of agent/brokers). Insurers rated complex multi-channel distribution as their next biggest connectivity challenge (22 percent); 27 percent of agents/brokers said ‘manual + paper process’ was their third biggest challenge.
Insurers, agents and brokers shared the same priorities when asked to rank business capabilities. In order, those capabilities include: ease of doing business; efficiency; effectiveness; collaboration; and visibility.
SMA found that the methods for passing data between parties varied significantly by line-of-business. Personal lines were found to be the most advanced in terms of automated and digitized capabilities. More than 80 percent said they use comparative rater/data exchanges; real-time upload; direct access through insurer quote/policy systems; and agency portal with data capture.
For the small commercial market, 70 percent reported using an agency portal with data capture, however many still use manual processes involving PDFs, faxes and paper mail. Middle market commercial and specialty lines still primarily use manual channels, such as exchanging data by phone, fax or through the mail, for data exchange. Less than half (45 percent) of specialty lines insurers use mobile devices for conversations and dialogue.
The biggest connectivity challenge for personal lines and small commercial lines insurers, and their agents/brokers is rekeying data.
Almost all (90 percent) of insurers are or will offer portals and paperless policy access, SMA found. And 86 percent of insurers are or will support partners with proposal generation, real-time upload/download and optical character recognition to capture data from PDFs. SMA said these advances indicate that insurers understand the value of better informed business decisions and working with agents/brokers to develop the value of their book of business and collaboration on customer service.
In terms of IT investment, SMA said plans for 2013 and the next three years are solid. More than a quarter (27 percent) plan to increase investment levels in 2013, and between 33 percent and 50 percent will increase investments over the next three years.
SMA said that overall, an impressive amount of progress has been made to increase connectivity in the insurance industry, but that rekeying information is still an unrealized goal. “To achieve real business advantage, connectivity must move beyond data exchange to informed interaction that provides the ability to complete the transaction in an environment of collaboration and negotiation as it is required,” SMA said.
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