Technology is your Slave, Not Your Master

By | July 10, 2000

The exhibit hall at the ACORD Technology Conference in Orlando in May would have made your head spin. On the one hand, technology is increasingly complex and sophisticated. On the other, it becomes easier when you keep the focus on what you know best, which is insurance.

Some observations from the ACORD Conference:

• XML is here. You’ve been using ACORD forms for years. But ACORD has moved beyond standardizing agency-company interface. It is working on ubiquitous standards allowing companies, agents, service providers and other business partners to interact with a new Internet-based translation language. Known as XML, this language tells various translators how to handle data exchange between applications and businesses. It eliminates compatibility problems.

All sorts of new products will be coming to the market quicker with XML as the lingua franca. Why do you care? Actually, you don’t. Let ACORD build the highway; you drive the new car.

• SEMCI is alive and well. Applied Systems demonstrated a multi-company, multi-line, real-time transaction processing through its “WARP Central” product. From policy rating, underwriting and policy issuance to billing and claims inquiry, WARP allows all partners to conduct business in real time versus batch store-and-forward environments. And it uses the new ACORD XML standards.

The Hartford said it tested real-time, non-proprietary SEMCI technology based on ACORD XML standards to quote and issue small commercial lines with The Mahoney Agency in Casa Grande, Ariz. Personal lines and workers’ compensation is coming this summer.

And Travelers Property Casualty said it would launch a real-time quoting, rate and issuance system for BOP policies, using ACORD XML standards. It will be available to agents on Applied’s WARP-enabled software beginning in the third quarter.

But SEMCI is no slam dunk. Single entry, multiple-company interface eliminates redundant data entry, synchronizes information between the agent and carrier, and reduces agents’ training and processing costs. The traditional concept of SEMCI relates to the activity between independent agents and their markets.

But that’s too restrictive, some say. What’s really needed is a new word or phrase for single entry, seamless communications among all business partners in the value chain. That includes companies, agents, glass-replacement outfits, adjusters, body shops, banks, information providers, etc.

The Internet has spawned growth of proprietary company systems. These proprietary systems work in insidious ways: Everyone is busy in your office on the cool new Internet, but the workflow is still duplicative or inefficient.

Producer groups are making more noise. The Independent Insurance Agents of America launched a campaign, “Elect SEMCI in November,” that will encourage insurance carriers, technology vendors and others to adopt the ACORD XML Standards.

Len Brevik, IIAA’s CIO and executive director of the Agents Council for Technology, said the campaign would build on the association’s grassroots political prowess. Some 800 insurance company executives will hear from their top producers between now and Nov. 1 to promote SEMCI.

“We’re going to have the lead agent of each of these companies sit eyeball-to-eyeball with the top executives,” Brevik said at a news conference. “We want their vote for SEMCI and the tremendous benefits it offers.”

• Insurance e-commerce is exploding in 2000. And carriers can’t sit around, warned Marc Ricks with business reengineer McKinsey & Co. “Most insurance companies are watchers,” he said. “This is a critical mistake for two reasons. First, you can actually shape your own environment. Look at what Amazon.com did for the book industry. And second, you don’t have time. You need to make your bets now.”

Ricks also said companies shouldn’t have a “catch-up strategy” by web-enabling what they already have. Instead, create new products, use underwriting technologies and offer intangible benefits beyond insurance.

Many of those brash insurance dot-coms may be snatched up by insurance companies. In fact, the dot-coms see such a sale as a superior “exit strategy” over an IPO, Ricks noted.

• Private labeling. Independent agents will have access to lots of products and relationships. You control your destiny online. Explore partnerships with business-to-business insurance sites. For instance, if your firm is getting into broader financial services, can you use technology and a business partner to create a wider offering immediately? “I think independent agents are extraordinarily creative,” said John Ashenhurst, executive vice president of AMS Holding Group, noting the number of producer-driven web offerings.

• Customer relationship marketing. Sophisticated software allows you to really understand your customers—one at a time. First you listen to and learn from the customer. Then you come through with unique and individualized products and services that meet the customer’s needs. “This is where I give you permission to interrupt me for things that I want,” said Rick Morgan, an agency technology consultant and author in Boulder, Colo.

Final thoughts:

• If you don’t hire, train and keep the best people, all the technology in the world is a wasted investment.

• Unplug from all technology—yes, even the phone-for at least 30 minutes a week. Get out a pad of paper and a pen. Work on the “important but not urgent” stuff you’ve been putting off.

Peter van Aartrijk, a 20-year insurance industry veteran, owns a communications firm specializing in the independent agent distribution channel. To comment on this column, send e-mail to ijwest@insurancejournal.com.

Topics Agencies InsurTech Tech

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