Even early in 2001, the market showed signs of hardening, or as some described it, "correcting." The events of September 11th are accelerating the change and 2002 could prove to be a genuinely hard market. Hard markets cut two ways. Higher premiums mean higher commissions for agents and healthy profits for carriers. But they also mean disappearing markets and a need to find coverage.
The Internet would seem an ideal venue to support the activities of an increasingly complex insurance marketplace. In this article we'll look at what's available through the Internet to help agents find markets and then write business in them. Though there's help out there, the potential of the Internet has only begun to be tapped for the wholesale marketplace.
Finding candidate markets
Industry publications feature ads and you probably get mailings, FAX, and e-mail notices announcing new programs. If you have a specific need when you see the solicitation, that's great. You can follow up and perhaps place the business. But oftentimes the timing of your need for a market and being informed about one don't match. So you frequently need to seek one out.
Perhaps you have good working relationships with a handful of complementary wholesalers. A phone call or a FAXed app solves the problem. That's great.
But special needs and a hard market may force you outside your comfort zone. You have to go fishing. How? Where? How about the Internet?
One approach to finding markets is to use Internet search engines, like Google or Excite, but the lists they pass back provide a great deal that isn't relevant. They leave out a lot as well. It makes more sense to make use of services that specifically collect and organize information about available P&C markets. None are perfect but they do offer a leg up.
Several starting points
Ultimate Insurance Links: Barry Klein's labor of love, www.ultimateinsurancelinks.com/MGA.HTM, provides links to hundreds of MGA/wholesaler Web sites. If you already know who you're looking for, but not their URL, Ultimate Insurance Links is the place to go. (It also provides P&C carrier, L&H carrier, vendor, organization, and publisher link lists). The MGA list provides only a little information about each entity - usually a note about the region and markets covered — and sometimes that can suffice. But generally, to find out which suppliers might be relevant, you have to link to their sites and take a look, one by one. Barry asked me to point out that his MGA list deliberately omits Internet-based market sources that try to have it both ways, retail and wholesale for the same product.
Agencytimesaver.com (www.agencytimesaver.com) is a members-only site (though agents can sign up for free) that provides systematic access to wholesalers in hundreds of coverage categories. Picking a category yields a summary list and links to wholesaler profiles. The wholesaler profile includes contact information, appointment information, staff contacts, and exclusive, admitted, and non-admitted markets. The markets list then provides links to the Web sites of the background carriers for the wholesaler. The profile also contains a link to the wholesaler's Web site. That's where the agent would go to establish a relationship and submit an application.
Agencytimesaver.com provides more information about wholesalers than can be found on other sites. According to Robert Bland, the site's creator, Agencytimesaver.com is about 35% complete. He intends to add a number of other services, including ACORD apps and a post-a-risk feature that allows agents to post a description of their risk on the site and solicit responses from wholesalers willing to cover it.
IMMS: CompleteMarkets, Property/Casualty is one of many on-line services available to IMMS subscribing members (www.imms.com). More than 1000 coverages are available, provided through special arrangements for IMMS members. You can search by coverage sought or geographic area. Many listings include on-line applications and/or agent registration forms. George Nordhaus and IMMS have been in the business of providing agent members with markets for many years.
Insurance Journal: This publication provides a free wholesale markets search page on its Web site. To access the service, go to www.insurancejournal.com, and choose the "Directories" link from the top of the home page, then look for the link to Excess Surplus and Specialty listings. Though the publication focuses on California and Texas, the wholesaler listing covers a good bit of the country in various categories. You can choose to see information on a particular carrier or choose a category, then sub-category and state. That yields a listing of suppliers with states covered and a home page link. If you don't have high-speed Internet access, you may find the Insurance Journal service a bit slow.
Insurance Marketplace: This free Rough Notes Internet service is also available in paper form (for $14.95 to cover shipping and handling). The Web site, www.insurancemarketplace.com allows searches by company/wholesaler or market/category and state. Either approach yields supplier profile records that provide contact, general information about coverages offered, and states where it's available. It's up to the agent to contact the wholesaler for more information. Insurance Marketplace has some distinct advantages: it's the most comprehensive free on-line industry markets source. On the other hand, it provides limited information and no link to the supplier's Web site.
Programbusiness.com (www.programbusiness.com) provides free online access to markets for hundreds of coverage categories. You can search by category or keyword or company then state and the results listing provides access to supplier storefronts/profiles contained on the Programbusiness.com site. Each storefront follows the same format, making searching and review systematic. The storefront links to the supplier's Web site for further information, applications, and the like. The Nielsons have added an interesting twist to the supplier profiles - an evaluation section that agents can use to grade wholesalers in five categories. The availability of a feedback loop (reviews) is an important part of the success of eBay and Amazon and could be valuable for agents looking for wholesalers on Programbusiness.com as well.
Sage: This new producer-oriented, Internet subscription service from Silver Plume (the CD-ROM reference library people at www.silverplume.com) provides, among other things, over 600 markets — with program information, underwriting guidelines, supplemental applications and so on. The information provided is extensive, accurate and timely, and offers links to relevant sites. (For more information, see a review of Sage on page 12).
Writing the business
Each of the information sources described above can help you find a candidate market. In some cases, applications and somewhat detailed information are provided. But in most cases you're left with contact information and a link to the candidate market Web site. That's not necessarily a bad thing, provided the wholesaler Web site supplies the tools you need to move through the indication, quoting, submission, and binding stages. Unfortunately most wholesaler Web sites aren't up to the task.
In the process of researching this article, I looked at about 100 wholesaler sites. That's about all I could stand. I kept seeing the same patterns over and over — too many sites offer nothing more than a greeting and contact information. You're supposed to call them and talk about your need and they'll see what they can do, perhaps FAXing some sort of representation agreement and an application. That means a drawn out process (likely over several days), while you trade voice mails and wait for incoming FAXes or response to your outbound FAXes. It's too slow. It's too expensive. It's primitive. It just isn't necessary with today's technology.
I also saw too many "Enter Here" pages featuring Flash (slow and irrelevant) as well as slow loading home pages filled with extraneous graphics. And too many sites featured under constructions pages and broken links. Why make it so hard? By the way, when trying to download PDF applications, my IE 5.5 browser frequently hung up forcing me to do an "End Task." However, once I downloaded the latest version of Adobe Acrobat Reader the problems disappeared.
Perhaps half the sites provide downloadable forms, generally in PDF format, though some are Word or HTML based. In any case, they're intended to be printed out, filled in, and FAXed to the wholesaler. While an improvement over having to ask for and then receive an application form via FAX, downloadable forms perpetuate inefficient processes. At the least, the forms should be usable online and intelligent, providing real-time edits and capture data for transmission to the wholesaler. As far as I can see, while the technology to host intelligent, online forms is readily available, wholesalers aren't much interested.
But even intelligent forms seem a weak offering when much more is possible. It would be much more desirable to be able to enter information online, get an indication of the acceptability of the case, get an accurate quote, and then submit and bind it. Reality hasn't caught up with possibility. Only a few wholesalers really automate the sales process.
Out of the 1000 or so P&C wholesalers, only a handful provide both reasonably extensive coverage (geographic and categories) and automated submission. Their advantage over the old way (FAX-and-back) is so significant and so compelling that one must wonder whether the traditional players can long survive without changing their behavior.
Noteworthy options
AgentSecure: When Ed Gilman formed AgentSecure (www.agentsecure .com), he did so to serve smaller and rural agents who had problems getting appointments with national carriers for small business coverage. Agents must apply to be members and pay a $250 application fee to be part of Agent-Secure. The agent receives full commission and owns the expirations. AgentSecure works with seven carriers and provides coverage in 235 classes. In June 2001, AgentSecure merged with InsureZone (www.insurezone.com).
The quoting process begins with a check on availability of coverage. The user chooses the lines desired (BOP, WC, CA, and UMB) and then chooses a business type. A link provides access to classification help if that's needed. Another link provides access to a table that displays general underwriting guidelines for each of the seven AgentSecure carrier partners.
MarketScout: According to Krista Tankersley, executive VP, MarketScout (www.marketscout.com) provides agents with access to 800 classes though 67 carriers. Basing its model on a "best of class" concept, MarketScout doesn't provide competition or choice. It opts instead for breadth with what it considers the right answer in each category. The agent pays no fee, earns full commission, and owns the expiration. More an e-Isurance portal than a wholesaler, MarketScout is licensed in 47 states and has more than 10,000 agency users.
MarketScout has created an inventory of on-line application forms. Once the agent fills one in, it's delivered to the appropriate eSpecialist (underwriter with the best of class supplier) or in a few cases to the carrier mainframe for quoting and return. MarketScout has taken one important step forward. It has automated the data acquisition stage. That makes it easier for agents to do submissions. It can also provide carriers with data in usable form (e.g., XML) though today only a few are able to make use of it.
Superior Access: As far as I can tell, Superior Access Insurance Services provides the most comprehensive coverage offering of any fully automated MGA (www.superioraccess.com). A sister company, Superior Access Internet Software, develops software and licenses it to Superior Access Insurance Services and other wholesalers and carriers. Northeast Agencies (www.neagencies.com), a major wholesaler in Buffalo, uses the Superior Access software to provide services similar to the California wholesaler (and competes with it). SAIS has about 8,500 agency members. It levies no signup fee, shares commission, and the expirations belong to the agent. SAIS is especially strong in California but continues to work toward national offerings.
I had a chance to talk with Mike Mayo, president of Superior Access Internet Software, recently to get an update on the software company as well its sister company, Superior Access Insurance Services, the wholesaler. He demonstrated the service on a notebook computer running wireless modem access and, interestingly, the performance was acceptable.
Perhaps most interesting about the SAIS wholesale operation and its use of technology is that all quotes and submissions are handled automatically — without human intervention. SAIS quotes about $1 million in premium per day, but no one on the staff has to deal with quotes until the business is actually sold. At that point, every submission is reviewed by a live underwriter and then passed on for issuance (within SAIS or to the relevant carrier).
Virtually all other wholesalers handle quotes manually. That means underwriter time is absorbed in submissions that aren't sold, an inefficient use of professionals' time. Because of its automated sales process, SAIS has been able to cut its staff in half while doubling premium written, a desirable state of affairs in a low-margin business. Of course, agents save time with SAIS as well. They can find out in minutes whether they've found a market and what it will cost. SAIS hosts competing suppliers, and though the service doesn't provide side-by-side comparative quotes, it does store agent case data so it can be reused to generate competing quotes one after the other without re-entry.
What is everyone waiting for?
It amazes me (when will I ever learn?) that the wholesale insurance business is so manually intensive and makes so little real use of the Internet. With the market hardening over the last year or so, it's been obvious that more business would be coming their way. Those wholesalers that can handle lots of quotes with aplomb, make it easy for agents to deal with them, and then handle the handoff to the carrier in an automated way, stand to do well indeed. Their more primitive competitors will not be able to scale to handle higher loads, will lack responsiveness, and will be selected against. Perhaps the next 24 months will be a real turning point in wholesaling, with the Internet-savvy running up market share against the business-as-usual FAX folks. Time to place your bets.
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