Bridging The Data Divide

With the growing acceptance ofindustry XML standards for data transfer, brokers are asking if the time is finally right for multiple interface with insurance companies directly through their broker management system (BMS). This would render the proprietary carrier Web portal, long a sore point for many brokers, obsolete. The only problem? Insurers have invested millions of dollars in their portal solutions, and so they won’t be abandoning them easily.

Undeterred, and led by their national association, Canada’s insurance brokers are taking a fresh look at the age-old problem of interface between broker management systems and carrier back-end technology. The focus is on pragmatic solutions that are tested and validated by BMS vendors — and based on XML standards. The big debate is whether the transmission of data should take place inside or outside insurer portals.

The Insurance Brokers Association of Canada (IBAC) is quietly trying to figure out a way for the latter approach to actually work. In other words, they would prefer to see straight-through processing of transactions directly from any BMS to multiple insurers. In recent months, its technology committee has consulted with BMS vendors on a proof of concept to test whether their systems can extract a standard XML auto policy file for new business and policy change. The XML file, based on Centre for Study of Insurance Operations (CSIO) standards, could be sent directly to an insurer’s back-end system via the Internet in real time without requiring the involvement of a company portal.

The Broker Perspective

It is still early days in the investigation, according to IBAC CEO Dan Danyluk. He notes it is important to first explore the capabilities of major BMS vendors active in Canada. “We have come up with a clear, small test about a message and whether that would work,” says Danyluk. “Once we know the answer, it will determine next steps. We want to first see if we can light a match before we build a bonfire.”

Specifically, IBAC’s technology committee has gone to the “pan-Canadian” BMS vendors for a response on how long it would take them to create an XML-standard message for an auto insurance policy. There is no fixed time frame for the project, according to Danyluk, but the long-term goal is to achieve multiple interface with insurers without the necessity of portal access. The transaction would begin in the BMS and end there as well.

“We strongly believe that: 1) brokers ought to be able to choose the broker management system that fits their brokerage,” Danyluk says. “And 2), if you are really going to do the job as a broker, you need to be in a position where you can do multiple interface with your insurers.”

The Vendors’ Perspective

The BMS technology vendors have already responded with their comments. Keal Technology (sigXP) has, for example, stated that it would require 30 days to meet the proof of concept test, while Custom Software Solutions Inc. (The Broker’s Workstation) has indicated it is currently ready.

Applied Systems Inc. (The Agency Manager, Epic) says it has received information from IBAC and sat in on meetings, but “at this point we are not able to participate in a proof of concept,” according to Doug Johnston, the company’s vice president of partner relations and product innovation. “It is not that we are not interested in what IBAC is doing, but our plate is pretty full. We believe in what they are doing and we think it is a serious endeavor.”

Others say they are encouraged that IBAC is taking a leadership role in technology.

“From our perspective, IBAC has asked us to prove this concept and whether we are willing to work on it,” notes Scott Andrew, president and CEO of Custom Software Solutions Inc (CSSI). “We said yes, because we are already doing it; there is no risk in it for us. It is an attainable goal and we will see where they go next with it. The other ways we have tried to do it as an industry in the last 15-20 years clearly haven’t worked. If IBAC can influence positive change from its position, I’m all over that.”

Patrick Durepos, president of Keal Technology, said he believes it’s “a leadership issue as to why this has not been done before,” but brokers have a very strong lobbying voice. “There are very few industries that have a group of members so strong on the lobbying front,” he says. “That is what we are going to start to see in the next few months. Once they throw their weight behind this project, companies will say: ‘Okay, this is what we have to do.'”

Meeting of Minds

The bottom line is that everyone has to get together at the table, sit down, put aside their differences and say what needs to be said to make things work for all parties concerned, says Peter Blodgett, president of the Insurance Brokers Association of Ontario (IBAO). “This is a national issue, so let’s look at the bigger picture,” he says. “It doesn’t make any sense for Manitoba to be farther ahead than Ontario when it comes to technology or vice versa. We all have to be on the same page.”

So what do insurance companies think about the prospects of broker-initiated, straight-through processing of transactions based on CSIO XML standards? Out of the four insurers that agreed to be interviewed about the topic (two declined or did not respond to interview requests), none had any specific knowledge of the IBAC-led initiative. And for some, this is a problem right off the bat.

“I don’t think this is the type of work that can be done outside the carrier world, and then [have the brokers] turn around [to the carriers] and say: ‘Here you go,'” Johnston says. “I have been very vocal to IBAC about that. We cannot do this in a vacuum. If we do, all we will create is a divide between the technology group, the carriers and the brokers. I have been critical of that, and I have not made friends on this point.”

Jack Ott, senior vice president and chief information officer for ING Canada, says he understands that IBAC and brokers would like to speak to insurance companies to see if the carriers “can get our act together” with BMS vendors generally. But “the reality is that this problem doesn’t get solved with general pronouncements,” he says. “It gets solved when key companies and key players sit down, talk, work things out and start pilot projects.”

The Company Perspective

Instead of focusing on multiple interface models, insurance companies in recent years have been developing their own proprietary broker portals. The intent is to give brokers the kind of functionality they are asking for, but only through the individual company’s space. This has translated into some individual successes, particularly in terms of current capabilities in real-time policy inquiry, billing status, rating and new business transactions. The competitive mantra for companies these days is ‘ease of doing business.’

Whether the solution in question is Gore Mutual’s GoBroker technology, Economical Insurance’s Group’s Connex Suite, Aviva Canada’s Fastrax portal for commercial lines or ING Canada’s similar venture, Savers, many say there is tangible progress.

“I think companies, including Aviva, have been working feverishly on making proprietary portal activity work,” notes Bob Fitzgerald, executive vice president and chief marketing and underwriting officer at Aviva Canada. “The companies’ portals have become more foundationally stable, and people are looking towards solutions and partnering with various BMS providers, be it WARP or Nexisys. There are vendors out there looking to tackle this space of point-to-point integration.”

Ott, whose company is also working with several BMS vendors, agrees there is a lot of activity on the integration side. “What I am seeing is a real change in attitude on both sides of the fence,” he says. “Both the BMS vendors and the carriers are finally getting the message that brokers have been sending for awhile: they [brokers] want the BMS to be the centre of their brokerage universe. That is where transactions start. This is where they do business. So we need to align to that.”

Gore Mutual vice president of information services and chief information officer Richard Meertens says his company’s GoBroker technology has enabled several key functions for brokers. These include policy view for all personal and commercial lines, including dec pages [“declaration” pages are the first page of the policy] and billing notices, commercial lines new business providing instant quote, bind, issue and electronic policy delivery and policy change functionality for auto and billing.

“Gore Mutual recognizes the significance of broker management system integration and we are proud to be making progress in our quest to deliver solutions,” Meertens notes.

For Economical Insurance Group’s senior vice president of operations, Jorge Arruda, the whole point of technology investments is to increase broker efficiency. “A matter of decreasing something from minutes to seconds, when added to the whole policy life-cycle, could result in big gains for the broker,” he says. “The development of the Connex Suite solutions like Edge and Rogo are the initial rollout of our ongoing technology solution strategy.”

Despite this activity, the question remains: Do proprietary portals really give brokers what they want? The only answer lies in broker participation or “take-up” rates for the portals. Insurers won’t discuss publicly how many brokers use their solutions; some sources say there has been private frustration at the relatively low participation rates, often at less than 20%.

“The insurers that have spent millions of dollars in building those portals are awfully disappointed with the take-up rate from brokers,” says Durepos. “Brokers do not use them because they want to work within their systems.”

Andrew says it would only be a matter of time before brokers realized carrier portals were not what they wanted. “My eight-year-old prediction was a 20% take-up for company Web portals,” he says. “If it was a 40% uptake, I would be pleasantly surprised. Let’s just say, I am not surprised.”

The Future of Portals

In a position paper on the use of multiple company Web sites issued last August, IBAC lists several disadvantages of individual interface solutions. Ultimately, the association does not recommend them to brokers.

“The challenge with insurers’ portals is that they require an incredible focus for a period of time, which makes it more challenging to respond to all your insurers,” notes Danyluk, who adds that the position paper was for internal information purposes. “We think it is important that brokers have a choice whether to use a portal or not.”

Blodgett notes that when a broker goes into a company Web portal, it still represents a double-entry system. “There are steps being taken to get us closer to that ‘One-entry, do-it-once’ technology that we are looking for, but we are not there,” he says. “Instead of one-touch, we are now at one-and-a-half touches.”

In fact, several insurers are publicly questioning whether the broker portal is the right long-term strategy when it comes to everyday broker-generated transactions.

“Our long-term broker integration strategy starts and ends with the BMS,” Arruda says. “The Economical Insurance Group is purposely avoiding extensive development of our broker portal because we’re focusing on a broker’s natural workflow. This isn’t to say that in the future a solution developed under our technology integration brand won’t utilize the portal. We’ll just eliminate the requirement to sign-on and greatly reduce or eliminate duplicate entry of data.”

Ott says portals “are here to stay” to support the relationship between the broker and the company. “But we really see them diminishing in importance as far as the transactional side is concerned,” he adds. “It is currently frustrating for brokers. They keep telling us: ‘Look, push the transactions back into our BMS,’ and we keep launching new features of the portal. I am really hoping this is the tactical mid-term and we will gradually move away from that. Unfortunately, I think a little more patience is required.”

Why Patience Is Required

Patience is required because the road to multiple-company interface is long and littered with obstacles. Despite the good intentions of both insurers and brokers, the integration process for various BMS and carrier back-end technology systems can get bogged down in the details of data-storing, sending and mapping — especially when it comes to policy change.

“While new business is important, policy change occupies about 80-90% of the activity on in-force business,” Fitzgerald observes. “That is really the ease of business issue on the personal lines side. I think every company is doing something or a series of things around trying to address longstanding broker concerns.”

Ott says that “if you look at the objective of round-trip XML processing from the broker management system, there are still some significant hurdles to overcome, especially around endorsement processing. The reality is that a lot of insurance transactions are back-and-forth and are heavily dependent on the reaction of the end user.”

The key obstacle is lack of standardization among BMS, Meertens says. “This makes integration with company systems challenging, as we must build integration with — and license with — each individual BMS on the market. While the movement to standardization is happening, it is moving more slowly.”

Arruda agrees. “There is inconsistency between broker management systems, creating fragmentation,” he says. “The industry is committed to CSIO standards, but the industry doesn’t neces- sarily store, send or map the same information. Integration that works for one BMS does not always work for the next.”

It is perhaps surprising that some BMS vendors acknowledge that the traditional weaknesses with integration have been more on the front-end than the back-end.

“I think the real barrier over the years has been the BMS vendors,” says Andrew. “To put the onus on the companies entirely is not fair. They have spent money; they have tried to do as much as they can, working around the vendor systems out there. Really, they are trying to plug holes that the vendors won’t.”

When it comes to policy change, Johnston says traditional broker management systems have been unable to handle the kind of data necessary to process these transactions. “From a broker technology side, we need the ability to transmit a more robust data set to the carrier when a transaction is occurring,” he notes. “That means we need better policy history and better management of multiple terms of a policy.” Applied Systems’ new BMS, Epic, will have those features. It is set for launch in Canada in the third quarter of this year.

From Front to Back

But if the BMS vendors build it, will the companies be able to receive the data? The fact of the matter is that it depends on the specific insurer at hand. Different companies are in different stages of development when it comes to technology. Some argue a greater investment in integration has to take place in the companies’ back-end systems.

“If the energies are focused on the back end, then all companies that want to work in the independent broker channel will end up saying: ‘This is where we need to spend effort, not on the portal,'” says Durepos. “The back-end scenario will permit the ‘catch’ of an XML file. The take-up rate from brokers would be a lot better because they would almost instantly see their efficiency improve.”

The concept of brokers ‘pitching’ standard CSIO XML files from their BMS and insurance companies ‘catching’ the data in their back-end systems and sending it back to the BMS is an ideal vision of efficiency in this distribution channel. It is, in fact, what IBAC is pursuing as it probes the capabilities of first BMS vendors and then insurance companies.

“I have to believe that compan ies do want to see this come to a point where functionality is key, and we are able to communicate with them and do our jobs in a manner that is time and cost-effective for all parties involved,” says Blodgett.

“We think that the value of the broker advice proposition comes about when you can easily access your multiple markets and distill your information into simple advice for the consumer,” says Danyluk. “That is really what technology is all about, at least at the first step. The second step is: Can we take that distilled knowledge, put it in and close the transaction for the consumer? There is a lot there in terms of accessibility and speed. That is really what we are trying to get our heads around.”

Andrew believes that what IBAC is asking for can be delivered. “We’re delivering it today to more than 200 brokers,” he says, adding that CSSI’s I-Biz integration solution has been active since 2004 and is fully rolled out with Wawanesa Insurance. “Any activity needs to start in the broker system, whatever that looks like, and then can be sent in a done transaction via Web services or [through] whatever [the] company system [happens to be], which then sends the results or record sets back to the BMS.”

Think about it this way, says Durepos: “If companies are saying they are disappointed

with the take-up level of brokers with their portals, and the front-end solutions like Nexisys and WARP are not able to get critical mass in the market, that is a lot of energy wasted. We have to stop and say: ‘How we can do this differently?’ That is what IBAC is doing.”

Other sources are bullish that some aspects of this scenario will play out in the next year or two, albeit on a smaller scale.

“I am optimistic that a lot of the pieces are coming together and coming into focus,” observes Ott. “The CSIO XML standards are rapidly maturing, the technology itself for integrating systems has come a long way, particularly with things like Web services, and there is a willingness on the part of carriers and BMS vendors to sit down and make this vision that the brokers have been telling us about a reality. I am pretty optimistic that over the next year or two, there are going to be some interesting breakthroughs.”

Johnston is equally enthusiastic. “I have been really encouraged over the last six months,” he says. “There has been a lot of work going on at carriers, and people don’t see that until it is out there. We have a lot of straight-through, round-trip, real-time transactions available today, defined in XML standards and implemented by a number of carriers. Those initiatives need to continue if we are going to learn what works and what doesn’t work.”

Fitzgerald sees lots of room for optimism, but not on the scale of an “industry-owned solution” akin to the failed CSIO Portal concept. “I see more innovation with middleware providers, and the willingness of BMS providers to come together and accelerate the plugging of gaps,” he says. “Brokers are not homogeneous. Many have a view that they want to start and end in their BMS, or else they won’t play. I think there needs to be a willingness to say: “One size doesn’t fit all.” What we are interested in is ease of business that is flexible enough to allow brokers of all sizes and shapes to work electronically.”

Instead of shooting for “many-tomany” solutions, as the industry has done in the past, the industry should be directing its attention to getting “one-to-one” solutions working on a standardized basis, Ott says. From there, the industry can expand to “many-tomany” concepts.

“From our standpoint, then, it is not going to be a battle of the PR announcements,” he says. “What we are offering is steady progress to achieve this vision of straight-through processing. This would be a good year to start to see that happening.”

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“We cannot do this in a vacuum. If we do, all we will create is a divide between the technology group, the carriers and the brokers.”

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“The insurers that have spent millions of dollars in building those portals are awfully disappointed with the take-up rate from brokers. Brokers do not use them because they want to work within their systems.”

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“We have a lot of straight-through, round-trip, real-time transactions available today, defined in XML standards and implemented by a number of carriers. Those initiatives need to continue if we are going to learn what works and what doesn’t work.”