“Visions” vs. Reality

Once again, CU’s annual focus on technological developments within the Canadian property and casualty insurance industry has come about…and guess what, after trying to figure out the various “half steps forward”, “six steps to the side”, minus a “quarter degree turn here” and a final “twist and turn there”, I still cannot decide whether any constructive progress has been made over the past 12 months toward achieving real-time interaction between insurers and their brokers.

The most recent development to have emerged from the industry is the Centre for Study of Insurance Operations’ (CSIO) announcement that it has awarded a contract to IBM Canada to develop what it calls “the first phase of a new CSIO web-based insurance portal”. The said portal in question is expected to eventually provide real-time features to both insurers and brokers over the Internet using standard screen and “upload/download standards designed by the CSIO. Included in this “Eldorado” of future company-to-broker connectivity is a comparative personal lines price quoting service, and in terms of the upload/download capability, this is to be based on the CSIO’s long-developed EDI standards. The first phase of the project is expected to be completed during the second half of this year and should go online before the yearend (see cover article of this issue for further details).

Despite the great sense of comradeship that supposedly existed between insurers and brokers in determining the design of the portal, and also in identifying the IT vendors to best carry out its development, I cannot but feel a certain sense of foreboding that the champagne bottles have been popped a little too early in the game. In particular, I worry when expressions like “this bold step forward represents a positive vision of the future” are sallied by with a casual confidence whereas in fact we are talking about what for years has been the property and casualty insurance industry’s biggest hang-up, namely industry-wide cooperation in an area of operations which is seen as highly competitive in separating the “winners and losers” in the ongoing over-heated marketplace.

Another factor which disturbs me with CSIO’s latest offering is the fact that download/upload of data will be based on the association’s existing EDI standards. One of the biggest hang-ups of users of EDI technology (which dates back to the early 1980s) has always been the awkward and restrictive data intensive fields required. As a self-admitted novice when it comes to understanding the technology business, I still but cannot question why the decision was made to use outdated and time consuming data entry standards over a network such as the Internet which is designed to accommodate immediacy and flexibility.

Another issue here is the proposed “standard screen settings”, which have been a concern of the brokerage community for some time. Understandably, brokers do not want to see a new “technology monster” evolve over Internet connectivity whereby a different set of connection requirements are required for interaction with each company. A similar situation existed, and to some extent still does, with past EDI-type upload/download systems between brokers and insurers where separate terminals were required for each company relationship. The fact is that Internet-based applications such as browsers (the program used to provide basic connectivity between sites) all have to share a common language, namely HTML (hyper-text markup language) or Java, thereby eliminating the need for separate basic program protocols as applied to EDI interaction. So, really, the issue of standard screen settings becomes a somewhat moot point, particularly as each insurer and broker is likely to continue looking upon their Internet setup from an individual marketing position. By setting restrictive screen settings and EDI-based data upload/download standards, are we not running the risk of creating an outdated “socialist style” order that is quickly going to stumble due to its inability to compete against more lean and flexible solutions of outside competitors?

My last concern with the CSIO proposed Internet portal is what benefits are really expected from the “multiple price quoting system”? In an ideal world, brokers and even consumers should be able to fetch up multiple quotes over the Internet simply by keying in their basic requirements. However, unless the insurance world has undergone a dramatic transformation I am not aware of, it is still my understanding that brokers can only transact with insurers they have established dealings with. In that regard, it is my understanding that as a result of the industry’s consolidation and drive for bulk premium volume, that many personal lines brokers of today now only have one or maybe two carriers on hand. What then is the advantage of multiple price quoting when more often than not the choice is limited to the one or the other?