Launching Commercial Tech

Long viewed as too complex or labour-intensive, commercial insurance risks are increasingly enjoying the benefits of technology. After some experimentation, several leading insurers and brokers are working closely with vendors to automate workflow and integrate data, while still maintaining the role of hands-on underwriting. There may be no “killer commercial apps” to date, but there is a steady progression of technology bringing increased efficiency to the broker’s desktop.

Do commercial lines insurer and broker operations have anything to learn from the personal lines quest for single-entry, multiple- company interface (SEMCI) technology? Many are putting that question on its head, arguing that commercial risks may actually be the most promising area of technology investment in the insurance industry today.

Commercial Lines In The Vanguard

With fewer technology vendors offering dedicated commercial management systems (CMS) to brokers (namely Policy Works and Keal’s comXP), and CSIO XML commercial data standards in place since 2005, an opportunity exists for insurers to work closely on data integration projects with defined timelines and deliverables. Many companies are taking advantage of that opportunity.

“It seems every quarter there is another announcement,” says Byron Hindle, senior vice president of commercial lines for Intact Insurance. “There is a lot of excitement. Currently, it is downloading of renewals; soon it will be policy inquiry. Ultimately, there will be policy change. There is a lot of leap-frogging going on among the leading insurers such as Intact. No company maintains the lead for long.”

The leading insurers in commercial lines technology development are familiar names: Aviva Canada, Gore Mutual, Intact Insurance, Lombard Canada, RSA Canada and The Economical Insurance Group. All are at varying stages of progress, but the emphasis generally for companies in the recent past has been on real-time comparative quoting in insurance company portals and uploading of quoting and policy information from CMS (or broker management system, BMS) to insurer. Real-time download of data, in any meaningful or functional sense, has proven elusive; some contend it is too difficult to manage.

Download Gets Done

However, in March 2009, Lombard Canada announced it was the first insurer to download commercial renewals directly into Keal’s comXP. Using its Commercial LINCQ solution and Business Choice commercial program, Lombard can download renewal policies 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. This PDF attachment feature occurs for all transactions.

“A lot of people said commercial download was not possible, but through a lot of hard work we got it done,” says Peter Silk, senior vice president of commercial business process and delivery at Lombard Canada. “And we have done it in a way that is exportable to other systems down the road, such as Policy Works or a BMS.”

The payback is that the broker is up to date and current with all the information in the policy, says Brian Moses, vice president of business systems and development with Lombard Canada. “It allows any person with access to the BMS/CMS to service the account. It really widens serviceability within the BMS.”

Silk adds that the true value to the broker in reducing duplicate entry is in tackling the high transaction areas of renewals and endorsements.

Moses says Lombard Canada is in general release mode with commercial download of renewals after beta-testing it with three brokers, noting “quite a lot of interest from brokers across the country.” Lombard is also working aggressively on bringing data download capabilities to all transactions in the policy life-cycle, such as new business, endorsements, cancellations and, eventually, multiple-location coverages and schedules — all slated for completion this year.

Keal Technology president Pat Durepos echoes Lombard’s sentiment that sending information from the insurer to the broker is a tougher proposition than the other way around. “For Keal and likely other management system companies, a download is much more difficult than an upload,” he says. “We have to extract the data from the insurer system and bring all the information to populate the CMS in the broker office. There is a lot of room for potential error. That is why XML standards are so important. The issue really is one of data integrity.”

Data Standard Pioneers

Policy Works president Kevin Campbell says his company’s support of CSIO XML commercial standards through its Certified Data Exchange Program (CDEP) with five insurers is laying the foundation for future developments.

“Each insurer partner we’ve worked with — Intact, Gore Mutual, Aviva, RSA and Economical — is taking an industry- leading role in terms of commercial lines data exchange,” he notes. “Really without their investment and desire to develop integration solutions, commercial lines data exchange would not be happening today.”

Hindle says Intact Insurance has been an early adopter of and promoter of standards in CMS/BMS integration. In March 2007, it launched basic submission upload (name and address) through Policy Works. It also worked with Policy Works to add upload of coverage data in August 2007. Intact expanded these transactions to support other CMS applications, including Keal and Groupe Ultima. It was also the first insurer to launch quote upload and download capabilities directly into a CMS in May 2008.

“We are committed to providing access to our systems in ways that suit the brokers’ workflow, whether click, call or fax,” Hindle observes. “This can be direct transaction from a CMS, using our Savers CL submission tool, telephone access to our underwriting teams or through other communication vehicles such as fax and e-mail.” Intact’s Savers CL submission tool now sources approximately 20% of new commercial business from brokers.

The advances in comparative real-time quoting of commercial risks have proven to be of great value to brokers, at least in the short-term, according to sources. “A lot of the emphasis these day is on real-time quoting, probably because the existing portals are designed around providing instant quotes for certain classes of business,” Campbell says. “Brokers find this useful when the prospect is sitting across the desk or on the telephone.”

The Economical Insurance Group (TEIG)’s vice president of commercial lines, David Crozier, agrees that realtime comparative quoting “supports the key activity of attracting and booking the business for the broker.” But he notes TEIG has recognized that quoting functionality does little to help brokers service the policy during its lifecycle.

“TEIG has recognized this gap in commercial (lines) and will be offering not only upload and download of quote information for new business, but also the ability to inquire about account or policy information and receive a response in real-time,” Crozier notes. “Furthermore, we provide the brokers with another option to submit to TEIG claims information — such as first notice of loss or report — using a process that is initiated directly from the BMS/CMS. This is the key component, allowing the broker to spend more time within the systems they use daily.”

Portal Quandary

One main obstacle standing in the way of brokers using their own systems has been the development of insurance company portals, a quandary similar to personal lines. Although portals are often beneficial for smaller brokerages, which can rely on getting a quick quote on a small commercial risk, they can actually be counter-productive for larger brokerages that already have a CMS in place and need to constantly reenter data.

Campbell says he has seen more insurance companies focusing on “bridging solutions,” which flow data between the broker’s system and the insurer’s por tal. Citing features like single sign-on, upload of submission, download of quoting and inquiry, he notes brokers are beginning to see how they can tap into their CMS automation solution and adapt their workflows. These data bridges are one step on the path to true integration.

“Bridging solutions are not true realtime, because they require brokers to work directly in the insurers’ portals, which means portal-specific training, managing user accounts and some additional data entry,” Campbell notes. “In the next year or two, we’ll begin to see true real-time integration between Policy Works and insurers’ back-end systems, where brokers will work only in Policy Works. And these integrations will expand beyond the marketing phase into the customer service operations, like policy enquiry and renewal download.”

Hindle says Intact is looking beyond the insurance portal model to accommodate a broker’s preferred workflow pattern. “We have learned to think more of solutions that work within the BMS/ CMS for transactions, versus the fixation with portals,” he says. “We need to find solutions that match the workflow of our brokers from the get-go. For business insurance, Intact’s customer-driven view is that the broker’s desktop is the centre of our universe. “

Durepos also believes the time is right for brokers to move away from portals and leverage their investments in CMS technology. “With the combination of CMS, Web services and data standards, you will see more of the use of XML streams to send data directly back and forth between an insurer’s policy management system and a broker’s CMS,” he says. “In fact, in some cases, this is already happening. You are seeing the early phases of actual implementation of real-time integration in commercial lines. We still have a lot of work to do to get to the full range of transactions in the policy, but we are making good progress.”

“Most of the portals offer quoting services, but brokers cannot complete the transaction all the way through,” Moses observes. “Lombard is aiming for 100% single entry from the quote stage through to policy issuance, followed by full integration into the broker CMS/BMS. Ultimately with features like commercial download, the broker will be better able to service the policyholder.”

Broker Anticipation

For many commercial brokers, this wave of technology investment can’t come fast enough — or perhaps widely enough to include all the relevant commercial markets.

“One of the frustrations for me is that more companies are not working or partnering with technology vendors on commercial lines,” says Brenda Robinson, vice president of commercial lines for Welland, Ontario-based Young Insurance Brokers. “As brokers, our job is to ensure we approach all markets and find the best coverage for a particular class of business, and we do that. But for those companies that are not investing in technology and efficiency, they will face a disadvantage. It will simply be harder to do business with them; they run the risk of being left behind.”

David Scholes, vice president of commercial lines for Orangeville, Ontario- based Secure Insurance Solutions Group, says his brokerage participated in the best testing of data integration projects with Aviva, Intact and RSA. He is eagerly awaiting the arrival of TEIG’s system. “Data entry and support personnel within our brokerage are benefiting from the education received as a result of conversing with underwriters during the new business and renewal quotation process,” he says.

The status of data integration projects with insurers aside, brokers are still benefiting from their investments in CMS. Estimates vary of how many brokerages with a significant commercial book of business actually have a CMS (it ranges from 10-40%), but anecdotal evidence exits that brokers are putting more emphasis on automating commercial lines business.

“Brokers are looking at their commercial business and trying to find ways to either increase or maintain their book in difficult economic conditions,” notes Durepos. “To do this, many are examining their processes and procedures. Some are bringing in consultants to look at the entire way a brokerage does business in its commercial lines and its entire operations. That involves technology because many of the recommendations that come out of this review will be related to technology tools.”

Durepos adds the marketing functions of a CMS are particularly beneficial to brokers, since a softer market may mean a ramp-up in increased sales activity. “One thing a commercial system can do really well is act as a client relationship management platform,” he says. “It can help brokers electronically manage referrals, leads, activities and follow-ups. This really helps broker mine their own database and provide a unified view of client data.”

CMS in Challenging Conditions

“From a vendor point of view, we’ve seen a number of BMS vendors creating and offering distinct commercial solutions within their BMS systems — a sign of the growing emphasis that is being placed on automating commercial lines,” says Campbell.

(Canada’s largest BMS vendor, Applied Systems/TAM, does not have a dedicated commercial solution, although it is working with both Keal and Policy Works to share data with its BMS).

Campbell also notes Policy Works has garnered a steadily growing customer base over the past five years, including the recent trend of smaller brokers showing interest in purchasing a CMS.

“Five years ago, I could have counted the number of brokerages in our area with a CMS on one hand,” adds Robinson. “That has certainly changed over the last couple of years.”

Robinson says her brokerage has seen the advantages of CMS efficiency in areas such as marketing, renewal processing, comparative quoting and standardized processes across multiple branch offices and employees. “We don’t just use our CMS for the marketing tool, but for the full policy cycle — endorsements, renewals, inquiry and so on.”

Scholes notes the CMS’s combination of improved documentation and electronic transmission provides an opportunity for greater efficiency in a brokerage. “Electronic transmission of the Policy Works submission allows the broker to increase significantly the number of customers serviced through improved documentation of new business and renewal quotation activities,” he says. “This documentation process is adequate, accurate and automatic, thereby reducing errors and omission exposure and improving the risk analysis process of the broker/producer.”

For Campbell, the real benefit of a CMS is all about standardization. “A CMS solution really provides brokers with consistency of process, which leads to increased efficiency, reduced E&O and better customer service.”

A CMS can handle virtually any size of risk, although likely commercial candidates for automation tend to be small-package business, single-locations risks with premiums up to Cdn$25,000 and individually-rated commercial auto.

“I believe that we are moving more and more towards a paperless environment,” observes Robinson. “This is a big step in commercial lines because, in the past, the emphasis has been on forms and binders. Now, the companies are saying: ‘Here is a PDF of the declaration page. You only need to print it off if necessary.’ Obviously, the less you touch a small business policy, the less it will cost you to process it. If we are looking at a Cdn$1,000-2,000 policy, it has to be handled efficiently.”

The smaller business policy also seems to be the starting point for many of the data integration projects between insurers and brokers. “I think the first step towards things like full download of transactions will happen here in small business,” adds Robinson. “And this will come in steps; then we can move on to mid-market accounts.”

Indeed, Scholes notes his brokerage’s beta testing of data integrations systems with insurers often precluded the more complicated risks. “We found the number of locations to be insured a red flag that would kick the risk to mid-market underwriters,” he says. “As the insurers experience the benefits of the electronic transfer, I feel the scope and variety of risks handled will increase.”

For Crozier, this evolution will have to reflect the reality of increased complexity in certain commercial risks. “While there are some similarities between commercial and personal lines, the workflow, qualifying criteria, what will be written and at what rate tend to be more varied between carriers in commercial,” he says. “This in turn creates variability in the technology requirements.”

Broker-Underwriter Collaboration

In the bigger picture, Campbell says the level of risks taken on for automation will be a function of the collaboration between broker and underwriter. “Imagine a broker and underwriter working together on a proposal for a prospect, able to share and interact with whatever data they have in either’s systems and communicating however they are most comfortable — by phone, email, chat or whatever,” he predicts. “The data is only entered once, at the brokerage or the insurer, and then both parties are able to use it.”

For Moses, this may mean a rethinking of how policy processing and underwriting have been approached in the past. “Lombard has separated policy processing from underwriting, which has resulted in a sharper underwriting focus and improved processing efficiencies,” he says. “Once a risk has been properly underwritten, all the data transactions should be able to flow through the system with considerable ease.”

This is a far cry from the early days of commercial lines processing. The prevalence of manual transactions, multiple touch points between brokers and underwriters and expensive paper trails typically resulted in higher expenses, reduced efficiencies and slower service time for end customers. It also ate into profit margins, making the advent of CMS and data-integration projects that promote streamlined workflow welcome signs for brokers and insurers alike.

Still, challenges remain for the progress of commercial lines technology. Key obstacles include the evolution (and acceptance) of CSIO XML standards and potential download pitfalls among insurance companies for various types of transactions.

“The continued evolution of CSIO standards for commercial is critical,” argues Crozier. “There has been work done on the commercial standards over the past few years, but this needs to continue to allow for multiple carrier and brokers systems to easily integrate and interface with each other without having to specialize code and translation for each.”

Hindle says that as download becomes a reality for more and more insurers, companies must address how that information is accepted by the CMS/BMS.

“As we extend the process to other transactions, such as download of renewals, policy inquiry (claims and billing) and policy change, we have to be careful not to overwrite the information that currently resides in the CMS/ BMS,” Hindle notes. “Our approach has been to download data into a separate record and then send it to the CMS/BMS to avoid that problem. The long-term challenge is to give the broker an image of the policy exactly as it appears at the insurance company, so they can make changes to that version. That is the ideal, but we are not there yet.”

For all of the technological hurdles, one of the most prominent obstacles may simply come down to the human element — resistance to change, particularly among brokers.

“It should not come as a surprise that the biggest problem is not technology, but people,” notes Campbell. “We’re finding that you need to change user habits one desktop at a time. That begins with simply capturing standardized data in your CMS so it is ready for data exchange. Some users are more comfortable with Word, Excel or their BMS systems, where the data is trapped and non-transferable. Insurers have invested heavily in the solutions that are available today and really need support from brokers.”

“We need to work hard to ensure the technology is adopted by our brokers,” Hindle concludes. “Emphasis needs to be placed on training and supporting the brokers’ proper use of CMS/BMS integration functionalities. We need to show people how to use it.”

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It seems every quarter there is another announcement. There is a lot of excitement. Currently, it is downloading of renewals; soon it will be policy inquiry. Ultimately, there will be policy change.

———

There is a lot of leapfrogging going on among the leading insurers. No company maintains the lead in commercial lines software applications for long.

———

A lot of the emphasis these days is on real-time quoting, probably because the existing portals are designed around providing instant quotes for certain classes of business. Brokers find this useful when the prospect is sitting across the desk or on the telephone.

———

Although portals are often beneficial for smaller brokerages, which can rely on getting a quick quote on a small commercial risk, they can actually be counterproductive for larger brokerages that already have a CMS in place and need to constantly re-enter data.