The Reality of ‘Real Time’

Language has always evolved to meet our communication needs. As the world around us changes, we invent some new words, but existing words also develop fresh layers of meaning to explain previously-unknown objects
and ideas.

If you could have talked to your Great Granddad about the Internet or your laptop, about backing-up your files or finding the right price for buying a skateboard online, the words themselves would have been familiar to him; but in the context of his day, they would not have held any meaning for him.

If you had asked Great Granddad what “real time” meant, he would have wondered what other kind of time you might be talking about.

As the development of new meaning occurs, a word’s precise connotation – especially in different situations – is fluid and may be subject to different interpretations. The insurance industry often uses the phrase “real time” in discussions about technology, for example, but the specific definition appears to be elastic.

In our everyday lives, “real time” brings to mind situations in which electronic information is instantly available to us. Usually via the Internet, we tap into electronic sources that give us the ability to know the current status of our bank balances, verify inventory at a particular store, compete for the best concert seats or check flights arriving at or departing from the local airport.

Brokers and ‘Real Time’

Within the framework of an insurance brokerage, however, the meaning of “real time” must take into account the broker as an intermediary, as well as the essential nature of the transactions that occur. Brokers deal with multiple insurers, using an electronic management system as the central repository for client data and the base from which communications to insurers are launched. Very often these messages are complex sets of instructions including details about clients and the coverage required. The data is contained within a broker management system (BMS) and needs to be transferred to the insurer.

The phrase “real time” suggests the idea of ‘live’ communication. But within the brokerage context, messages must not only travel between two distinct systems, the transaction process must extract the necessary information out of the first system and relay it in a comprehensible form directly to the insurer. The insurer’s system must then accept the information and provide an immediate acknowledgement and response to the broker.

Coordinating between two distinct systems is often a challenge. Each must be able to interpret the information sent from the other usefully; agreement about the language to be used and the expected content and format of messages is therefore essential. For brokers, the issue is still more complicated. Again, we must remember brokers conduct business with a number of insurers. To be most effective, brokers need to communicate with each of their partners in the same manner, since it is impractical to program different processes for each different correspondent.

The Role of CSIO

This is where the Centre for the Study of Insurance Operations (CSIO) plays its role. Its mandate includes the creation and maintenance of standards to promote efficiencies for the broker distribution channel. But CSIO is not merely a reference centre: it also provides a dynamic, open forum in which industry stakeholders work together to develop and enhance existing standards to fill new needs as the industry evolves.

The technology committee of the Insurance Brokers Association of Canada (IBAC) has devoted significant time and resources to examining how brokers do business, considering how processes could be improved and reviewing new technological trends and initiatives. Recently the IBAC committee discussed the concept of “real time” and the meaning of these words within the context of Canadian brokerages. Ultimately, it was agreed a “real time,” broker-to-insurer communication would be expected to:
• concurrently update the insurer’s system with information from a broker’s system; and
• transfer data via standard, non-proprietary messages that strictly adhere to CSIO XML standards.

Without any one of these elements, brokers are not communicating as effectively as current technology could allow. For instance, if all data is not sourced from the broker’s database, if instead it is separately entered into fields captured only by the insurer system, the broker’s data record is not complete. This affects both the broker’s efficiency and errors and omissions exposure. Alternatively, if one insurer or broker system uses message formats diverging from the standard, then anyone corresponding with them must create, learn and follow a separate and unique process for those transactions just for that one insurer or broker.

As technology and the language describing it constantly evolve, various processes are presented to brokers as “real time” solutions when, in fact, they do not meet the criteria of extracting live data from broker systems in a standard CSIO XML format and conveying it directly to insurer systems. Terminal or Web-based screen-scraping tools, store-and-forward methods, batch processing, software-bridging techniques, and even direct links to insurer portals or systems for client-specific details not recorded in the broker’s system may all may be promoted as “real time,” but they do not fit IBAC’s vision. Certainly some may offer an improvement on laborious manual duplicate entry, but they are at best temporary, intermediate steps. These compromises ultimately cost the broker time, either immediately or later. When we multiply those small inefficiencies over several insurers, the costs expand to impractical — and unacceptable — levels.

IBAC’s Vision

IBAC has previously made clear its position that brokers should not be obligated to use insurer Web sites. In place of these ‘portals,’ the association has been working on an alternative means of data exchange, a process embodying what IBAC sees as “real time” communication for brokers. This process will be characterized by:
• data transactions that start and end in the BMS;
• data flowing between systems electronically and transparently, without user invention or data entry on insurer portals, systems or pop-up screens;
• transmission formats and content that strictly follow CSIO standards;
• immediate response generation by insurer systems, such as a simple acknowledgement, error message or, ideally, a complete return transaction; and
• any translation or manipulation of data to accommodate an insurer’s system occurs on the insurer’s side of the transaction (not within the broker system).

IBAC has been focusing on using such a process for policy changes, implementing the Data Exchange Project, now in its second phase. The project involves a growing list of insurers such as Intact, RSA Canada, The Dominion, Guarantee Company of North America, Gore Mutual, The Economical Group and Aviva. It also encompasses all major Canadian BMS vendors, including Keal Technology, Zycomp Systems, Policy Works, CIM-Data and Custom Software Solutions. Applied Systems has recently committed to include this functionality in the development of its Epic product. With both brokers and insurers looking to save time and dollars, these participants are cooperating to fulfill the “real time” ideal within IBAC’s criteria. As time goes on, and insurer legacy systems are enhanced or replaced, even richer communication will become possible.

In examining any software or workflow, it is important to dig deep and consider what is actually happening to data during the transaction. A discussion of “real time” needs to go beyond the label. It needs to address the purpose of the exchange, as well as both long-term and short-term efficiencies. We must ask from where information is drawn, where it is recorded and how and to whom it is transmitted. If we can u
nderstand the essentials about our processes and persevere to ensure our principles are not diluted, we can improve the effectiveness of both brokers and insurers for the benefit of all stakeholders.