Solutions from the Ashes

The Synchron initiative, once heralded as the industry’s ultimate electronic interface solution between companies and point of sale, collapsed last year. From its ashes have risen several alternative solutions, one of the most prominent being The Freedom Alliance, a strategic partnership between The Agency Manager, Compu-Quote and Cebra.However, other vendors and company-backed solutions are closing in, namely Powerbroker and CGI who have been developing their own version of the broker to company interface solutions. But, will these alternatives achieve the efficiency that Synchron – in theory – aspired to? Even as vendors scramble to address this question, there is nagging doubts through industry ranks that in spite of their best interests, neither insurers nor brokers are truly willing or able to work towards bringing a legitimate industry-wide solution to fruition.The Synchron initiative, once heralded as the industry’s ultimate electronic interface solution between companies and point of sale, collapsed last year. From its ashes have risen several alternative solutions, one of the most prominent being The Freedom Alliance, a strategic partnership between The Agency Manager, Compu-Quote and Cebra.However, other vendors and company-backed solutions are closing in, namely Powerbroker and CGI who have been developing their own version of the broker to company interface solutions. But, will these alternatives achieve the efficiency that Synchron – in theory – aspired to? Even as vendors scramble to address this question, there is nagging doubts through industry ranks that in spite of their best interests, neither insurers nor brokers are truly willing or able to work towards bringing a legitimate industry-wide solution to fruition.A year ago, Synchron Insurance Solutions Inc. was considered the pre-eminent solution for point-of-sale insurance transactions. The not-for-profit consortium — an IBM initiative initially supported by six insurance carriers — proposed a real-time policy management system accessible by brokers through an inter- or intranet connection.

Initially the system was expected to provide brokers with a point-of-sale rating engine as well as a structure that would allow them to issue, renew and change policy information. Brokers would also have access to online libraries of company information featuring everything from sales and marketing information to policy and claims handling regulations. In time, Synchron would expand to meet a wider definition of point-of-sale, providing brokers with instantaneous information tracking pay structures as well as claims input and tracking information.

In theory, the initiative appeared to be exactly what the entire industry would support. The technology would provide brokers with the efficiency to compete against direct writers while insurers would be supporting the broker supply chain, a distribution model that has served the industry well for years.

In practice, though, gathering industry support for the Synchron project — from all sides — proved a disaster. By April 98, two of six carrier supporters balked — ING Canada and AXA Insurance turned their attentions away towards other business solutions. By the end of the month, another company, Guardian Canada, had begun backpedaling on its support, most likely due to the acquisition discussions taking place with ING. With brokers across Canada ambivalent about the initiative, and only three companies still in full support — Wawanesa Mutual Insurance, Zurich Canada, and Economical Group — the Synchron initiative lost steam and crumpled inward.

Vendors rise from ashes

Subsequently, some familiar market players have risen from the ashes of Synchron, touting their own point-of-sale solutions.

The first out of the gate is the “Freedom Alliance”, a partnership between The Agency Manager, Compu-Quote and Cebra. The Alliance has produced a product comprised of the latest version of The Agency Manager broker management system with Compu-Quote’s Lincq engine embedded within the software. Lincq is a rating and point of sale system in which insurer underwriting criteria is stored on the broker system allowing brokers to rate and sign new policy holders instantaneously. New policies, and any changes to underwriting criteria are sent back and forth from broker to insurer in an upload/download transfer at the beginning and end of each business day.

Brokers currently utilizing Lincq and the broker management system must run it as a separate program, and in some cases must duplicate data entry. The Alliance, with Lincq embedded, provides the efficiency of one-time data input along with the point-of-sale system that allows policy signing, renewal and change capability.

The Alliance is all set to unveil its product — Agency Manager president Jeff Purdy says Dominion of Canada’s new subsidiary, Chieftan Insurance, has committed to using it as their policy issuing method.

While the Alliance is a partnership of some of the major technology vendors, it is not an exclusive arrangement between the companies. Compu-Quote is still able to embed its Lincq engine in other systems, says president John Savage. “We hope to follow Intel’s business model with many different broker management systems having the Lincq engine inside,” he says. Purdy is not concerned about the prospect that the alliance structure could be duplicated by competitors. “We are running with the Microsoft theory that if we build it first and build it best, then we are going to remain competitive,” he says.

Peter Symons, CGI Inc.’s vice president of consulting services, says his company has a different philosophy. “Our history has been that we may not be first out of the game but we always put out the best solutions. We’ve spent extra time studying the market and have been able to develop a solution that provides immediate benefits for both the company and the broker,” he says. CGI’s AssureNet, an integration of several of CGI’s existing solutions, will launch in the early summer. AssureNet will have the underwriting and rating component on a centralized network server that the broker can access via their broker management system without adding more software.

In the AssureNet model, both broker and insurer can access the server. Insurers can access from a workstation to control and change rating and underwriting criteria. Brokers will send policy applications and changes using standard CSIO transactions. Applications sent by brokers will be accepted or denied at the remote system based on carrier specifications and criteria, with a copy of policy sent back to both insurer and broker. “A real advantage to a centralized approach is that all of the data is stored at one location. No matter how careful you are, when you are sending criteria information to many different sites, something is going to go wrong. By sending data to 1000 brokers you have 1000 possible failure points,” notes Simmons.

CGI plans on initially releasing the product with integration capability into its own broker management systems. But Simmons insists CGI will invite other broker management system vendors to test with AssureNet to ensure compatibility.

Still, by the time CGI invites the other vendors, they could very well each have released their own point of sale technology. Powerbroker, another broker management system, has created a subsidiary that is developing rating and point of sale software. “Our brokers have been pushing us to create the software. Initially we wanted to concentrate on what we do best as opposed to diversifying, but we’re doing the best we can do now so it’s a matter of servicing our customers further to help them compete against the banks,” says Eila Zylak, vice president of sales and marketing at Powerbroker parent corporation Zycomp Ltd.

Powerbroker’s rating system, Powerquote, is currently in the beta testing stages, while its point of sale system Powerlinq will be unveiled later this year. Chris Lang, president of Zycomp subsidiary Powersoft, says the company plans on having five insurance companies signed on by its launch.

Other bro ker management vendors, including CIMData and Delphi Systems, are adopting a wait and see approach regarding their expansion-minded peers. CIMData president Bob Hornick says his company has halted development of its own point of sale technology with a view towards embedding Compu-Quote’s rating system into its broker management system. If those plans do not proceed, he says, CIMData could enter the point of sale market. Hornick suggests current point of sale technology falls short of the industry’s needs noting, “soon enough the real aspiration in the industry will be to put out a web-enabled full policy full broker management system. That’s something we’re looking at doing in the long term.” Delphi’s recently unveiled ebix.com, though, signals they are back in the game. (See sidebar).

Too many solutions?

Currently, only a handful of insurers have committed to either of the solutions being touted. Dominion of Canada has indicated it will utilize both Freedom Alliance and CGI. Compu-Quote president Savage says Lincq counts General Accident, Lombard and Lloyd’s among its supporters. Powerbroker identified Lloyd’s as a potential future client. A small number of insurers, yes, but one market observer notes more will come aboard, “without an industry-wide solution, there’s going to be some major shakeouts in the industry, there will be a scramble to get technologically on par. Those that have good technological platforms and sound broker relationships will thrive at the expense of those that do not,” he predicts.

Dominion of Canada has indicated it will support different point of sale technologies. In fact, according to Brigid Murphy, Dominion’s senior consultant, the new vendor-driven multi-solution model has greater appeal than Synchron. “From an industry point of view, we liked Synchron but we didn’t like the fact that it was only one solution. We like to see more than one solution out on the market. We plan to have the capability with our brokers to accommodate any management system that they are using,” she says. The vendors are banking that other insurers will follow Dominion’s example.

However, not all industry players are convinced — many are concerned that three different point of sale systems set for release within one year might hamper and not encourage industry efficiency.

Consultant Len Ashby, former president of the Centre for the Study of Insurance Operations (CSIO), suggests an operational Freedom Alliance and Assurenet might adversely affect the industry. “Fundamentally, every broker is going to have to support both models. Either the broker is going to be paying double or all of the companies are going to be paying double,” he notes.

The concern is not the existence of competing point of sale systems, but the non-standard structures of the technology. The Freedom Alliance will essentially store all underwriting data and function at the broker level where Assurenet will maintain a third-party distribution point. A Freedom Alliance carrier doing business with an Assurenet broker could ultimately have to switch back to paper and pen.

Insurance Technology Advisors Ltd. president David Plouffe agrees the various systems could fragment the market, but notes this is typical of vendor-based solutions. He suggests a true industry technology solution must come from both the industry and the vendors. “The question is not one of technology, it is how the industry can improve its products and services. The insurance industry must come to a consensus on what it needs, and then tell their technology vendors to deliver it,” he says.

One insider suggests this type of agreement is unlikely, noting the fall of Synchron and other initiatives resulted from an environment where both brokers and insurers were not willing to commit to costly technology in the face of a changing industry. “The future may mean that brokers may no longer fulfill traditional roles and insurers may no longer provide the same degree of support for broker distribution. Why would either want to spend large chunks of money on systems that might not be relevant in the years to come?”

Adopting a “wait and see” approach is, however, a shortsighted strategy, says Lori Guthrie Phair, a Toronto broker and an early Synchron supporter. “Here we are as an industry, from a broker perspective, saying brokers can’t sell on price because we’ll lose. So we have to sell on the added value that we bring to the table. This added value must be instant information at our fingertips and systems that demonstrate independence, providing consumers with the best policies from an industry-wide range of alternatives. This is what we need. This is what Synchron aimed to provide, but I’m not sure the industry itself is ready to take these steps,” she says.