Over the last year, I've had a chance to talk a number of times with Klaas Westera, president of CSIO, a Canadian broker/carrier association, about their new industry Internet portal. Though the CSIO portal and the strategy behind it have relevance for (at least the independent part of) the U.S. insurance industry, I suspect that few carriers or agents know much about it — or even who CSIO is. Here's a short report on the ambitious and suggestive efforts going on north of the border — and what it might mean to you. (By the way, in Canada independent agents are called brokers, to distinguish them from one-carrier agents.)
CSIO (Centre for Study of Insurance Operations) is a cooperative broker and carrier association focused on improving the efficiency, effectiveness, and competitiveness of the independent Canadian insurance distribution system through the use of technology. It's a bit like ACORD, IVANS, and a national rating vendor rolled into one.
Over the years CSIO has created Electronic Data Interchange (EDI) Standards (AL3), Form Standards (paper and computer formats), Web Screen Standards, XML Standards, Terminology Standards (including an English to French Glossary), and developed an industry extranet (CSIOnet). And it's done all this with a staff of nine!
Like IVANS in the U.S., CSIO early on used Advantis to provide an industry-wide communication network. Then two years ago, the industry switched to CSIOnet, a private IP network put together by Canadian Bell. According to Westera, the industry now enjoys a 70% savings in data communication costs. It's now standard practice in the industry for brokers and carriers to communicate with one another via CSIOnet.
What's particularly interesting to me about CSIOnet is that it appears to have all the advantages of the public Internet — without the problems. Because the network is private, it can be managed for performance and security in ways the Internet cannot. As I pointed out in my December column, increasing U.S. industry dependence on the Internet creates risk it would be wise to acknowledge and mitigate. That's exactly what the Canadians have done.
In 1999, CSIO recognized that carriers would want to begin to make their rating, policy, claims, and other systems directly available to their brokers through the Internet (CSIOnet). That was a good thing because it would result in greater responsiveness and lower expenses. But CSIO also recognized that were all carriers to do this on their own, they'd spend more money than necessary and create a chaotic situation for brokers.
According to Westera, CSIO had six key principles in mind when creating the portal:
Even though the broker will be using multiple carrier Web sites, the broker will need to do only one logon and will be exposed to only one look-and-feel. To begin with, the portal will focus on two areas: personal lines point-of-sale support and single-logon to multi-carrier policy systems.
Point-of-sale refers to everything needed to comparatively price and document a sale — including upload to the carrier (submission) and/or download to the broker management system (BMS). In addition, CSIO has created screen layout standards carriers are expected to use when presenting Web pages back to the broker. That means brokers should not have to deal with unique layouts carrier to carrier.
The CSIO portal will pass broker identify information to carrier systems as the broker clicks through to them. With the broker verified at CSIO portal logon, it shouldn't be necessary for the carrier to require additional broker logon.
For the future CSIO is looking at hosting carrier rating manuals, publishing an API for remote Web service tie-in, linking to other industry sites and services, connecting to specialty markets, and providing a simple policy change form.
Comparative quoting: Doesn't this work to the disadvantage of carriers? Won't brokers sell on price? Won't the system hide carrier-by-carrier product differences? Brokers do comparative quoting today. It's part of the value they provide their customers and they're not going to quit it. The portal will allow carriers to provide accurate quotes into the comparative environment as well as explicitly describe the special characteristics of their particular product offerings — neither possible with current comparative quoting.
Carrier sites: What about carriers who feel they need their own broker Web sites, separate and apart from the CSIO portal? That's fine. They can be both participants in the CSIO portal and have their own broker site — with it's unique look-and-feel, structure, or whatever.
Real-time rating: Some carrier systems can't support real-time rating. What do they do? Westera suggests that these carriers contract with rating vendors. Some now provide ASP services that can be custom-tailored by carrier. CSIO provides standards for the conversations between the portal and carrier (or their designee) systems.
Justification: Why should a carrier be part of the effort? Why not go it alone? If the carrier doesn't yet have a broker site, being part of the CSIO portal will be less expensive than duplicating the effort. If the carrier does have a site, it should be easy to open its functionality to the CSIO portal. If CSIO achieves critical mass (and it appears that will happen), carriers that don't participate will be at a competitive disadvantage.
Rating vendors: What happens to existing comparative rating vendors? Won't the CSIO portal put them out of business? Westera believes their future lies in providing private label solutions to carriers rather than retail solutions to agencies. Rating vendors have expertise with interactive rating many carriers lack. Smart rating vendors have provided solutions to carriers for years. With the CSIO portal they'll have a venue through which they can finally provide the accuracy, timeliness, and quality they've always sought but found difficult to achieve.
Funding: Who will pay for the development effort? CSIO from its current surplus and carriers and brokers via a modest assessment. Ongoing development will be funded out of current portal operating revenue generated from brokers - who will pays fees comparable to what they've paid for comparative quoting.
Success: Will the portal work? The general rollout is scheduled for early spring 2002. Though CSIO has designed the portal, it is being implemented by IBM and DWL, a Canadian vendor that focuses on the insurance industry. Technology is less of an issue than industry cooperation and the Canadians seem to have an ample supply. Seventeen carriers with 55% of broker generated personal lines premium are aboard and implementing their part of the solution.
Though I'm certain some carriers (but not many agents) would disagree, something like the single-point-of-entry concept being implemented by CSIO would benefit the U.S. independent agency distribution system by making it more competitive. Carriers would spend less, perhaps much less, connecting with agents. And agents would have more orderly and consistent access to carrier functionality.
Even though it might make sense, is the U.S. likely to follow the Canadian lead? Not without leadership — and there's no one in sight to provide it. Smart carriers might lobby their associations as well as producer associations and agent vendor user groups. Agents could motivate producer associations to step up to the plate. And the press should provide more coverage of the Canadian future-making process. If you want to know more, take a look at www.csio.com and www.csioinsuranceportal.com.