Commercial Coming of Age

For property and casualty insurance brokers, the benefits of automated policy management systems first became realized in the ’80s, mainly for personal lines accounts. Today these broker management systems (BMS) have become an integral part of brokerage operations. However, many brokerages with a strong commercial lines orientation have recognized that BMS are not ideally suited for managing and processing business accounts.

As personal auto and property insurance comes under pressure from direct response insurers, the efficient management of commercial lines business has become a key priority for many intermediaries.

COMMERCIAL MANAGEMENT SYSTEMS (CMS)

For these brokers, commercial management systems (CMS) are playing an increasingly important role in their operations. The CMS was first introduced in the early ’90s and used mainly for document generation and policy process management. This served as a good introduction, and allowed commercial lines brokerages to automate what had previously been manual, inefficient processes.

Today, the CMS has evolved into a more comprehensive solution for many brokers. It followed a familiar arc, progressing from document-generation capabilities to becoming a critical part of operations and workflow. Instead of mere policy processing, modern commercial brokers are using the CMS to standardize all customer inquiry, quoting and policy management services, ensuring a consistent “checklist” approach to all business accounts. Now, the focus is on managing the account throughout the full policy life cycle.

“I think one of the main benefits of a CMS is the consistency of process,” Jon Ouellette, president of Calgary-based Canada Brokerlink, says. “This goes straight to providing consistent levels of service to all of our clients and to standardization. If we have something unique in our specific policy or product lines, we can make it uniform across our entire company.”

Ouellette adds that using a CMS allows brokers to input specific policy information and checklists so that submissions to insurance companies are detailed and accurate. This not only saves time for the broker, but also the insurer.

“One of the primary benefits of a CMS from an insurer’s perspective is quality and completeness of information,” Tom Reid, vice president of affiliated brokerage operations for ING Canada, says. “We get two advantages out of accurate and complete data. First, there is the efficiency of the process. In other words, we don’t have to go around and around to get all the information. And second, we can conduct better analysis of the risk about to be insured and therefore offer a more competitive price.”

STANDARDIZING PROCESSES

For many brokers with a commercial lines orientation, a consistent approach to all accounts has been elusive. This is mainly due to the approach of different producers and the individualized nature of servicing accounts. The value of the CMS today is creating standardized processes across the operation.

“A CMS can help create a standardized workflow,” Jim Grieve, vice president of commercial lines for Toronto brokerage Sinclair-Cockburn Financial Group, says. “If any of our sales or service people are not in the office, another person can look at the client file and know exactly where to find information on the system and how to proceed. The workflow is dictated by the CMS and it makes us that much more efficient.”

As commercial management systems evolve, other spin-off benefits result. For example, consistency of business processes not only helps efficiency and service, but also reduces exposure to errors and omissions claims against the broker.

REDUCING E & O CLAIMS

“It can help reduce the risk of E&O claims,” says Ouellette. “In a multi-branch environment, if you have a number of offices and they each write insurance for, say, service stations in their communities in a slightly different way, it creates a degree of E&O exposure.'”

“There is built-in E&O protection for brokers,” Grieve agrees. “At each stage, the CMS finalizes the transaction. When you are moving through a process of submission to a company, a quotation to a customer and issuing a binder, the CMS makes sure you don’t miss anything like changes in coverage or limits.”

For brokers with multiple office locations, the need for a standardized approach becomes paramount. “A CMS in a multi-branch environment is an absolute necessity as far as I’m concerned,” adds Ouellette. ‘We need to have the ability to centralize commercial information in a more complete manner. If one office is experiencing difficulties, another can act as a back-up.”

CENTRALIZING MULTI-BRANCH INFORMATION

Ouellette notes this very situation occurred in the Canada Brokerlink offices during the flooding in Peterborough, Ontario in 2004. The brokerage’s office in that city was forced to shut down, but other brokerage locations were able to provide continued service to customers thanks to centralized data management. In today’s changing environment of storms, fires and floods, this flexibility may prove to be crucial for multi-branch brokerage offices.

Another potential opportunity for the CMS lies in training of sales and service employees away from personal lines to commercial lines. As the personal auto and homeowner insurance markets face intense competition from direct writers, more brokers are looking to shift premiums to commercial lines and re-deploy staff.

“Our CMS platform has been a significant factor in the successful re-deployment of our personal lines sales force in our commercial operation,” says Doug McIntosh of Renfrew Insurance. “It has provided a systematic track that our people have been able to follow, guiding their training and development. As a result, these individuals have been able to perform at a second year-level within their first six months and are performing well ahead of plan.”

LINKING BROKERS WITH INSURERS

Although the CMS has helped brokers address workflow, consistency and training issues in commercial lines, the other side of the equation has been missing – linking the broker system to the processes of multiple insurance carriers. Several insurers offer web quoting systems for standard commercial accounts, but they require brokers to use the company’s proprietary forms and processes. This can involve double entry of information for brokers who are shopping the market and looking for the best price for their clients.

“This does create a challenge and it can waste a lot of time, especially if you are not clear which market is the obvious leader for a particular account,” says Ouellette. “You are stuck with going to multiple web sites. If commercial management systems were allowed to exchange data with company web sites, it would be a phenomenal opportunity.”

In the future, the CMS is poised to bridge the gap between insurance company web quoting sites and brokerage workflow. The CMS of the future can play a critical role in centralizing all data in the brokerage and enabling direct communication with company systems through standard data protocols.

“The ultimate scenario for insurance carriers is that our primary underwriting rules are available to brokers at the point of sale,” says Reid. “Obviously, this is not for the multi-million dollar account, but rather the smaller end of the commercial market where it is a lot more of a mechanical process. From mid-market on down, brokers could have access in a very straightforward way to rating, product and underwriting rules from multiple carriers. Brokers could go into the CMS and input risk details and have it sent back online real-time with rates and rules from a multiplicity of carriers.”

Through standardized automation, a consistent approach to all business accounts and the evolving goal of direct insurer-broker communication, the CMS has truly come of age for the modern broker.