Business Process Integration Can Help Solidify Carrier-Agency Partnerships

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Historically, insurance carriers have struggled to keep pace with the demands of highly productive agents, who in some cases can single-handedly write enough business to impact the carriers bottom line.

Agencies choose carriers based on their ability to generate revenue by selling the carriers products. The specific products and pricing factor into this equation, of course, but if the carrier and agency do not have a good collaboration strategy, operating costs will eat into profits and reduce the carriers attractiveness.

Agencies have indicated that in situations where products and pricing were competitive, ease of doing business is the most important factor in carrier selection. If the carrier cannot provide good service, agencies may find other carriers who are easier to work with. For this reason, carriers can miss opportunities to add to their book of business if they are too slow to provide quotes, issue policies and endorsements, or respond to agency requests.

At the root of the collaborative issues is the inability to integrate agency and carrier technology, including agency management systems, as well as policy, claim and underwriting applications. In addition to their internal applications, carriers rely on dozens of external systems or service bureaus for motor vehicle reports (MVRs), credit reports, background checks, and so on.

To illustrate how pervasive integration problems can be, consider the simple agency process of providing quotes from three different carriers.

Typically the agency must log onto three separate carrier Web sites and enter the same information three times, perhaps in three different ways. Some quotes may be handled in real time, but other quotes may take a day or two.

This forces the agent to wait before providing all the quotes to the customer.

When it comes to more complex processes such as issuing policies or certificates of insurance, these integration problems are magnified tenfold.

To solve these inefficiencies, agencies are working towards SEMCI (single-entry, multiple-company interface)in other words, using a single system such as an agency management system to send data to multiple carriers. Critical to this effort is the ACORD XML standard for transmitting insurance data electronically.

Also assisting are intermediaries that provide value-added communication mechanisms that use ACORD XML to broker transactions between agencies and carriers.

Most carriers have not leveraged the full value that these intermediaries and standards provide, but some experts believe it is only a matter of time.

It is not hard to envision how carrier-agency partnerships can be improved dramatically by the ability to transmit data electronically.

Agencies that have made substantial investments in technology rapidly are separating themselves from the pack. They are demanding real-time or near real-time transactions, because they know the framework exists to make this a reality.

Carriers feel the pressure to improve service by making the same type of technology investment. Carriers know that price is not the only differential in a customers decision; customers want agents who can provide professional counseling and top-notch customer service. If the carrier takes three hours to give an agent a quote or six weeks to issue a policy, the customer will consider this a deficiency on the agents part. The ensuing repercussions to the carrier are obvious.

Where do these crucial carrier processes break down?

The answer is surprisingly straightforward. A carrier may be able to receive agency data electronically, but this does not mean the carrier magically can transfer the ACORD XML data into its policy administration system, rating system and other critical back-end applications. The data must be transformed and entered into many different systems.

Each system typically holds only part of the answer for the particular business process that will fulfill a single agency request. Carriers generally end up handling these ACORD transactions through batch jobs or by re-keying data, causing long lead times and driving up operational costs.

In the past, some carriers spent millions of dollars and months at a time on integration projects, scrambling desperately to write custom code that attempted to tie together the back-end systems. But as soon as the carrier plugged one hole, a new agency would come on board with a different set of business and technology requirements, and the integration dike would burst once again. In addition, standards changed frequently and carriers struggled to find ways to handle new data requirements and transactions.

IT budgets are far more limited now, and carriers want immediate results that will have long-lasting effects. They want a repeatable solutionone that does not force them to start over each time a new agency or intermediary is introduced or a new external service is required.

What is needed is a straight-through processing (STP) framework that helps automate typical carrier processes that involve multiple systems. One such framework called business process integration (BPI) has been gaining momentum, based on its ability to address integration problems rapidly and show immediate results.

In the context of integration technology, a business process refers to any multi-step activity (issuing a policy, for example) that manipulates data and coordinates business logic. Business process integration refers to the automation of these business processes and business logic, usually by interacting with several different types of back-end systems.

BPI has garnered attention because it is a top-down, business-focused approach to integration. BPI technology is easy for the business community to use and understand because a businessperson can model a business process without worrying about specific technology requirements. A typical business process model might look something like the figure accompanying this article.

Carriers can use BPI to automate business processes (such as issuing endorsements or certificates of insurance) using functionality and data from existing systems, regardless of the technology with which these systems were developed. As the graphic illustrates, the businessperson does not need to specify what system or database is used in each step. Thus, the process is reusable because it is not bound to a specific technical implementation.

This idea of reusable, repeatable integration solutions is critical. No two carriers have the same back-end systems or identical data requirements, but most have similar business processes. Every carrier must accept application submissions, order underwriting reports and track them as they come in, provide quotes, respond to agency requests, issue endorsements, and so on.

A good BPI solution can provide predefined processes that give carriers a valuable jumpstart. For example, carriers can use BPI technology to accept ACORD XML data streams from intermediaries, and based on the content of the data, route the information to the appropriate business systems. This routing is accomplished by connecting to the various systems using point-and-click wizards that do not require coding.

A carrier who uses BPI to add a new agency or intermediary can reuse the same processes. If new processes are warranted, carriers can create them rapidly and integrate them into the business to support new agency and intermediary transactions.

BPI is an affordable, simplified approach to integration that allows companies to rapidly eliminate manual handoffs, complicated batch jobs and other inefficient processes that traditionally have blocked the path to creating the real-time, round-trip transactions that carriers and agents have long been striving to achieve.

At the same time, BPI greatly simplifies the view of the business. When dealing with multiple insurance forms, complex functionality and the endless nuances of proprietary systems, it is easy for carriers to tumble into the abyss of technical details and lose sight of business objectives.

BPI can help give carriers the focus necessary to drive new business by providing faster, better agency service.

is director of marketing and business development for Metaserver Inc., based in New Haven, Conn. He can be reached at steve@metaserver.com.


Reproduced from National Underwriter Edition, May 19, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.