that TECHNOLOGY THORN

With the conference and seminar season once again shifting into full drive, the message remains consumerism. Nothing new — the insurance industry has become almost anaesthetized by the repeated urgency to address consumer expectations. However, the latest round of discussions on the consumerism topic have shifted focus to the industry’s technology weaknesses.

The emergence of Internet-based technology is changing the rules of how and where financial service products are sold, attendees of the recently held Strategy Institute conference were told (for further details, see article on page 34). This, however, is not only impacting on the selling of products, but the cost of the delivery. Interactive business-to-business-and-consumer technology is the way of the future, the conference speakers including broker, company and technology vendors predicted.

Notably, Barbara Addie, president of Baron Insurance Services Inc., used the Strategy conference to voice what many within the industry have long suspected: EDI-based company-to-broker technology has to all intents and purposes become redundant. She advised current EDI users to shy away from further investment in this technology and concentrate on web-based solutions. Other than the generally poor effectiveness of EDI in company-to-broker electronic interaction, Addie’s prime dislike of the technology is that it excludes the consumer from the process.

And, while the same industry competitive pressures which derailed the Synchron initiative still exist today, many commentators observe that the biggest problem with the solution on offer was that it was being developed around outdated technology — and at a hefty price. Many believe that the basis of a common interactive technology for the industry is readily available through Internet applications. According to several speakers at the Strategy Institute conference, web-based technology is not only easily adaptable for use, but relatively cheap as an added bonus.

This raises a question I have long attempted to gain a logical answer to: why was Synchron focused on EDI and essentially attempting to “redesign the wheel” when the Internet offers all the common interface capabilities needed? I have yet to hear a plausible argument in support for the way Synchron was being developed, or for future EDI technology development.

Furthermore, as a technology layman, and one perhaps not fully aware of all the complexities involved, I find the typical industry excuse that company legacy systems are not capable of interacting with web technology to be a poor copout. I cannot think of a single person in the industry who does not have public email access, suggesting that the Internet is indeed being used in conjunction with existing systems.

Also, the view that many independent brokers do not have Internet access or understand the technology is a little difficult to believe, and perhaps even insulting to the intelligence of the brokerage community. And, should this be so, the real issue is whether such members can legitimately call themselves professionals in an era where Internet access is rapidly becoming a common household item. If someone is acting as a financial advisor in what is commonly recognized as the “technology age”, and is not personal computer and Internet literate, then they probably shouldn’t be in business — and by not meeting up to future consumer expectations, they will probably be put out of business.

However, as mentioned earlier in the editorial, the issue to why the industry needs to embrace current technology is not just about serving consumer preferences, but staying afloat in a cost-sensitive environment. Technology has significantly reduced operating costs in the banking industry and also allowed direct writers to steal a sizeable chunk of the market away from the independent brokerage channel. As such, by applying technology to advantage rather than seeing it as an unknown threat is the only way forward as competitive pressures continue to emphasis cost-efficiencies. Brokers have voiced their irritation over spending consuming hours of every day uploading and downloading information with companies in an antiquated manner, and rightly pointing out that their time would be better served in selling. Companies state that they need to become more involved with customer data mining to hold position against other financial service competitors, again a real objective. So why doesn’t the industry remove the technology thorn from its side and get on with the real business of insurance before someone else does it?