Independent agency carriers are not likely to succeed by selling direct through the Internet. If they abandon their agency sales force they will see premium fall and claims rise. On the other hand, if they attempt to sell in parallel with their agents they will lose their agents' trust and muddy the relationship with the insured.
Similar points can be made about on-line self-service. If carriers try to make themselves the direct supplier of on-line service, ultimately they will lose the goodwill of the customer and weaken the position of their agents.
But there are wise ways carriers can use the Web. They're not necessarily very expensive, can pay for themselves quickly, and can be adopted even by smaller carriers. And when Web technology is coupled with the right business strategy, carriers can find themselves enjoying both premium growth and better ratios.
Here's the simple core idea: If your agents consider you their key business partner, they will bring you more and higher quality business. One way to become your agents' key business partner is to help them sell and service more effectively — and that can be done through the appropriate use of Web technology.
The most appropriate use of Web technology is to change the way business is processed, essentially to move from a multi-step agency-to-carrier model to a single-step agency model. Agents should be able to initiate and complete most transactions without any "help" from carrier staff. Single step processing allows agencies more control and with it the ability to do a better sales and service job. Single step processing allows carriers to significantly improve their premium-per-employee ratios. It's a win for carrier, agency, and customer. And the Internet makes it feasible.
In my October column I suggested four: Agency Web site locator; carrier background; general insurance information; and insurance and related links. An agency Web site locator should be an important part of every carrier site. Carrier background, general insurance information, and relevant links Web pages should be available in such a way that agents' sites can link to them while retaining their branding. Here are five more ideas.
Agency information access: Agents should have direct access to all information that is important to them. Whether access is through a portal or extranet, agents should be able to retrieve policies (for printing), policy detail (in force and history), billing status and history, claims status and history, commission statements (account current and direct bill), and any other database information that plays a role in the daily life of the agency
Agency endorsements and data entry: Agents should have the ability to do renewals and make policy changes on-line as well as to change other relevant information contained in carrier databases. Agents should be able to track the status of each submitted change so they can monitor the progress of every transaction.
Real-time editing, rating, and underwriting: Agents should be able to complete most new business transactions on-line and in one sitting. That means that tasks once done by the carrier must be automated and included in the agent's workflow. Applications should be exhaustively edited so that there is no chance the transaction will be rejected by the carrier's policy system. The agent must be able to get back, instantly, a guaranteed rate — the premium that will eventually show up on the policy. Tiering and acceptability are usually based on underwriting and business rules as well as retrieval of third-party information (e.g. credit scores). That means underwriting rules and information must be retrieved and applied real-time.
Download: Data entry into the carrier Web site should flow (overnight) back to the agency and its management systems thus obviating the need for multiple key entry by the agency. Many carriers have already established download functionality using the ACORD AL3 batch standards, a practical choice today.
Upload: Some transactions may be more convenient to initiate in an agency management system than in a carrier Web site (e.g. endorsements). Upload is the process of moving data from the agent's management system to the carrier's system. In order for upload to work, real-time editing and sometimes rating and underwriting processes need to be brought to bear. Therefore the modules described above (real-time editing, rating, and underwriting) need to be applied to upload transactions as well. Upload implementations, less common and more complex than download, often make use of the ACORD AL3 batch standards.
The five Web-based functionality elements listed above assume, at least to some extent, agency use of carrier Web sites. For carriers the approach has a number of advantages including reduced costs and a shift in the division of labor toward the agent. Agents can benefit as well by having more control over information, processes, and calendar time. But there are certain disadvantages as well.
Many agents find comparative rating a useful sales tool — not to gravitate to the lowest rate but to contextualize the premium for the policy they think best serves the prospect. It isn't practical for agents to visit multiple carrier Web sites, re-key information, and then gather and reformat information to make a sales presentation. Agents need convenient comparative rating — like they've had for years but real-time from carrier systems.
Though an agent can move from carrier Web site to carrier site via a browser, that process can pose some problems. One agent I talked to works with twelve carrier Web sites. Each site has its own password/security system, workflow, layout, and cosmetics. He said the complexity just isn't workable for his agency.
Some carriers provide customer self-service functionality through their consumer Web sites. The more enlightened of these carriers allow customer click-through from agency sites. Though this arrangement may seem wonderful to the carrier, in fact it poses real problems for the customer — who must now track which carriers she has policies with, what their security arrangements are and so forth. Where in the past the customer could just call the agency and have her needs taken care of, she must now deal with ever more irrelevant administrative trivia.
It simply won't work for agents and their customers to have to deal with multiple carrier Web sites. Agents know it but many carriers have yet to understand. At a recent industry conference, one carrier senior executive complained that agents weren't using his multi-million dollar Web site. From his point of view most of his agents were troglodytes. But agents in the audience explained what it was like to have to deal with multiple carrier Web sites and it wasn't a pretty story.
Carrier Web site based services can provide value to carriers and agents in the short run but won't work in the long run. What agents need, for themselves and their customers, is some way to consolidate the information and functionality from multiple carrier sites into what appears to be more or less one system.
Fortunately much of the work that carriers have done to field agency and direct sales/service Web sites can be appropriated to serve as remote services feeding a single integrated environment for an agent. Over time the presentation layer may be handled by an integration service provided to the agent while the data, edit rules, underwriting rules and other functionality continue to come from carrier Web sites.
Agency management systems are one obvious integration platform candidate. Rather than going to carrier Web sites, agents would use their management systems for all their work, an approach some agents and vendors consider ideal. The management systems would have background conversations via ACORD XML with carrier systems while presenting a consistent face to the agent.
But management systems may not do the trick. Agents are rapidly broadening the kinds of products and services they offer — into life and benefits, for instance, but often beyond insurance altogether. At the same time, a new generation of insurance ASPs is providing transaction support that goes beyond the boundaries of agencies to include all the parties involved in certain insurance transactions, for instance certificates, claims, and commercial lines submissions. Agency management systems don't have the right architecture to support this new world and creating new technology and a new business model may be beyond the resources or interests of management system vendors.
What both agents and carriers need is some kind of broad integration service that can create order out the increasing richness and chaos agents now face. Clearly an integration service would be of value to agents since it could order a disordered world. But such a service could have value to carriers as well since it could make their remote service offerings actually practical to agents and thus accepted and used.
What's the message? As agency management system vendors and integration platform suppliers approach carriers for cooperation, it makes a great deal of sense for carriers to listen and then participate in efforts to integrate their proprietary services into consistent presentation and workflow at the agency and customer end.. It's likely that integration efforts will be facilitated to the extent that carriers and vendors implement ACORD XML standards and extensions.
In the short run carriers will do well to use their Web sites to make it easier for their agents to sell and service. In the longer run, the fragmentation caused by this first step must be ameliorated by multi-carrier integration at the agency end. And that can only happen with carrier participation. Are you ready?