Jokers Wild

Just over half a year has elapsed since the burial of Synchron. Since then, little appears to have been achieved in finding a replacement solution to the industry’s drive for a single interactive technology interface solution.

Add to which, recent internal disagreements within the Centre for Study of Insurance Operations (CSIO) — the company-backed body established to set industry EDI standards and lay the groundwork for broker/insurer interface — has resulted in a management shakeout. Rumor has it that the CSIO may well be disbanded in the near future and its research taken over by the Insurance Information Centre of Canada (IICC), which will likely result in further delays to the modest progress in industry consensus made thus far. In fact, industry commentators from both the company and broker camps believe that the latest developments signal a return to the technology drawing board.

Against this backdrop, market analysts such as Don Smith and Ted Belton, have repeatedly warned the property and casualty insurance industry of the danger of falling behind the technology advancements made by competitors in the other financial service sectors. They — and company/broker spokespeople — agree that technology driven communication through an industry-wide initiative is likely to provide the future competitive edge against outside intruders, whether that might be from local banks or the goliath financial service corporations in Europe and those south of our border.

What has emerged from the battle smoke of the industry’s internal fighting on the technology front is “The Freedom Alliance”, a partnership of some of the major technology vendors serving the p&c industry. The Freedom Alliance is being punted by some partner members and certain factions within the p&c industry as being the beginnings of a possible alternative to electronic interface similar to Synchron. By consolidating expertise and cost-efficiencies, the alliance members believe that they can generate sufficient groundswell support at the brokerage and company levels to achieve an industry standard delivery service at point of sale and policy management. The concept introduced by the alliance does provide an interesting perspective in that it is focussing broker attention on the type of technology that they require rather than relying on company-based solutions.

I have noted in several of my editorials that an industry technology interface solution has to come from within the industry, at least in terms of broad agreement on what needs to be done. In particular, I have suggested that such a process should be led by brokers who stand to gain the most from a competitive ability standpoint. Ideally, the cause should be taken up by brokers at a national level, possibly through the Insurance Brokers Association of Canada (IBAC), and negotiated with companies at the same level. Bringing vendors, brokers and companies into a single representative forum would negate much of the self-serving interests of the industry stakeholders. It would also ensure that all of the parties gain a stake in the industry’s technology development.

It sounds a simple process but as the experience with Synchron proved, misleadingly so. However, brokers cannot afford to rely on companies to provide the ultimate solution. Doing so would be folly considering that the companies have their own technology concerns in terms of pending costly legacy system upgrades and dealing with Y2K-related system problems. Furthermore, as broker readers know, what the companies preach of broker commitment and what is practiced are often contradictory actions. Essentially, as various commentators have noted, the companies are likely to be reluctant to invest heavily in broker distribution technology without a clear vision of the market’s future landscape.

In that sense, a broker-system vendor approach to breaking down the doors to communication could well provide the basis for a broker/company technology interface solution. However, communication and achieving consensus remain the keys to such a solution. Basically, the same players and stake issues which haunted Synchron remain.

One of the biggest stumbling blocks to the IBM-backed Synchron was gaining support from the broker management system vendors and technology service providers. With the new initiative drive now coming from the broker management system vendors, there is no sense in the market that companies and even the bulk of brokers are open to this solution. Furthermore, the vendor alliance is not wholly representative of the market’s broker management system service providers — the alternative initiatives pitched against Synchron are also still active forces in the picture, on both the personal and commercial lines side. As such, the issues of broad communication and consensus remain the challenges to be addressed.