What’s on Dec? | Episode 4 | Broker-carrier connectivity

Commercial lines differ from personal lines when it comes to broker-carrier connectivity.

Northbridge Insurance and insurance software company Acturis will take you behind the scenes of the development of an API data exchange solution. They’ll look at typical interactions in the commercial space that could be made more efficient, and provide some data exchange use cases.

You’ll also hear what’s involved on the carrier side and what the future looks like. Will critical mass ever be reached to replace individual, proprietary company portals?

Text transcript:

Intro: You are listening to What’s on Dec?, the Canadian Underwriter podcast, focusing on the hottest topics in the P&C community, featuring insights, analysis, and interviews with subject-matter experts throughout the year.

Pete Tessier:

Hey, everyone. Welcome to What’s on Dec?, the Canadian Underwriter podcast. I’m Pete Tessier with Curt Wyatt here, and this podcast is brought to you by Taycon Risk. They’re the MGA that specializes in niche markets, hard to place or unusually complex commercial risk. They turn hard risk into smart coverage the old-fashioned way – they underwrite it.

Curt, we’ve got a great show today and this one’s super fun because we’ve got two guests coming up and we’re going to talk about the whole issue of broker-carrier connectivity.

Curt Wyatt:

APIs, portals, gateways, standardization, Pete, we’ve got it all. This is something that I don’t think you could not be at the water cooler and talk about it. It’s been the conversation forever.

Pete Tessier:

Yes, we’ve got CSIO working on this. We have IBAC technology committees talking about it. Well, we have almost semi-celebrity brokers dealing with this on all sorts of fronts. There’s a lot of drive to solve the problems that exist and we have entities such as broker management systems, we have a multitude of carriers trying to do things and we have to undo old tech as well. And one of those big issues is what happens to portals and we’re going to talk about that.

Curt Wyatt:

Absolutely. I think the way we see portals evolving, what we see today is not the future of the industry. What we see today is an attempt to make it better and sometimes when making things better, it doesn’t always come off in the first flush the way everybody hoped. And we hear critical concerns from the distribution channel of brokers and portals and what that means to their offices and expenses to their office of being in a portal environment. And I think today we hear two sides of that from individuals that are truly wanting to make it better for their organizations. And I think it really opens up your mind to the fact that these things are evolving.

Pete Tessier:

Yeah, evolution is happening all the time and what’s refreshing to understand is with our guests today, we’re going to get into the idea of how they look at solving the problem, how they have to dip their toes in it, test what works, and then move forward and overcome obstacles sometimes you don’t anticipate or are on your radar. So let’s get into it and bring in our first guest and we’ll come back and talk a little bit about some of the interesting things they have to say.

So we’ve got Theo Duchen, who is the co-CEO of Acturis joining us to talk a little bit about the carrier side of things, Curt. And Theo, welcome to What’s on Dec?, the Canadian Underwriter podcast. Thanks for joining us.

Theo Duchen:

Thank you very much, Pete. Glad to be here.

Pete Tessier:

So, let’s talk a little bit about the whole broker-carrier connectivity piece and how a company like Acturis sort of fits into the equation. Let’s get into the easy part. We know we want connectivity on all lines of business, but what are some of the differences between personal lines and commercial lines when it comes to broker-carrier connectivity?

Theo Duchen:

Great question. In the first place, in the micro commercial lines area, there isn’t much difference. Personal lines tends to be quite a binary process. You get a quote or you don’t get a quote, you accept the quote and you don’t accept the quote. So it’s what we call synchronous in a sense, and it’s quite a binary outcome process and that tends to be the same in our experience for micro SME, really small SME cases, it fits the same model. The moment SME becomes slightly more complex, then the synchronous process breaks down and you’re looking for more of what we call an asynchronous process where there are gaps in the process, for example, where there’s some complexity and the case gets referred. Now ideally you want to keep that in a digital channel, but there may be a gap while an underwriter looks at the case and decides whether to load the premium or impose special terms or something like that. The difference in process is quite marked, the more complex the commercial cases become, but there is a digital process nonetheless.

Curt Wyatt:

Do you find that adding a standard like CSIO who’s getting involved in the API process to help bring together this idea that we can communicate between brokers and carriers using various platforms, do you find that at this point is having a standard or bringing a standard into that equation going to be a benefit to try to increase or decrease the number of errors, I suppose is the best way to put it?

Theo Duchen:

Absolutely. In an ideal world, we look for a standard that we can base our integration around and this is absolutely critical, otherwise we don’t have consensus. It’s like deciding which side of the road a car needs to drive on. You have to make a decision. And if there is a practice in that market, then things become a lot easier.

So once there’s a semblance of a standard, for example, the CSIO standard, we look to integrate or connect with carriers using that standard. Of course, every integration does require a certain amount of customization, but the closer it can stick to a standard, the better for all. Once we’ve decided what language we’re going to speak in, we now decide the rules of the game. How do we engage with each other for our conversation? Who starts to speak and who follows? How can I interrupt you? What topics can we cover? What is off limits and etiquette and so on? So it’s pretty complex, especially in the earlier days, but once you’ve completed a few integrations, you have a working model and life in our experience gets easier and easier the further you go.

Curt Wyatt:

And as we try to make it easier, APIs just keep getting talked about more and more because we think that’s a word to sort of bring us all together, like you say, and speak that same language. The development of APIs build a solution for brokers and carriers and obviously BMSes like yourselves. Is that within itself going to continue to be the big change maker in the connectivity space in the near future as far as what you see?

Theo Duchen:

Yes. I think it’s important that everybody’s on a journey to develop the APIs and their necessary interfaces to facilitate connectivity in the market. If we don’t see that progress, it’s pretty hard going. But the moment we start to see progress in certain lines of business, it’s a sort of self-fulfilling prophecy in the sense that once people see a working model, more people then adopt that model and it almost forces the market to move towards that model and invest behind it.

Pete Tessier:

Theo, are we starting to see that point now where the market is seeing where success is and movement is happening and saying, “I’m ready to follow that?” Are you seeing that from other carriers and is there momentum now?

Theo Duchen:

Pete, we are seeing early signs. I wouldn’t say we’re seeing a wholesale market adoption. I’d love to say we were, but we’re not. But we are certainly seeing early positive signs and I think once those early positive signs translate into something, there’ll be more of a momentum behind it. And that’s our experience in the U.K. You start somewhere, you keep going, you build it up and suddenly you reach a point where it becomes an inevitability.

Pete Tessier:

So knowing now that we have some momentum, and certainly on the broker side, there’s going to be a lot of positivity that comes with that, a lot of hope that goes with it. Are there any existing roadblocks that the industry needs to consider still as whole, as a group, whether you’re on the broker side, the carrier side, and what we can do to further that? Is there anything else out there that we need to address in unity together?

Theo Duchen:

Well, one thing that we’ve seen in the U.K. that is rearing its head here is as you get further and further down the integration and the broker-insurer connectivity equation, is this business about the process. What actually should the process be? There’s a need for clarity. So, for example, how in an integrated world will a change work? Will the broker continue to go onto a portal or will they be able to do it from the BMS? I’d hope that the broker would be able to do that from the BMS, but then you need to have clarity and agreement about the process.

Pete Tessier:

Where do you see the value of portals becoming as we build out broker-carrier connectivity?

Theo Duchen:

Most people have an assumption that in a connected market the portal is like a dodo, it’s going to become completely extinct. And I can tell you that it’s not the case. The value of the portal and the functions that it’s used for changes, but it certainly doesn’t become extinct. So, for example, in the U.K. market, the portal hardly covers private car and habitational products, but it’s covering more complex products and other classes of business that aren’t so widely electronically traded.

Curt Wyatt:

Theo, it’s been great to talk about this and we look forward to bringing you back on again to talk some more about what’s what’s happening in this space.

Theo Duchen:

Thank you, Curt. Thank you, Pete.

Pete Tessier:

We’ve got Andrea Bucek who is the VP of distribution for Northbridge Insurance here to talk to us a little bit about how insurance companies are viewing some of the connectivity challenges, getting policies out and transmitting data faster. So, hey, thanks for coming on to What’s on Dec? Andrea, and welcome to the show.

Andrea Bucek:

Thank you for having me. It’s my pleasure.

Pete Tessier:

When we’re talking about connectivity, one thing we want to understand is from the carrier side, how is it different when you think about personal lines versus commercial lines and what are some of the issues that you see when it comes to making technology work better for the distribution experience?

Andrea Bucek:

Yeah, I mean data exchange has been around on the personal lines side, whether it was EDI or API format for decades, right? And in contrast to that, on the commercial lines side, we’ve been talking about it for decades and yet it’s taken us this long to really get there and I think we’ve seen in the last few years a few strides forward and some real progress to set the framework and the groundwork for this to happen now. So it’s an exciting time because connectivity for commercial lines is actually now a reality. And there are some insurance carriers out there who have worked with the CSIO standards that are now in place and have taken that step to launch these kind of initiatives that are really building out that connection between the broker management systems and the carrier systems.

Curt Wyatt:

Andrea, it’s exciting to have that perspective of different lines of business now going into a digital interface and thinking that we’re maybe finally away from the fax machine. So knowing that, what are you starting to see as commercial emerges into that space? Are you guys trying to maybe push it in a certain way as a carrier to hone or tune it up so that it works properly? So in essence, is there a low-hanging fruit that you guys are going for in the early stage of trying to be connected with brokers and broker management systems?

Andrea Bucek:

Yeah. Where we’ve prioritized it initially is to focus in on small commercial business. So that business that is more transactional, less complex to automate, you know, just that sort of natural progression from moving from the personal lines side that’s a very standardized side of our business space to commercial lines that tends to be more complex. So it’s starting out with that small commercial space.

Pete Tessier:

Small commercial is sort of like the gateway point. Gateway areas when it comes to opportunity present a little bit of the testing ground. How far is Northbridge into the gateway point with small commercial enterprises and how fast do you feel you can scale up to provide that connectivity?

Andrea Bucek:

So we at Northbridge, we’ve been working on this for a number of years to get to this point. Maybe if I give a bit of that progression, it started about five years ago, we made the decision to move off of our legacy systems, modernize our systems. That enabled us to then use APIs and think about connectivity. Spent a lot of time then talking to brokers and understanding where they would like to see us go, which was very clear, very unanimous, don’t build another portal and go this connectivity route. And it lined up well with some of the things that were happening in terms of industry, digital, working groups and initiatives, whether that was CSIO or the IBAC DX Exchange. So we clearly chose our path and our digital strategy at that point to say, okay, ‘Let’s invest in connectivity.’ And then we’re now actually live with a pilot with Applied Systems Canada that we went to market with in the fall. So, it’s a reality now.

Pete Tessier:

When it comes to portals, do you think portals will maybe be reimagined in the future so that we’re not trying to do true workflow through it, but they become a different kind of version of themselves?

Andrea Bucek:

I would hope that there’s a movement away from portals between the broker and the carrier side. Not to say there may not be on-demand portal type of interfaces for customers, easy lookup of information, that kind of thing, or access to customers through a portal, but I think the broker-to-carrier interactions, I would love to see us just as an industry move away from portals, support the brokers in that way and really drive that efficiency of one to many from a data exchange perspective rather than looking for brokers to replicate data entry and all of that transactional pieces across multiple carriers.

Pete Tessier:

So, Andrea, can you provide some examples of typical API data exchange use cases in commercial lines and which ones has Northbridge emphasized and why?

Andrea Bucek:

Sure. Really because this hasn’t been done on the commercial lines side, there’s a lot of opportunity to choose those use cases. Certainly a broker requests a property casualty quote from their markets would be a key one. Another would be a broker request to bind that quote; broker might report a claim or the broker might want to check the upcoming billing payment schedule and know what that is and be able to convey that to their customer.

The ones that Northbridge has emphasized and the reason behind it is, we’ve emphasized the request for a quote for small commercial business and it really has to do with the fact that we hear that it’s time-intensive for brokers to write small commercial business. It’s very transactional, it’s time sensitive. So they’re looking for that speed and efficiency that can come from an API connectivity solution. And if I can share a stat, we also hear from them that about 65% of brokers identify inaccuracy just in data, in that re-keying of information that allows errors to creep into a policy. That that’s a real pain point for them. So naturally, every time you’re re-keying information, the brokers, the underwriters into policy systems, you’re just going to get those inaccuracies. And so by eliminating that re-keying, we just naturally also get that advantage of getting rid of those errors, providing a better customer experience, therefore, and that efficiency for brokers.

Curt Wyatt:

Do you see a point for yourselves as a carrier but also up against an industry that’s evolving and your competitors, they’re evolving also, do you see there being a bit of a critical mass here? You’ve jumped ahead and tried to be a leader. If others start to come online and do the same, that the snowball effect will start to kick in and it should be something that helps everyone in essence. Where are you at that way as far as a company when you’re looking ahead and saying, “We’re still two years away, we’re still 10 years away,” where do you think this is heading? And we’re not going to hold you to a specific date, but how do you see this sort of coming along when it comes to a bit of a timetable?

Andrea Bucek:

I sure hope it’s not 10 years. I hope it’s more like two years. It was important to Northbridge that we move in this direction, we were a leader. I think there’s others that are also early adopters on this and we’re going to see some movement and we’re already seeing some movement across the industry in this direction. So I think that there’s early adopters and then I think we’re going to see others choose to either move along in that same steady pace while some that come a little bit later. But ultimately brokers are, I would think, going to gravitate to those carriers that are supporting them in this way, that are supporting this type of a workflow and that ultimately it’s going to support the customer because if the broker can provide great service and we can provide the broker with a great experience, that’s good for the customer in the end.

Pete Tessier:

Andrea, that’s fantastic stuff because it sounds like Northbridge is taking what your broker partners are saying seriously. Thank you so much for jumping on What’s on Dec?, sharing some thoughts from Northbridge. And exciting to see how you guys are viewing the world and what changes are coming up.

Andrea Bucek:

Thank you so much.

Pete Tessier:

Okay, Curt, I’ve got a lot of takeaways from this one. Theo and Andrea were both amazing sharing their perspectives and they come at it from different places, but they’re aiming for the same goal: to make this a seamless event for the broker and for the carrier. But as we learned, there’s a lot of points here that you have to take away and go, “Can we do it all at once or do we have to start small and work big?”

Curt Wyatt:

I think the standardization piece is critical here because before when we talked APIs, we thought there was going to be this sort of all-encompassing solution to fixing the problem and it was going to be like, “Wow, we got an API, it’s fixed the problem.” The thing is you can’t just use it that loosely. It’s got to fit into a system so that you can get a higher rate of return on the success of bringing data through digitally from whether it be a BMS, whether it be a portal or any type of other solution that someone has come up with that is bringing information in, let’s say it’d be third-party data pools and what have you, but it has to drop in and then be able to be used across a number of different organizations and solutions. So Theo talks about that. We know Northbridge and Andrea have been involved in it way back – data exchange days with the CSIO and with IBAC. So, it’s really evolving.

Pete Tessier:

It’s moving, but for some it’s not moving fast enough, I would say. And we hear this across the landscape in the insurance industry, especially on the distribution side. Think of this. One of the things that I really understood from Theo is, is look, we have to address all limitations and abilities of carriers. Now you think about what Andrea is saying and they chose to work with a specific BMS vendor to solve a problem. There’s a scale and ROI on this. Do you want to work with a vendor that potentially doesn’t serve enough of your brokers?

And, yes, we’re supposed to have standards. Yes, we’re supposed to have agreed-upon solutions, but not everyone can move at the same speed. Not everyone has the same interests to the same degree of level that gives them the same return and we got to find a balance in that. I’m very optimistic though, because I think when you hear someone like Theo speak that we’re starting to gain traction, that energy becomes contagious and it’s almost like innovation. It’s almost like evolution. It’s almost like entrepreneurship. Others are going to want to catch up and not miss out on the party.

Curt Wyatt:

I think you got to make it a little more exciting, too, because I think in some ways, brokers are their worst enemies. There’s no lack of different applications out there. There’s no lack of different ways to collect information and put it together and send it out to the markets. I’m sure if we surveyed 10 markets, we’d find that there’s 300 different forms of applications that are coming in. And as much as we don’t like the idea of having to change an existing workflow within an organization, let’s use digital as an excuse to get a little better to speed things up, the client’s going to win, let’s hope.

At the end of the day, they’re going to get more selection in a quicker, faster solution and potentially we’re going to reduce errors and when we reduce errors, we stop E&O claims. And that is a huge part of having a third party representing you that’s more efficient and technical, I guess is another word to describe what we see going on here. And, yes, CSIO has been around a long time and, yes, we can be critical of the fact that outside of some of their forms, it’s been a long time since we’ve physically watched a big win and let’s hope APIs are a big win here for the broker channel and for the carriers when it comes to connectivity.

Pete Tessier:

Curt, couldn’t have said it better. We need a big win on the solution and we’re close. We don’t know quite how it’s going to unfold, but there’s momentum to change and let’s hope everyone catches on the momentum and makes things happen. Thanks again everyone for listening to What’s on Dec?

Outro: Thanks for listening to What’s on Dec?, the Canadian Underwriter podcast.