In the rush to embrace technology, unintended consequences can sometimes prove the old rule: “Two steps forward, three steps back.”
Take, for example, commercial lines technology for insurers and brokers: no doubt we have seen big gains in this area over the past five years. It is far easier now to obtain online quotes for some commercial risks, and there have been several breakthrough developments in the design of commercial management systems (CMS). In these ways alone, brokers and insurers have benefited greatly from improved electronic efficiency. Two steps forward.
But what about the drawbacks? Many insurers have invested heavily in proprietary company portals to facilitate online quoting. This meant brokers could get access to virtually real-time quotes, but it also meant brokers had to input policy information into different systems. Similarly, a preoccupation with new business left the bulk of broker transactional processing — endorsements, renewals — without much-needed productivity gains. And then there is upload and download. Given the issues around varying insurance company back-office systems and the complexity of capturing current data, the notion of full electronic data interchange (EDI) is for the most part just that — a notion.
So how do commercial insurers capitalize on the advantages of technology for brokers without re-living the mistakes of the past?
MOVING FORWARD
First, start with the broker. Overwhelmingly, brokers want transactions to be done within their broker management system (BMS) or CMS without having to re-enter data or re-work their processes around another entity. Any company-created technology solution must address this reality first and foremost. The complexity of commercial lines accounts only increases the number of challenges in this area.
Second, we need to focus on high-transaction areas such as endorsements and renewals. These represent the majority of day-to-day office processing that brokers and their CSRs must complete. It is the most time-consuming and potentially productivity-draining area of broker operations.
Third, the emphasis on commercial lines business has to be on complete issuance — including quoting, new business, binding and renewal — for all policies. This should include complete package policies — auto, property and general liability — and extend to the ability to issue specialized policies for farm, marine, E&O/D&O and subscription.
THE LINCQ SOLUTION
Lombard Canada has placed its resources and technology investments behind these three priorities. Through LINCQ, its Web-based software, brokers are in control of commercial lines transaction processing — with no portals or workarounds. New business and renewal quotes can be fully absorbed into LINCQ, making it easy for brokerage customer service representatives (CSRs) to complete the quoting process. The proof is in the pudding: 20% of Lombard’s new business is actually issued prior to inception and 73% within 15 days.
With LINCQ, endorsements and renewals are given the same priority as new business. Renewals can be processed ahead of expiry. Fifty-nine per cent of Lombard’s renewals are done prior to renewal date and 83% within 15 days. Endorsements can be done the same day. This not only improves service turnaround, it reduces the backlog and errors associated with traditional endorsement processing.
With LINCQ, for the first time, commercial renewals can be downloaded directly into Keal’s comXP. Renewal policies can be downloaded into Keal’s CMS without manual intervention — a process that includes not just data, but also a PDF of the entire policy output as an attachment tied to the policy.
To improve efficiency, LINCQ also allows brokerage staff to print declaration pages of policies locally in their office and mail them to clients. This eliminates delay at the insurance company end in issuing binders and temporary print cards. In most cases, the broker can take the actual policy to the client, not a binder. In addition, this “dec” can be saved as a PDF document; it can be easily absorbed into any BMS or CMS that supports document storage — Keal, Policy Works, TAM, etc. This is a tangible step towards the “paperless” office for brokers.
Finally, this transactional processing efficiency applies to all sizes and types of commercial lines policies. A technology tool addressing only quoting or new business for smaller commercial accounts is by definition a limited solution. Lombard uses its LINCQ solution for all policies — from packages to specialized coverage to marine.
PARADIGM SHIFT
In many ways, we need a paradigm shift in thinking about technology for the insurer and brokers. Instead of focusing on a limited commercial lines data entry system, there needs to be a separation between underwriting and transaction processing. These two functions have been blurred in the past, leading to confusion, workarounds and stop-gap measures. In essence, insurers have been trying to do the two functions at once. Once a piece of new or existing business is properly underwritten, data transactions should be able to flow through the system with ease.
Some in the insurance industry are still pursuing the dream of a single-entry, multiple-company interface (SEMCI) in real time. For commercial (and personal) lines, this is a lofty goal: it is dependent on a range of different factors, from standardized data to insurance company back-office system synchronization with BMS and CMS. Groups like CSIO and ORBiT are making solid progress in these areas, particularly in data standards. But the complexity of commercial lines policies means true SEMCI done in a BMS or CMS remains a future objective.
Perhaps it’s time for brokers and the industry to step back and ask: ‘Realistically, what can be done now?’ This means focusing on solutions that would allow brokers to work fundamentally within their systems on all transaction processing, improve customer turnaround from weeks to days (or minutes) and achieve a smooth workflow that addresses the entire sales and service cycle. This should include easy issuance of certificates of insurance, viewing claims history, reporting claims and entering and viewing billing information, to name a few issues to be addressed.
As the LINCQ solution demonstrates, these functions exist today for commercial lines. This technological efficiency might involve a closer working relationship between insurers and brokers, and it might even involve companies relying on a smaller but more cohesive number of distribution partners.
But the payoff is well worth it, for brokers and their clients.
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We need a paradigm shift. Instead of focusing on a limited commercial lines data entry system, there needs to be a separation between underwriting and transaction processing. These two functions have been blurred in the past, leading to stop-gap measures.