February 1, 2004 by Craig Harris
Last fall was “gut check” time for the Centre for Study of Insurance Operations (CSIO). After a lengthy period of budget over-runs, missed deadlines and squabbling among brokers and insurers, it looked like the CSIO portal could be the latest example in a long and disappointing history of industry single-entry, multi-company interface solution (SEMCI) “strikeouts”. The question facing the CSIO board, brokers and companies last October was stark and simple – how badly did they want an industry portal? And were they willing to invest the necessary time, money and resources to achieve it?
The answers to these questions are emerging today, as the portal is on the brink of its “phase I” launch for Ontario auto and habitational business. “The response from brokers last fall was vigorous and energizing,” says Alister Campbell, a senior vice president with ING Canada, the largest single funding participant in the portal. “We are committed to this channel and if brokers believe the portal will improve their efficiency and workflow, then we support it.”
Brokers in Ontario were asked to put their money and commitment on the line in a survey conducted by the Insurance Brokers Association of Ontario (IBAO) last fall. “We needed at least 15% of our member brokers, or 105 brokerages, to give critical mass to the portal,” says Danny Craig, chairman of the board for the IBAO, and a longtime broker participant in the quest for SEMCI. “We got 155 responses and cheques from members, which was a tremendous response.”
It was not just brokers who stepped up to the table. A complete revamping of the CSIO board and governance structure, an outsourcing agreement with IBM to handle technology development and a recommitment from participating companies in the form of money (insurers fund 95% of the portal development costs) and IT staff completed what many hope to be a new phase in broker-company cooperation. “I think a negative spiral has been broken,” says Bob Fitzgerald, chairman of the board for CSIO and an executive vice president with Aviva Canada. “Insurance companies and brokers were chasing their tails in that companies did not seem to be that interested and brokers were saying, ‘why should we get involved if companies aren’t doing much?’ That has changed and we are looking at the portal now in terms of execution.”
Fast-forward to the present and here is where the portal “execution” stands. Currently, a pilot group of 16 brokers are moving to “Beta”, or live testing of the portal during February. “Phase I” consists of comparative rating (with most rates non-guaranteed) and a streamlined renewal process. Company rates are signed off and ready – 15 for auto and 13 for property.
“As of early February, we are on plan,” says David Patrick, interim CEO of the CSIO. “The product application software is done, it works and everything is loaded at the IBM data center. We are in production and there are no ‘show-stoppers’ right now.” Asked when the portal will actually be up and running in multiple broker offices in a live business environment, he adds, “we are fairly fluid right now. We are moving ahead, but we want the portal to proceed at a disciplined and measured pace.”
The IBAO is conducting a province-wide road show to market the portal to brokers. Starting February 23, the sessions will cover more than a dozen cities across Ontario and include demonstrations and opportunities to sign up on the portal, according to Randy Carroll, vice president of operations for IBAO. “We have two teams of presenters who will cover all the major pockets across the province,” he notes. “And we will be signing up brokers along the way. After the portal launch, we want to see at least 105 brokers online in the first month. The growth pattern after that is ten brokers per month. We want the roll-out to be controlled.”
After Ontario, Quebec is the next province for broker testing of the portal. Craig believes there is “tremendous potential and interest in the portal” among the province’s brokers and companies. Carroll says the real planning for Quebec will likely begin in April, with other provinces to follow in the order of Alberta, the Atlantic Canada region and then the government-run auto provinces.
The pilot brokers in Ontario were selected according to the four major broker management system (BMS) vendors: Applied Systems Canada, CIM-Data Ltd., Keal Technology and Zycomp systems (Power Broker). Brokers were also profiled based on different sizes, number of locations, number of employees and office configurations. By breaking down brokers into clusters, the IBAO and CSIO hope to anticipate any glitches and ensure that roll-out of the portal will be more predictable.
David Hare, president of Oshawa-based Petley-Hare Insurance Brokers Ltd., is one of the pilot brokers testing the portal. “We are in the process of Beta testing the portal through Keal and we have found that it is working well,” says Hare, who is also president-elect for IBAO. “I would characterize the problems so far as very minor, mainly involving small data elements. There are no ‘deal breakers’.”
The different technology configurations of broker offices have long been an Achilles’ heel in the quest for broker-company straight-through processing. Broker management system vendors point out they have to be involved in any industry solution that involves broker desktop technology and workflow. Many say they were not consulted early in the design phase and testing of the CSIO portal, which created uncertainty and confusion. “We agree with the concept of the industry portal and we support it as both appropriate and necessary when we look at the broker distribution channel,” says Bob Hornick, president of CIM-Data. “However, the implementation sucks. The initial design of this thing was incompetent, and the technical issues have been mismanaged. If you go right back to the beginning, there were no design meetings or study groups involving the various parties to see what would work and what wouldn’t. Now the problem is that you have design flaws built right into it, and they are not that easy to fix.”
Other BMS vendors are adopting a wait-and-see perspective. “We’re a bit cautious in how the pilot testing has been going overall with the portal and hope that the roll-out into production is well controlled,” says Jacques Fortin, president of Keal Technology. And, Greg Purdy, the CEO of Applied Systems Canada UK, observes that issues such as connectivity with the virtual private network and the additional step of brokers waiting for downloads from the portal for basic quoting services may impede progress. “As BMS vendors, we can say what the technical advantages are from one solution to the next, but it is not really up to us to decide,” he adds. “It really is up to the brokers to figure out how to streamline their workflow. Our BMS solutions are ready from our end, but we can’t control what is happening on the other side.”
Purdy says a positive sign with the portal is improved communication among all parties. “We have been able to establish a better plan for communicating in the past five weeks,” he says. “Recently, the IBAO and CSIO have been doing a good job of updating us and being upfront about developments.”
BMS vendors are not the only ones sending early warning signs about the long-term viability of the CSIO portal. Jack Ott, chief information officer for Allianz Insurance Co. of Canada, says his company is not participating in the project because “right now, we see the CSIO portal as high cost and high risk with unproven rewards. If that profile becomes more attractive, it’s a different story. But until then we’ll keep it on the back burner.”
Ott contends that the initial phase of the portal has made some progress, but not enough. “We support the improvement of broker-company workflow, but we are not convinced that phase I of the portal will do that,” he says. “Let’s face it, phase I is basically solving problems that have already been solved.”
This is a point that established rating ven
dors strongly echo. “It is absolutely absurd that independent brokers would be required to use a single comparative rating product for the industry, which is what the CSIO portal is trying to do,” says John Savage, president of Compu-Quote, the largest rating vendor in Canada. “After four years and millions of dollars, all the portal has to show is 15 carriers on its rating service, some of which are subsidiaries of larger companies. If we performed like that, we would be out of business.”
Savage says that Compu-Quote launched its OmniRater web quoting service last year, which “basically gave away Internet rating to brokers for more than 100 carriers. But even then, we didn’t have a high take-up. What that says to me is that the ‘brokers on the street’ are not really interested in adding this service to their workflow.”
Wawanesa Insurance Co. is another high-profile holdout to the CSIO portal. It has pursued a proprietary approach to straight-through processing with Custom Software Solutions Inc. But, Chris Luby, vice president of branch operations for Wawanesa, says “we haven’t ruled anything out. We are watching developments and we are talking to CSIO. We want what is best for the industry as well, but it has to be a proven solution.” He adds, “if our brokers reach critical mass and show that the portal will work, we will definitely move to support it. But we haven’t seen that critical mass yet.”
Glen Piller, president of iter8, a provider of web and back office solutions to the insurance industry, says the CSIO portal “has unbridled potential, but the vision and strategy have been lacking in recent years. You have to look at this from a business case point of view. Is there anything in the portal that helps brokers reduce inaccuracy, ineligibility and incompleteness in the workflow process? Does it help brokers and companies get it right the first time and achieve straight-through processing? Right now, the answer is no.”
Those participating in the portal’s development have often made the point that phase I is “foundational,” setting the stage for future functionality. In particular, “phase II”, which is targeted for March 2005, will provide single sign-on access and new business transaction capability to the portal. Several sources point to the CSIO portal’s “solid business plan”, which promises insurance companies a payback on their original research and development investment as brokers get on board and start to pay user fees.
Single sign-on is critical for brokers because of the proliferation of individual insurance company websites, according to Craig. “Single sign-on is so important for brokers because of the workflow problems and inefficiencies of logging into and entering security codes for individual company portals,” he says. “This is extremely cumbersome and represents a step backwards for brokers.”
The ultimate goal is to allow brokers to enter the CSIO portal through one sign-on access, then compare rates and select a preferred quote and transfer seamlessly to the individual insurance company processing system. A “submit” button would allow new business to be entered directly into the company system, which the company could then download to the broker’s management system. “Certainly, this concept of the portal is compelling, but brokers and companies don’t believe that SEMCI will happen overnight,” says Campbell. “We decided to break this down into smaller deliverables and then achieve those. We think with phase I, we have done that.”
“We have come a long way, and we still have a way to go,” comments Fitzgerald. “I don’t want to gloss over what has happened, but I think the focus now is on execution and our outsourcing arrangement with IBM is based on that. CSIO was never built as a development shop and it ran into some problems when it tried to do that.” Patrick agrees with this assessment. “The outsourcing agreement with IBM recognized that the CSIO is too small of an organization to bring the technical expertise necessary for this kind of project,” he notes. “But it is purely an outsourced relationship [with IBM]. This is not a joint venture. We still own the solution.”
Phase II is where the rubber hits the road for the portal. “March 2005 is a date we are committed to get this thing up and running,” says Patrick. Craig echoes these sentiments. “We are confident about the timeline,” he adds. “This is a realistic business plan and there is a lot of resolve around the table. Insurers have committed with designated IT staff, which was not necessarily the case before.”
Referring to the March 2005 target deadline, Campbell says, “this is a very ambitious objective, but we think it is something we can accomplish. One of the main issues with single sign-on is the security protocols of global insurance companies and we will have to find a way to deal with that.”
Indeed, dealing with the integration of technology and multiple IT architectures on the insurance company side could stand as yet another Achilles’ heel for the CSIO portal.
Ott says that “single sign-on adds a ton of risk to the project and takes the focus away from XML upload, which is where the real value lies. We don’t understand why single sign-on is a priority for phase II of the portal. Individual companies have their hands full getting single password authentication to work, so it’s hard to imagine that we can get the whole industry working on it anytime soon.”
Ott is also concerned about “phase ‘n'”, or the next phase. “We have heard talk about policy change and endorsements, and that frankly does not work for us. The CSIO would do well to build a limited portal that includes XML processing of new business and then get back to its roots and concentrate on XML standards development and promotion.”
Fitzgerald says “I think the idea of a complete end-to-end SEMCI solution is folly. There is no perfect solution, and we have to focus on what is doable in the current context. That is why we did not seek policy change in phase II, because right now policy change is all over the map. We have instead focused on single sign-on and new business. We want to deliver something of value to the broker and to the company, and we have a timeline for delivering it.”
The belief is that as brokers come on board, it will spur insurers to participate. Carroll says the difference between the CSIO portal and other rating services or proprietary software applications is that “this is an industry solution. Increased participation from brokers will lead to a realization on the part of insurers that they need to get involved. I wouldn’t want to be an insurer not at the forefront of the portal.”
“The CISO portal is by no means a private club,” Fitzgerald points out. “We are eagerly awaiting other companies to join us, and there has been a large number of brokers requesting that these companies sign on. We would welcome them, but at the same time, there is no free ride. You can’t just sit at the table, you have to invest in the future of the portal.” When, and whether companies (or brokers for that matter) choose to invest their time and money depends on their view of the reality of the portal – is it a viable project that promises tangible results in improving workflow or reducing costs? Or is it just another SEMCI mirage? These questions will be answered in phase I and II, one way or the other.