For two decades it's been possible for some agency management systems to print certificates of insurance (and sometimes evidence of property insurance) forms. A number of standalone certificate software packages have also been available. Certificate printing software functionality has been useful, certainly in comparison to using typewriters to create certificates. But in some certificate cases, it's now possible to do much better.
The Internet has made it possible to think about handling certificates in a new way - to the advantage of agents/brokers, insureds, and certificate holders alike. A number of organizations have sprung up to offer Web-based certificate services. One new service proposes to eliminate (the need for) certificates altogether. The purpose of this article is to describe how the Internet could be used to improve the certificate situation and then compare five Web-based certificate services.
Why certificates?
Businesses want minimize their risk. One way to do that is to make certain that appropriate risk is transferred to third parties, e.g., suppliers. Supplier contracts specifying responsibility and indemnification provisions play a role and suppliers having the right kind of insurance plays another. It is important, then, for many businesses to satisfy themselves that their business partners are relevantly insured, and they do that, not through seeing the policies themselves, but through certificates that describe certain elements of the policies. Though certificates are not contracts, but rather a business courtesy, they have played a role in some court cases in establishing coverage.
Some businesses and governmental bodies have thousands of suppliers, lessees, or other business partners and must manage thousands of certificates. On the other hand, some businesses are suppliers to thousands of organizations and thus must see to it that thousands of certificates go to certain of their business partners. Corporate risk managers are often in charge of certificate request, receipt, evaluation, and management tasks. Agents are usually responsible for issuing certificates on behalf of their insureds and notifying certificate holders in the case of cancellation or significant policy changes
Though no one knows for certain, it's likely that annually many hundreds of millions of certificates are requested and issued. In all cases, both the issuing and requesting/receiving parties must do a great deal of work -- the agent generally without charging and the risk manager with inadequate staff.
The current certificate process is incredibly inefficient. Agents print (or FAX or e-mail) certificates and risk managers (or their surrogates) enter the information from the certificates into their own systems to manage and compare them to coverage standards.
Two new classes of online services have appeared recently that provide improvements to the conventional certificate process. The first, what we could call the delegation model, helps agents move the certificate issuance process from their premises to their insureds. Overall, the delegation model doesn't make any substantive changes to the prevailing system -only incremental improvements. The second, the coverage confirmation exchange model, suggests that certificates be dispensed with altogether and the coverage confirmation process handled through a shared database. The confirmation exchange model has the potential to significantly transform the insurance scene, saving all parties now involved with the certificate process a great deal of time and money.
As we'll see, the delegation model, while continuing to support the idea of the generation of certificates, could be improved through the use of smart certificates. And the coverage confirmation exchange can't be the ultimate solution because it does not account for integration with agency, insured, and risk manager systems. It may be that the real solution to the problem lies in real-time, coverage confirmation conversations between the parties computer systems - an application of the Internet remote services paradigm that will become prevalent in the next five years.
The agency-as-certificate-producer model
In the traditional certificate handling model, agents print certificates for their insureds who then distribute them to the business partners who request them. The agent's software needs (basically) two different kinds of information in order to create certificates: 1) relevant policy detail including coverage information and 2) certificate holders (that is, who needs to get a certificate).
If an agent's management system supports certificate creation, then the policy information is already present (providing the agency has loaded it), but the certificate holder data must be received from the insured and keyed into the system. In the case of freestanding certificate packages, both policy and certificate holder information must be entered.
More up-to-date management system certificate modules or standalone packages may support FAXing and e-mailing as well as printing certificates. In virtually all cases, it is the agent that produces and then distributes the certificates. (In some cases now or very soon, some management systems may make it possible for the insured to come to the management system, online, to retrieve a certificate.)
Though the traditional certificate-handling model gets the job done, it has some shortcomings for agents, insureds, and certificate holders. Agents have to produce the certificates. It's a clerical process, usually done gratis, that can absorb a great deal of staff attention during renewal processing for some customers. Some estimates suggest that when all is said and done, creating a certificate can cost an agency somewhere between $4 and $10.
The insured may not find the agency-as-certificate-producer model entirely satisfactory. In some cases, it's important for a business, say a subcontractor, to get a certificate right now, perhaps even on the weekend. The insured would like to have more control over the process and be able to request/receive certificate immediately.
And from the certificate holder or risk manager's point of view, it would be much more convenient to be able to access certificate content directly without always having to involve the business partner and its insurance agent. After all, it's the risk manager that wants coverage confirmation (not the agent or insured), so having a long, complex supply chain makes no sense if the risk manager could be both customer for and producer of his certificates (or better, just confirm coverage as needed).
Certificate tracking outsource services
The current certificate-processing practice has agents printing certificates and risk managers receiving and tracking them. Sending electronic certificates as e-mail attachments doesn't change things much for the risk manager. The certificates must still be reviewed and keyed into the tracking system. A business category of certificate outsource services has sprung up to do the certificate handling work on behalf of the risk managers.
Certificate outsource services handle all aspects of certificates for risk manager subscribers. They solicit the certificates, track their receipt, compare them to coverage expectations/standards, create management reports, and provide Web access for risk managers to the certificate management database. Generally speaking, even if the certificates are received in electronic form (FAX or PDF files generally), those sources are used like paper as source documents for data entry into the certificate management file.
Certificate outsource services believe they can provide economies of scale to enterprises that receive a significant number of certificates. In some cases, the services are willing to act as an ASP, providing only the management software and not the clerical/analytical help.
Though certificate outsource services provide valuable benefits to the right client, they do not ultimately make the certificate environment more efficient. They make it appear so to the risk manager, but that's only because they've taken on the clerical burden - with perhaps better tools than the risk manager has available.
The idea of a coverage confirmation exchange
New technology permits new business models. The Internet makes it possible for a variety of geographically dispersed parties to directly access the same data, each playing a role in a particular process or transaction. In the case of certificates (or more broadly the confirmation of coverage) problem, a Web-based service could allow the agent, insured, certificate holder, and even carrier to report or request and receive coverage information -- without the generation of certificates. One way to describe this shared database service is as a coverage confirmation exchange. It would be a many-to-many service focused on addressing the needs certificates do now.
An exchange is an attractive idea in theory but faces some hurdles in practice. Several might pop up vying for attention with none achieving the critical mass they need. A great deal of inertia would stand in the way and favor incremental improvements to the status quo rather than the revolutionary change of an exchange. An exchange would be an ASP (application service provider) a new and not entirely proven business concept An exchange would not, out of the box, satisfy the needs of the participating parties to integrate exchange information and transactions with their own systems -- thus double entry and continuing coordination problems would manifest themselves. An exchange would disturb the current division of labor, with agents benefiting, while insureds (perhaps) would have more to do. Finally, there's the question of who pays and how much. If the risk manager benefits, should he pay or should the cost be borne by the agent?
Intelligent electronic certificates
The certificate delegation model falls short of an exchange. It still results in the generation of certificates, but with the insured serving themselves. It's an improvement for agency and insured but the holder doesn't directly benefit and still has to manage its certificate request, receipt, and evaluation process.
A first step toward improving certificate processing as a whole would be for certificate issuing systems -- whether agency management systems, standalone systems, or online certificate services -- to create certificate forms extended with XML data. Risk managers could then absorb certificates directly into their systems without the need for key entry.
Compare and contrast
Three online certificate services - CertificatesNow, eCertsONLINE, and VeriCert -- are what I would characterize as delegation models. They're not intended to overthrow the current certificate paradigm. They seek only to provide insured self-service and make some efficiency improvements. Two other online certificate services, Certificate Exchange and Ins-Cert, can be described as coverage confirmation exchanges. The former continues to employ certificates as a primary mode of information transfer. The latter sees common access to a central database as a way to break out of the certificate paradigm altogether. Both foster services that look to improve the entire coverage confirmation process and bring true efficiencies to everyone involved. Both provide tools to the risk manager as well as agent and insured.
The following sections describes these five certificate vendors, and the table below provides a shorthand way to compare services their services.
Certificate Exchange
www.certexchange.com
Certificate Exchange recognizes the interests at both ends of the certificate process. The service encompasses both outgoing issuance and incoming tracking. Agents and brokers, not risk managers nor certificate holders, pay the freight. (There are some exceptions; for instance, when a risk manager wants to use the service, but has no relationship with agents and brokers.)
In the outgoing mode, the service maintains there is sufficient governance for a Certificate Holder to obtain a certificate directly from the site without the direct involvement of the agent or insured.
In the case of incoming, in which a risk manager initiates the service and registers with Certificate Exchange, the risk manager enters his insurance requirements and e.g., suppliers. The exchange e-mails the suppliers, who in turn contact their agents to tell them how to use the exchange to verify coverage for the risk manager. If the agent already uses the exchange for a relevant insured, it isn't necessary for him to enter information to describe coverage. It's already on file.
Frank Hayes, former Marsh executive and founder of Certificate Exchange, is eager to have risk managers use the service - even if he doesn't charge them for the service - because they lead him back to agents and brokers who are his primary market.
The Certificate Exchange Web site is plain, perhaps even austere, with few graphics and no flash. It's all business and from what I can tell works well. Hayes offered that "the austere look is due to the need to have a look that works well with others Web sites because we do a lot of linking and branding." The system demo is the use of the system itself with dummy accounts. A good bit of background explanatory content is available on the site along with online help. Hayes claims that he gets very few support calls and use of the service is fairly intuitive.
Instead of using Oracle, DB2, or SQLServer as the underlying database, Certificate Exchange uses K (www.kx.com), a very fast, boutique database used by Zurich Financial and some other big names in the insurance/financial services segment. Because his service needs to respond to huge processing spikes (e.g., a 100,000 certificate renewal), Hayes wanted a database that could handle the load without falling on its face. He reports that only K could keep up. Unlike some exchanges, Certificate Exchange stores every certificate indefinitely and without a charge. Rather than storing the certificate image (as some vendors do), this service stores the data content of the certificates and can recreate them at any time.
Certificate Exchange isn't integrated with any major agency management system and though Hayes would like to get there, he thinks that in most cases it's not important to an agent. First, it's likely that 10 or 20 insureds account for 90% of the certificate load in any particular agency. The real benefit is having those insureds use the service and that doesn't take much time to set up. Second, Certificate Exchange is happy to do an initial system load of coverage and holder information from an electronic source supplied by the agent. Then changes can be handled as they come up. Finally, Certificate Exchange is willing to create integration processes for agents who can provide the technical coordination from their end.
Certificate Exchange is happy to put itself in the background and the agent (or insured, for that matter) in the foreground by private labeling the service to make it appear to be an integral part of an agent's Web site. The vendor's privacy policy assures that information on the exchange won't be passed on to any third parties and is owned by the source of the information.
There is no charge for incoming certificates. Outgoing fees per certificate range from $.20 to $.50 depending on volume and other considerations. There are no monthly minimums or initiation fees. Large volume accounts may negotiate an annual subscription fee rather than a per transaction charge. Customization is entertained and can be negotiated. A certificate is considered to be one certificate holder, no matter how many copies of the certificate have to be distributed. There is no charge for outbound FAXing of certificates.
CertificatesNow
www.confirmnet.com
Historically ConfirmNet has come at the certificates problem from the agent/broker point of view. They use a hosted Internet service to make it possible for agents to streamline the certificate issuance process and allow "self-service" by the insured. They have not yet involved the certificate holder in the process.
But with the initiation of the TrackCertsNow service projected for early next year, ConfirmNet will provide risk managers/certificate holders with a way to store coverage requirements and compare them to incoming certificates. The service will automate the imaging and data collection from incoming certificates, and provide streamlined certificate tracking and management capabilities.. ConfirmNet does some outsourcing now, for example, the physical mailing of paper certificates so that neither the agent nor insured has to bother.
ConfirmNet is also exploring the feasibility for what one could call intelligent certificates; that is, electronic certificates that contain ACORD standard XML-tagged data. Any XML-ready receiving program, used by a risk manager for instance, could read the file and update its tracking database without need to do key entry. And ConfirmNet is also looking at the possibility of facilitating real-time coverage confirmation conversations between risk management systems and a central database of coverages built by downloading policy information from carrier systems (something RIMS has also expressed interest in doing).
The service supplies online help, account managers, and other human help from a support department. Training can be provided to agents on request and ConfirmNet provides training/help materials agents can hand on to insureds. Felicia Douglis, VP of Marketing, cites significant attention to improving certificate workflow steps, and the ability for insureds to self-serve as two important CertificatesNow value-adds. The CertificatesNow Web site is more elaborate than some of the other certificate exchanges and their conspicuous marketing presence at industry trade shows bespeaks non-trivial startup capital.
As with other vendors, the agency sets up certificate templates for their insureds. Then the insureds add certificate holders and issue certificates. Generally speaking, the agency is not involved with the self-service certificate issuance process, even to review, since the insured has already been adequately constrained by the templates. Agencies see significant cost and labor savings by using the system to process and deliver renewals.
CertificatesNow uses Oracle for its database engine, storing the data used to generate certificates rather than the PDF files it "prints" for attaching to e-mails. The vendor has confirmed its capacity to deal with processing spikes through its own testing, and an independent technical audit concurred. It has redundant servers to guarantee uptime, and uses a top-tier co-location facility.
Integration with agency management systems is a high priority for ConfirmNet. It's finishing two-way integration with the Ebix Infinity system. Besides moving coverage and holder information back and forth, the integration also adds items to the Infinity transaction log so the agency can maintain customer service information all in one place. The vendor reports it's working with IVANS via Transformation Station to integrate with Applied's systems (due this fall) and it's negotiating arrangements with others. ConfirmNet would like to be the certificate module all agents use and get to seamlessly from their agency management systems. By the way, in the interim or for agents that are interested, ConfirmNet will load coverage and holder information, on a one-time basis, from agency supplied files.
ConfirmNet supports co-branding of the service so that it appears to the user to be part of the agency Web site. The user links from the agency site to the Confirm-Net site, but a banner identifying the agency is displayed prominently at the top of the page. The user must then log into the ConfirmNet server. The vendor has a strict privacy policy that forbids their use of agency data for other purposes.
The CertificatesNow service is priced by the slice. Each certificate (one certificate holder but with any number of copies) costs $.96. A surcharge of $.25 applies to each outbound FAX and $.75 to each outbound paper mailing. There are no setup fees or monthly minimums though the vendor does require a working deposit (pay in advance).
eCertsONLINE
www.insurancevisions.com
eCertsOnline is an online certificate service hosted by Insurance Visions, creators of Qwik APP. The vendor also supplies Web-based claims solutions and Web site creation services and has been in business since 1988. Sounding Line reviewed eCertsOnline in its May, 2001 issue.
eCertsONLINE focuses on agents and insureds and doesn't concern itself with risk managers/certificate holders. It doesn't intend to overturn long-standing certificate concepts, but only make them more efficient for agencies and more controllable for insureds. The service fits the certificate handling model that has risk managers using tracking systems (sometimes managed/loaded by certificate outsource services).
This gradualist approach, though not achieving the theoretical heights of efficiency imagined by some of the other vendors, may be easier for many agents to understand and evolve to. Nils Martinson, founder of Insurance Visions and a practicing agent, is clear about his market and doesn't need the whole world of certificates to change in order to be successful.
As I pointed out in the May issue, eCertsONLINE is very easy to use and comes with a downloadable user manual that can also be offered to the insured for its use. The service supports the possibility of multiple certificate templates per insured, a useful feature for more complex insurance situations.
Because eCertsONLINE follows the current industry certificate processing model, its value add is primarily the facilitation of insured certificate generation, e-mailing certificate images (Adobe Acrobat PDF files), and the convenience of (nearly) automatic renewal processing. It's expected that parties in the certificate process will print out and file their certificates as they normally would, unless they want to store the PDF files somewhere online on their own systems. The vendor does not provide perpetual access to historic certificate data or the ability to reprint a certificate from any point in time.
Insurance Visions provides limited support for agency co-branding by showing the agency name at insured log-in. eCertsONLINE isn't integrated with any agency management system though the vendor can facilitate initial upload from agency supplied files. The host server uses Microsoft's SQL Server as its database engine.
eCertsONLINE requires a $200 start-up fee and then $.20/e-mail. Thus if one certificate goes to three different parties, the service would charge $.60. No outbound FAX service is currently available.
Ins-Cert
www.Ins-Cert.com
Of the five online certificate exchanges reviewed in this article, Ins-Cert takes the most radical departure from conventional certificate handling and in doing so has the potential to have the greatest impact on the efficiency of the system as a whole, including the risk manager.
Ins-Cert proposes that, for all intents and purposes, certificates of insurance be eliminated entirely and the coverage verification process be replaced by recourse to a shared "data warehouse." In this scenario, agents populate the warehouse with coverage information on their insureds and risk managers/certificate holders populate it with their insurance requirements for each insured. The system creates an exception report which identifies coverage problems, then automatically generates e-mail discrepancy reports back to the insureds (and they on to their agents) to remedy the problems and update the information warehouse.
With Ins-Cert, there is no need to "print" paper or electronic certificates or to distribute them. The renewal process, rather than being a major task for both the agency and certificate-holders, consists of a simple online update by the agent and a viewing by the holder to confirm the renewal.
Ins-Cert is a wonderful example of using technology not just to improve an existing process but to replace it entirely with something much more efficient and satisfying to all parties involved.
Agents using Ins-Cert create a coverage record for each insured -- with effective and expiration information - for GL, auto, umbrella, WC, pollution liability, and professional liability as well as additional coverages. In some cases limits are involved, in others merely the presence or absence of coverage. The agent sends the insured information about the new Ins-Cert service and directions on how to use it. The insured, in turn, sends a fax, letter or e-mail on to each "certificate holder" on how to use Ins-Cert to check coverage.
The agent's work is minimized. Besides setting up the coverage information, the agent does nothing else, except to respond to insureds requests to change coverage and to cancellations, reinstatements, expirations, or renewals, if they occur. In any of those cases, all the agent needs to do is make the change to the online database, and e-mail notifications are automatically sent to all relevant holders. It's up to them to consult the database and then take action with their insureds, which they can do with automatically generated e-mails.
Bill Hartigan, Littleton, Colorado agent and Ins-Cert founder, has anticipated and covers many of the issues that might arise for agents, including how to avoid showing limits higher than requested and handling additional insureds without requiring agent entry.
The Ins-Cert Web site is plain, but full of information on how the system works. It could be improved with better navigation. For instance, there is a menu on the home page but navigating from each child page requires clicking the back button on the browser. There is no navigation on the page itself.
Ins-Cert's patent pending service uses Microsoft's SQL Server 7.0, a commercial grade database server that can scale well. Coverege and requirement information is stored indefinitely (along with every change) over time, so that a coverage situation can be recreated as of any particular point in time. Though the system is intended for use without certificate generation, paper or electronic certificates can be created and mailed, FAXed, or e-mailed. Interestingly, the ACORD Certificate form isn't used because it is inadequate. It simply doesn't contain enough explicitly stated coverage fields and relies too much on free form comment boxes - and free form text is virtually useless when coverages in force are to be compared to coverages required.
According to Hartigan, there really isn't any point in integrating Ins-Cert with any agency management system because the coverage information to be loaded exceeds that stored in management systems and because certificate holders are handled by the insured. The purpose of the service is ultimately to take agents and insureds (for the most part) out of the business of confirming coverage. See the Web site (Agents and Brokers area) for detailed information about which coverage parts of the certificate are handled and how.
Because Ins-Cert is intended to have the certificate holder drive the process, there isn't much purpose in making the service appear to be part of an agency Web site. According to Ins-Cert, the holder has no reason to go there and 50% of insureds use more than one agent anyway, so going to multiple agency sites is more complicated than going to www.Ins-Cert.com.
Like the other certificate exchanges reviewed, Ins-Cert bills agents and holders use of the system gratis. Agents pay $3 each time (though not more than once per day) they update an insured's record (except cancellations) and then $.25 (though not more than once per day) each time a holder views or makes use of the coverage information for the insured.
Ins-Cert provides some useful tools to the risk manager for powerful coverage tracking and management. The service can generate exception, compliance, and expiration reports. The compliance report points out coverages that are low, cancelled, or expired with the exception report showing complete detail. The risk manager can use the online reports to trigger follow-up e-mail to the insured when they are out of compliance.
Using Ins-Cert can help a multi-location business do a better job monitoring compliance - with the central risk manager creating compliance levels and managers at each location directing insureds (and their agents) to provide coverage information that can then be automatically compared with requirements. Compliance need not be left to the vagaries of different processes at different locations. And because the agent has already entered the coverage information, the risk manager need not look at any certificates, interpret what's there and then key it into a tracking database.
Ultimately, it makes more sense to eliminate certificates than try to fix them, and that's the Ins-Cert insight. While it will certainly take some mind shifts to get agents and risk managers to adopt Ins-Cert, the organization has anticipated many of the operational objections and provides practical solutions to them. That certainly will help.
VeriCert Exchange Network
www.vericert.com
The VeriCert Exchange Network is an online certificate service provided by XDimensional Technologies, Inc., also host of what it calls the Application Service Provider Network (ASPN), offering Internet access to electronic customer relationship management software for retail and wholesale agents and brokers. XDTI has recently announced development of a new agency management solution, Nexsure, built specifically for the Internet and using XML.
VeriCert is focused especially on agents and brokers and their insureds, but also provides access to risk managers to receive VeriCert-generated electronic certificates. Agents and brokers pay for the service. Insureds and certificate holders have free use of the service. The vendor's hope is that once risk managers get the message and require their insureds (and in turn agents) to use the service, VeriCert will become the online certificate exchange of choice.
VeriCert provides risk managers with a bit of risk management content on its Certificate Verification page listing links to S&P and Best ratings, IRMI, and news. Risk managers are invited to enter a VeriCert certificate number to verify a certificate and to signup for Venue CMP, a service that will notify them if the status of a specified certificate changes.
Of the five certificate exchanges reviewed in this article, VeriCert is the only one that requires installation of a client program (in this case Venue CIM) on the agent's system to set up certificate and insured template information. According to Tim Hardine, senior VP at XDTI, local software will no longer be needed in a future release of the service. Insureds and holders are not required to install software locally. Their functionality is accessible online. In any case, even now, all the data the agency creates with Venue CIM is stored on the VeriCert server.
VeriCert uses Microsoft tools and SQL Server database software to manage the certificates data. Like other vendors that produce electronic certificate images for attachment to e-mails, VeriCert use the Adobe PDF file format and ACORD certificate standards. XDimensional is an experienced ASP and technical support organization that offers consulting services and telephone technical help through its FAST service. In 1999, Microsoft recognized VeriCert Exchange Network with a "Best Online Insurance Solution" award.
VeriCert prices by transaction. With the low-volume plan (up to 200 certificates per month), the agency pays $19 and $.32 per certificate. A certificate is one holder, no matter how many copies. Outbound FAX costs $.15 per transmission. There are no setup fees.
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Online Certificate Services Comparison Chart
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