Certified Data Exchange

Broker income is squeezed during the current soft market, but service costs for smaller commercial accounts are rising. Is there a better way? Today the answer lies not in grand industry technology solutions, but in safe and accurate data transfer between brokers and insurers. A data exchange certification program may make that process much easier.

In recent years, the property and casualty industry’s lofty dream of an industry-wide portal has been yielding to the pragmatism of XML standards and efficient data transfer between broker and carrier. For now, this is the most promising and practical application of technology to streamline broker-company transactions on the commercial (and personal) lines side of the fence. Are we there yet? Almost.

As brokers know, sometimes there is more talk than action when it comes to carrier connectivity. Brokers have to cut through the hype of “seamless” data transfer promised by some vendors and technology gurus. In many ways, when it comes to commercial lines, a gap still exists between various insurance company Web sites and broker workflow processes. Such a gap results directly in multiple data entry, increased potential for errors, customer turnaround delays and higher servicing costs.

“Commercial policies are extremely diverse, complex and non-standardized, and do not lend themselves as easily to structured electronic data transmission,” notes Brenda Rose, vice president with brokerage Firstbrook Cassie & Anderson Ltd. “Consequently, the vast majority of commercial information we relay to insurers is via fax or email, which then must be re-entered into the insurer’s system. Further, even where primary coverages and limits can be formatted, there is an additional challenge in translating the suite of ‘frills’ coverages provided in various insurers’ packages.”

PREPARING FOR DATA EXCHANGE

The Centre for Study of Insurance Operations (CSIO) issued XML standards for commercial lines in May 2006. This is a crucial platform for industry-wide electronic data exchange, but it is also just a starting point. Over the past year, how many insurers and broker vendors have embraced the standards and realigned their systems accordingly? How rigidly are the standards being adhered to? Have systems been audited and checked to minimize glitches in transactions and ensure security? Without this hard work, standards are just, well, standards. The devil of data transfer is in the details.

For the details to work, several things have to happen on both the broker and company sides of the equation. First, brokers’ systems must have the ability to create transferable commercial-lines data. Since Broker Management Systems (BMS) in the Canadian market currently do not have this capability, brokers with a significant amount of commercial business should strongly consider a Commercial Management System (CMS). If the data is not collected and stored in a standardized manner at the front end, the process breaks down right from the outset. A comprehensive CMS solution solves this problem.

“Broker management systems are one of the main current limitations in transmitting data,” says Jeff Roy, the owner of P.A. Roy Insurance Brokers and president of Westlake-McHugh Insurance Brokers Inc. “Many do not have the next CSIO standard forms and XML standard in their systems. It can take from six months to two years to get them in the system. Then they have to figure out what the companies are doing. In today’s fast moving world, this is way too slow.”

If brokers can transmit standardized data, the focus then turns to the insurance company’s ability to receive that data. There are numerous pitfalls – some purely application-based, others more business process oriented – that can derail a successful data transfer exercise on the carrier side. Insurers can benefit from a closer relationship with technology specialists who know the ins and outs of commercial data exchange.

CERTIFIED DATA EXCHANGE

This is one reason why Policy Works established its Certified Data-Exchange Partner Program. It is a formalized business relationship and certification process recognizing insurers that have worked in partnership to ensure accurate exchange of commercial lines information. The program focuses on three key areas: standards, verification and security. All Certified Data-Exchange partners must use CSIO XML standards to exchange data with Policy Works brokers as a starting point.

It goes well beyond that. The certification process begins with a stringent data-mapping exercise completed by business analysts at both the insurance company and Policy Works. Using the CSIO XML standard, this process ensures a “match” between the data the brokers send and the data the insurers receive.

When the data-mapping is complete, Policy Works helps the insurer perform extensive function testing to verify data is being transferred properly. This testing provides an opportunity to fix problems; it also provides quality assurance that protects brokers against E&O exposure.

Security is a paramount concern for any parties in a data-transfer agreement. As part of the Certified Data Exchange Partner Program, Policy Works also works closely with a company’s web architects and security experts to ensure data is transferred securely between brokers and Web site.

To date, one carrier, ING Insurance, has become a Policy Works Certified Data-Exchange Partner. “We believe this technology initiative enhances our relationship with our broker partners, as it furthers our commitment to make it easier for them to do business with us,” says Peter Weightman, senior vice president, commercial lines for ING Insurance. “The interface to Policy Works reduces double entry by brokers, thereby respecting their time constraints and honouring their existing workflows.”

BENEFITS OF CERTIFICATION

After crucial standards, verification and security have been established, the insurance company has a green light to exchange commercial data with brokers using Policy Works. The bottom-line benefit for the broker is once-and-done data entry, quicker turnaround and reduced errors (and E&O exposure). It also frees up time for brokerage staff.

“Good management necessitates that we constantly seek ways to streamline our operations,” says Rose. “Liberating staff from tedious, unproductive (and potentially error-prone) data entry work allows them to focus on more productive, service-oriented activities.”

ING deserves credit for embracing the CSIO XML commercial standards and for opening up opportunities in electronic data transfer. Still, it is only one company and brokers need the ability to do commercial data exchange with numerous carriers.

“The recent pilot project transmitting data from Policy Works to ING’s systems has set important precedents, by eliminating the need to re-key some of the data from the CMS,” says Rose. “We look forward to further development and the ability to transfer more information, such as coverage limits. Unfortunately, though, this is only one insurer and we do still need to submit data to other insurers or complete their Web screens for comparative proposals.”

It makes sense for insurance companies considering commercial data exchange to start with standardized business risks, notes Roy. “The best short-term solutions are in package policies – retail, office or contractors,” he says. “We want those risks in which technology can take our information and figure out rates quickly. Companies will link their commercial systems to brokers to give real-time rates on simple items. I think this will be the first wave.”

Rose agrees. “Because of the huge task of programming and mapping together disparate elements, in order for data transfer to work, for the short-term it does make most sense to work on projects of more defined scope – on smaller business packages,” she says. “This is the area where markets have put more pressure on brokers to do data entry and pushed up our
costs, so real data transfer provides welcome relief.”

As the process of commercial lines electronic data transfer becomes more widely embraced in smaller policies, there may be opportunities to discover how technology can best streamline similar transactions in medium-sized and larger risks. But many brokers believe the shift in the long-term will likely have to be cultural, not just technological.

“This requires a huge shift in the culture in our commercial departments, both on the broker and insurer sides,” notes Rose. “Despite the pain of change, though, it is a necessary investment to take our commercial industry to the next level of efficiency. It is short-sighted to tell ourselves that commercial is too individualistic to be effectively automated — in any industry, new, hungry and creative competitors will find ways to automate any processes possible, and we need to be prepared within our own houses.”

Many brokers are taking this preparation seriously and investing in the technology needed to perform safe, reliable and accurate electronic data transfer in commercial lines. Are insurance companies ready to receive them?