View this article online: https://www.insurancejournal.com/magazines/mag-onthestreet/2004/07/19/44583.htm
Samuel Beckett’s classic play “Waiting for Godot” involves two characters waiting for a third one who never shows up. Agents can’t be blamed for sometimes seeing themselves in the same situation when it comes to information technology (IT). This isn’t the first time Insurance Journal has addressed the street’s interest in the matter.
IT is here! The street rejoices, but then what agents are looking for doesn’t seem to have arrived, or it’s arriving a lot more slowly than they thought it would. There are both good—and bad—reasons for the delay, but the fact remains that such issues as re-keying data, incompatible systems, the need to retain hard copies, and the inability to get real-time comparative quotes remain problems in search of solutions.
In the United States, the program called Single Entry Multiple Company Interface, or SEMCI, has become Godot in spades. In an interview last October, IJ Publisher Mark Wells said, “The goal is to create a system that would allow an agent or a broker to use one interface to contact as many companies as they want with a given risk; compare the coverage offered and the premium, and select the best option for the client all in one package.”
Despite the great promise such a system holds, it hasn’t happened. Asked why, Wells responded, “Basically because the carriers don’t want it. They aren’t interested in giving the agents the ability to compare price and form across all the agent’s markets” He pointed out that the “technology has been available for years. It’s being done in Canada right now.”
“For over 25 years we have been anticipating the arrival of SEMCI,” wrote Robert G. Slocum in his “Parting Shots” article, which appeared in the June 21 issue of IJ. That’s 16 years longer than it took to put a man on the moon.
A portion of the difficulty can be traced to the nature of insurance itself. Try as it might, the industry just can’t turn its products into commodities. Oh, it would like to. How easy everything would be if an agent could just pick out the coverage his client needed from a Chinese restaurant style menu—one from column ‘A,’ two from column ‘B,’ etc. But it doesn’t work that way. As life gets more complicated, the difficulties of choosing the right coverage at the right price also increase.
Even the big direct writers—Allstate, State Farm, Farmers—have had trouble trying to use the Internet. They still need agents to sort out the details and assure the renewals. Rod Guilmette, who now edits the National Association of Professional Allstate Agents’ newsletter, spent 30 years as an Allstate agent. In an interview last year he pointed out that the company had gone into direct writing through the Internet and the use of 800 numbers in a big way, spending millions to set up their system. “But nothing has come out of it, more than 90 percent of their business is still handled by the agents.” Who is still waiting for Godot?
He went on to explain the impossibility of making all policies the same, even in something as basic as auto or homeowners insurance. “Insurance isn’t a commodity, all customers are different,” Guilmette said. A big part of any agent’s job is to obtain sufficient information to enable the company to measure the risk, and this can’t be done if the people on the other end of the line only take orders.
“Every business has three areas of activity or focus: people, process and products,” Wells explained. Technology offers the promise of increased productivity in the process area. True enough, computers now handle virtually all processing with greatly increased speed and efficiency. A growing number of offices boast of being “paperless.” But, as Wells also observed, “very little attention has been focused on people and products.”
If it isn’t being done for the simpler forms of insurance, improving products becomes even more complicated when talking about commercial policies. Each one is different; that’s why over 80 percent of the larger U.S. companies have risk managers. There’s nothing wrong with improving processing. It has significantly leveled the playing field between independent agents and their captive brethren by enabling everyone to use the same tools—the independents often more efficiently.
However, the lack of progress in using IT to design overall products has meant that the industry increasingly relies on modeling, and on non-insurance related data, particularly credit scoring, to calculate risk exposures. Modeling is a necessary tool, especially in calculating the potential losses from catastrophic events like earthquakes, hurricanes and floods, but something more is needed. Even credit scoring may be useful, but again it does not solve the overall problem.
Slocum, who serves as chairman of the Agents Council for Technology, expressed confidence that Godot is about to show up in the form of “real-time” processing, which he said is already becoming a reality. Discussing SEMCI, he wrote: “I can honestly say that the technology exists to end multiple data entry and to realize the efficiencies and corresponding cost savings that will follow for agents as well as companies.”
He blamed both agents and carriers for not getting “on board” and beginning to use “this powerful new technology ASAP.” He’s right. If the people who need new techniques ignore them, because they fear the consequences, or just plain don’t like changes, nothing will happen. A paperless office is a fine idea, but you can have just as much junk stored in a computer’s memory (if not more), as you can in a paper file. The real need is to replace present processing methods with something better, not just to duplicate them electronically.
SEMCI aims to do that, but it isn’t the only initiative. Lloyd’s is working on its Kinnect project, which aims to create an interface that all Lloyd’s brokers and underwriters can eventually use. It uses standardized procedures, based on London Market Principles (LMP), as its format. Granted Lloyd’s has a somewhat more captive audience given its structure, but Kinnect promises to be a big breakthrough.
The “imarket*” system, backed by six of the U.K.’s biggest carriers is already in use. It has created the software necessary to use a single interface—thus avoiding the re-keying problem—and promises to expand the ability of brokers and carriers to manage everything from risk assessment to claims servicing online through a unique access portal.
Most critics and analysts of Beckett’s play have concluded that Godot symbolizes hope. Although he never shows up, he nonetheless exists, even if the two main characters are never quite sure that they do. If you put those two ideas together, you get a concept that will hopefully arrive. The street is still waiting for it, but unlike Beckett’s protagonists, some day soon it just might.
“The goal is to create a system that would allow an agent or broker to use one interface to contact as many companies as they want with a given risk; compare the coverage offered and the premium, and select the best option for the client all in one package.”