Tear Down This Wall

The cold war is still alive and well in the Canadian insurance industry in the form of cumbersome insurance company portals. These effectively form a wall between brokers and carriers, increasing costs, adding delays, hurting broker profitability and, ultimately, reducing customer satisfaction.

The solution to this situation is for brokers, insurance companies and broker management system vendors to work together to break down the wall by evolving portals towards real time, or what the techies in the innovation working group of the Organization of Real Time Brokers Implementing Technology (ORBiT) call “straight- through processing.” Currently, that is just a vision, but if brokers raise a united voice on the importance of this issue, then insurance companies and BMS vendors will surely join in its resolution. This would be a win for brokers, for the end customer and, ultimately, for the entire industry.

Portals have been around for a number of years. Although, they were introduced with the goal of automating the interaction between broker and carrier, most portals still require significant manual intervention. As a result, our industry is unable to pass data seamlessly from the BMS through to the company system, without manual intervention by the broker. For the broker, this wastes time, slows down client service, leads to inefficient work-arounds and increases training time. This lack of efficiency not only increases brokerage expenses by 10%, but it can also prompt customers who are frustrated by a lack of real-time interaction to buy from direct writers.

WHAT IF WEB COMMERCE WORKED THE SAME WAY?

What if Amazon.com’s online book buying process worked the same way that insurance company portals work? Here’s how the process would work:

• before you order your first book, Amazon would send out a portal training specialist to your office or home;

• the trainer would spend three hours teaching you how to use Amazon’s unique unintuitive process;

• after training, you attempt to place your first order;

• you enter your unique user ID and password;

• you answer the unique questions and follow the prompts for additional information;

• you have to call the Amazon help desk to finish placing your order, because your memory from the training session is not perfect; and

• you press “done” and your book is finally ordered.

What would be the impact on Amazon’s market share if it forced this inefficient workflow on its customers? Imagine further that you deal with eight different book selling companies, meaning you have to learn eight different processes in order to do business with each of them? Well, thankfully, Amazon figured out how to make book ordering easy for their customers. When will insurance companies do this for brokers?

How would you rate insurance companies on their portal improvement process?

Portals are required in the insurance business because there is both a BMS, which includes a broker’s view of customers and policies, and the insurance companies’ systems, which include detailed information on clients’ policies.

Technically, portals are a good way to reconcile and prepare the data for transfer between these two systems so that they can interact seamlessly and in real time. How well that is accomplished is another matter entirely!

THE PROBLEM WITH PORTALS

The portals initially rolled out by the carriers required significant manual intervention from brokers, who were told that portals would eventually be enhanced for ease of use and would eventually evolve to real-time, round- trip processing. But this has not happened.

Common problems with portals include the following:

• different passwords are required to log in to each carrier;

• passwords expire every X number of days, necessitating sticky notes on monitors, which reduce security;

• duplicate entry in both the BMS and the portal;

• the need to learn specific navigation for each carrier;

• rules and error-handling are not standardized; and

• specific training is required for each carrier, extending training time.

For a brokerage with as few as five markets, its hands are full doing training, managing passwords and keeping procedures current.

Take as an example an auto new business policy with one car and two drivers. The application form completed by the broker asks for “the % used by each driver,” so every BMS duly records this information. This data is exported out in a data stream to the insurance company so it can be rated and recorded in the insurance company system the same way the broker quoted it.

Almost all insurance company rating systems need to know which driver is the principal driver, but that information is not captured specifically in the BMS so it cannot be exported by the BMS to send to the insurer.

The best portals handle this case by creating rules and logic that assigns the principal and secondary drivers, adding this information to the BMS data stream, so that the insurance company gets what it needs. The rules are fairly simple: when the broker indicates the split of driving is 60/40 or 30/70, the best portals reconcile this information and send what the carrier needs without the broker having to enter the portal to fill in the blanks. The best portals are designed with the expectation of straight-through processing.

It is not necessary to have a perfect solution in order to make progress towards real time.

So, what is the solution? Here are some specific suggestions to move everyone in the right direction:

•Improve the data that is captured in the BMS. If a field needs to be added to the BMS, then add it.

•If an insurance company wants unique data, it needs to deal with CSIO to get it into the standards before brokers need to collect it. There are enough analytics done by the actuaries (predictive analytics) that one data field is not going to make that big a difference.

• If there is a problem between the BMS and the company system, a common screen should come up advising what standardized data is missing, so the broker can enter it. Politics in the industry will likely prevent having standardized portals, so why not standardize the screen asking for missing data?

• Make real-time or I-chat available for when information is missing; a company person comes up on the bottom of your screen in real time and tells you what is needed.

SET A DEADLINE FOR CHANGE

These are some ideas, and certainly many brokers who are living with the pain of portals today will have more ideas.

So, how do we knock down this “Berlin Wall” to achieve real-time, straight-through processing in insurance? And how do we do this at a time when insurance companies are seeing a reduction in revenue in the auto insurance product? Start by saying, “People, we have an industry problem.”

Brokers need to raise awareness of the negative impacts of inefficient portals on the industry overall, and the importance of all players participating in the solution.

The key industry players -ORBiT, the Insurance Brokers Association of Canada (IBAC), the Insurance Brokers Association of Ontario (IBAO) and the Centre for the Study of Insurance Operations (CSIO) – along with the BMS vendors and the company CEOs, need to meet, collaborate and solve this problem. A deadline for completing this needs to be set. Brokers need to talk to executives at all levels of the carriers and to BMS vendors.

Change will not happen overnight, but a journey of a thousand miles begins with a single step.

Amazon had to make many improvements in order to make it easy for consumers to buy books on the Internet. Hopefully, it will not be long before the wall comes down and insurance company portals achieve similar levels of efficiency and ease of use.

Vive la revolution.