Real-time data exchange within reach for first notice of loss

The Toronto Insurance Conference (TIC) has announced the rollout of the Data Exchange Model (Dx) Initiative, a proof of concept for real-time integration between an insurer technology platform and a broker management system (BMS) platform.

TIC has partnered with RSA, AIG, Keal Technology and CSSI to roll out the initiative, which focuses on exchanging claims information related to first notice of loss.

Real-time data exchange projects are well underway in various areas of personal lines insurance, but the Dx Initiative is unique because it seeks to extend real-time benefits into the commercial insurance arena as well.

“This is the moment where we prove ourselves as an industry, when the customer has a claim,” Dx Initiative chair Brenda Rose told Canadian Underwriter Thursday, when asked why the project focuses on the exchange of claims information. “We need to get the information to the carrier from the broker immediately so that they can activate the claims process and get the adjuster assigned right away.”

At this point in the claims process, Rose said, the broker needs to transfer the information to the carrier quickly and accurately, so when an adjuster calls the client, the adjuster already knows what’s happening.

“Adjusters don’t have to ask clients to repeat themselves,” said Rose. “Of all times, this is the time when we don’t want to irritate the customer by asking them to repeat what kind of car it was, the serial number, etc.”

Claims is a logical first step for applying real-time data exchange, said Rose. “This is certainly an area where there is a whole lot of manual work going on, and there’s a whole lot of information not being moved around at all.”

The Dx Initiative applies to first notice of loss in both commercial and personal lines contexts, and follows the Insurance Brokers Association of Canada (IBAC)’s Data Exchange principles. Among them:

• Transactions must start and end in the BMS;
• Systems must adhere strictly to the recognized CSIO XML standards for data and messaging; and
• Electronic information must be sent directly to insurer systems without additional manual keying (which would not be recorded in the BMS).

From a technical perspective, tackling first notice of loss claims data is relatively straightforward, because the list of data points is finite. There may be “dozens” of data points in a first notice of loss form, Rose points out, as opposed to hundreds of interrelated data fields in an application for new business for a personal lines policy.

The proof of concept evolved out of the TIC’s June 2017 white paper, Commercial Technology Integration: It’s time to cut the costs out, which states: “the cost of doing commercial insurance through the distribution channel in Canada is too high.” The lack of technology integration between insurers and brokers has resulted in the insurers’ average expense ratio being estimated 32% (i.e. for every $1 coming into the company, 32 cents is paid out in costs).

The timeline for completion of the Dx Initiative will be spring 2018. At that time, TIC will publish a white paper to outline lessons learned. Also, TIC members, insurers and industry partners will be invited to attend a public demonstration of how it works.

David Gambrill