The LexisNexis Insurance Exchange, a system that promises to improve how property/casualty agents, brokers and carriers collaborate on commercial lines accounts, is becoming available industry-wide.
The system simplifies the submission of small and mid-sized risks by agents and brokers to multiple markets. Agents and brokers need only enter account information once. The system lets carriers and wholesalers not only respond to submissions but also make producers aware of their current appetite for certain kinds of business.
This exchange is the result of an alliance formed through LexisNexis Risk Solutions, The Council of Insurance Agents & Brokers and Marketcore Inc.
According to Ken A. Crerar, president, The Council of Insurance Agents & Brokers, the system addresses an issue the industry has been struggling with for 40 years: workflow inefficiency in preparing and submitting business to multiple markets.
“The core of the Insurance Exchange is to streamline a system that allows brokers to be better brokers and helps underwriters better underwrite,” he said.
LexisNexis has been conducting an “early adopter” program of the system since last fall. A group of 200 brokerages and carriers has been using the system and providing feedback. During this period, submissions have been sent to more than 730 underwriters, representing nearly 200 carriers and wholesalers.
“What we’ve found is that there’s a lot more benefits that can happen when you start filling in the inefficiencies,” said Peter Lynch, president, LexisNexis Insurance Exchange. “Things like greater focus on their claims, greater accuracy in the information, less errors that come back in these proposals and better understanding of carrier appetites. Those are the things that are derivative of efficiency. But efficiency gains is certainly the first benefit or the first advantage that people thought that they would get out of this exchange.”
The system is intended for use on small and mid-sized commercial accounts where one market is sufficient to cover the risk. The founders say that is where the efficiencies are needed the most. It is not intended for multi-tiered risks where multiple markets are involved, although Lynch said that could be added later.
Agents can use ACORD and other forms for submissions. Carriers and wholesalers can request additional information on any submission if they want it. They can also communicate where there may be errors or incomplete submissions.
The LexisNexis exchange operates like a membership club that is open to all agencies, brokerages and carriers. For agents and brokers, membership fees are scaled by agency size. There is no transaction fee. Lynch is reluctant to quote a membership price, however.
“It’s been hundreds of dollars a month and thousands of dollars a month, not tens or hundreds of thousands of dollars a month, so it’s very affordable. Our goal is to get people to use the systems,” he said.
Carriers can accept and collaborate on submissions for free but they pay a fee for extra features such as ones that allow them to communicate their underwriting guidelines and risk appetites.
“We don’t believe it’s revolutionary, we think it’s evolutionary,” said Lynch.
Lynch calls the Insurance Exchange evolutionary because it takes what producers and carriers are already doing to shop and secure coverage for mid-sized accounts and makes that process more efficient and brings all documents together in one secure place.
“We’re not trying to change the way the business flows through today or change the relationship that carriers and brokers have with each other. But … by virtue of that efficiency and dialogue and collaboration inevitably things will change,” he told Insurance Journal.
“I mean you really talk to the senior most people in these brokerage firms, they want to be brokers; they don’t want to be administrators. They want to be people who understand the needs of their customers and match it up with the correct carriers and markets that they have out there.”
The system is also evolving as users test it out and put it to some unintended uses.
“[W]e didn’t start out to be kind of a social media type of application, but when you start having an ecosystem of users on board and they start to dialogue not only within a submission but also within the relationship between a broker and a specific agency and a carrier, they start to do things that are even broader than just the specific submission,” said Lynch.
Lynch downplays the term “revolutionary” as a way to emphasize what the Insurance Exchange is not.
“[I]t’s not an open auction. It’s not a way of commoditizing the market. It’s not an appointment market and it doesn’t open up markets for new brokers. The appointments that are in place are still in place. The dialogues that brokers have with carriers are still in place,” he told Insurance Journal.
Commoditization is an issue because some carriers have resisted the system out of concern that agents will simply use it to send out submissions and then accept the lowest price, leaving them no opportunity to differentiate themselves.
However, Lynch said carrier resistance is fading as they realize that a high percentage– he says 65 to 80 percent—of their submissions get underwritten but not quoted. He said carriers are coming to realize that they are handling many submissions they have no interest in writing in part because they are not doing a good job of making their interests known.
“How many times do carriers get into a market, realize it’s not a great market, and get out of it without actually telling the brokers that they’re out of that market?” he asked.
Lynch said that while the exchange promotes efficiency, it does not keep a carrier from differentiating itself, unless that carrier’s marketing strategy is built around the inefficiencies that exist.
“I say, ‘Well, this is an opportunity to get your message out there in a much more efficient light.’… So what we have done is talk about ways of them being able to differentiate themselves by using the exchange, versus having the exchange drive them to a commodity space.”
He said regional carriers in particular appear to welcome the exchange as a way to level the playing field with larger carriers and get opportunities to quote on business they might not otherwise see because producers would not have taken the time to also submit to them.
“Some of them are using this for improving customer service with their brokers. Some of them are looking to get their appetite out there to more markets. Some of them are looking at the efficiency gains, what they can get out of this. So they all have different ideas and advantages to try to take advantage of,” Lynch said.
Lynch said the firm plans to start marketing and advertising its availability soon, although it still has some internal infrastructure to build to handle anticipated membership growth. LexisNexis also has some webinars in the works.
Lynch said the Insurance Exchange “ecosystem” is open not only to all agencies, brokerages and carriers but also to other portals and online systems.
Sixteen insurance brokerages signed up as early adopters and began using the system last October. They were AmWINS Group Inc; Brown & Brown Inc.; BB&T Insurance; John L. Wortham & Son, L.P.; BancorpSouth Insurance Services Inc.; Rutherfoord/MMA; EPIC Insurance Brokers; Van Gilder Insurance; McQueary Henry Bowles Troy, L.L.P.; RCM&D; Sterling & Sterling Inc.; M3 Insurance Solutions Inc.; Early, Cassidy & Schilling Inc.; Roach Howard Smith & Barton; Oswald Companies; and Cook, Hall & Hyde Inc.
The Insurance Exchange is overseen by the Insurance Exchange Trust, an industry board with broker, carrier and industry trustees, including representatives of The Council, the Independent Insurance Agents & Brokers of America, Assurex Global and ACORD. The trust holds the exclusive rights to determine any use of the participants’ data that passes through the Insurance Exchange pipeline.
There are 16 trustees: J. Hyatt Brown, Brown & Brown; Andrew G. Cassidy, Early, Cassidy & Schilling Inc.; Albert R. Counselman RCM&D Inc.; Ken A. Crerar, The Council of Insurance Agents & Brokers; M. Steven DeCarlo, AmWINS Group Inc.; Sharon Emek, CBS Coverage Group Inc., representing the Independent Insurance Agents & Brokers of America; Clyde H. Fitch Jr., State Auto; Lawrence G. Graev, The GlenRock Group LLC representing MarketCore; James Hackbarth, Assurex Global; Russell Johnston, Chartis; Greg Maciag, ACORD; Markham R. McKnight, BancorpSouth Insurance Services Inc.; Mark J. Moitoso, Liberty Mutual Group; H. Wade Reece, BB&T Insurance Services Inc.; George A. Steadman III, Rutherfoord/MMA; Robert H. Rheel, Zurich.
LexisNexis is a member of information company, Reed Elsevier. Information on joining can be found on the Insurance Exchange Web site.
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