Sounding Line’s June editorial accurately captured the essence of the SEMCI issue. At the bottom line, it’s a question of broad agency willingness to do everything necessary to achieve what they have historically proclaimed to be their long-standing objective.
Clearly, the technology is available. And there are various approaches to implementation that permit the single entry problem to be solved — largely, agency and carrier, situation by situation. The solutions may not be perfect, in the absolute and ideal sense, but they are definitely workable.
In any case, the key question when talking about SEMCI (or something that approaches it) is, "What does it take?"
Attitudes and obstacles
One has to wonder if SEMCI is really a serious goal of independent agents in general. Or, is SEMCI concern merely crucial to a much smaller group of vocal agents who have always been technology and/or maximum workflow efficiency oriented? If so, for the others perhaps SEMCI is just something to talk about philosophically, or something to merrily beat on carriers and vendors about when the opportunity presents itself, or something to implement only when and if they get around to it. Applied Systems’ experience, with only 22% of eligible agents using real-time transactions, suggests the latter may be closer to the actual state of affairs. The evidence, at least to date, suggests SEMCI is not a problem agents are genuinely intent on solving.
Or, could a main obstacle be something as simple (and complex) as the independent nature of the independent agent. Independence has always been the great strength and cornerstone of the independent agency system? Independent agents are one of the remarkable American business success stories. Independence, however, is a two-edge sword.
Independence has also been independent agents’ collective weakness. Agents have always had the right of the risk taker — come hell or high water — to do things their way. The entrepreneurs’ names go on the door and they can run their businesses however they choose, even if that’s not in their best operational interest. So, maybe it’s just not possible to overcome the innate desire of independent agents to act independently — even to the detriment of their shared business model.
Why the “What does it take?” question
must be answered
Whatever the case, the "What does it take?" question needs to be truthfully answered by agent leaders — even if those answers are painful to obtain and accept.
If the technology to actually accomplish SEMCI is in place — or soon could be with extensive use of bridging — what is the real problem? Is it really the technology and the technologists who just don’t identify with the practical difficulties of widespread implementation?
Or, is it agent independence? How about a simple lack of education and understanding? Or, is it lethargy? Is it lack of commitment? Is it not really having the communal will to do what is necessary? Is it money (and there is little doubt that agents wanting carriers to “pay the piper” is a big part of the issue)? Is it a lack of extremely focused agent leadership? Is it really the carriers who are reluctant to do something that might help their competition (here it is important to also answer, in very pragmatic terms from the carrier perspective, why they should)? Is it a combination of things? But until the "What does it take?" question is candidly answered, the required action plan will always be lacking and will fall short of solving the problem.
Toward an answer
The book, Good to Great, written about the common denominators of what it takes to build a great company, speaks to the “What does it take?” question. The research behind the book showed that all the good to great companies began the process of finding a path to greatness by confronting the brutal facts of their current reality.
These organizations started with an honest and diligent effort to determine the truth of their situation. They thought about the things conventional wisdom suggested they would never do, and then investigated if it was time to reverse course. Leadership would not accept easy answers, or opinion, or finger pointing. In effect, they conducted "autopsies without blame"” and spent a great deal of time genuinely trying to understand their situation. In the process they learned the right strategy and decisions and what it took to really accomplish their purpose, which often became self evident when they finally faced the stark realism of their situation.
If we step back and think of the various agent associations as a single company, then answering the "What does it take?" question — really facing the brutal facts of real-time interface implementation — is an interesting place to start. Yet, with all the partisan influences in play, one wonders if truth could ever be discovered, widely accepted, and then acted on in a coordinated fashion. If such is the case, perhaps, universal SEMCI is nothing more than a Quixotic Dream.
Agent and carrier perspectives fundamentally differ
Single workflow interface, for all practical purposes, may really be just an agent problem. If so, agents have to solve it, albeit with the assistance of carriers and vendors. Clearly agents cannot completely solve it on their own initiative. But, following this logic, it essentially remains an agent community problem to solve because single workflow is in their best interest compared to the interests of carriers. True, carriers have an interest in the solution and a big part to play in its implementation, but they don’t have the same fundamental or vested interests as agents in developing universal workflow solutions.
Carriers, on the other hand, are not in the multiple company business like independent agents are. Rather, they are in earnest competition with other carriers. It is not in their “independent nature” to easily do things that might also benefit the competition — especially when their agents are not broadly, and loudly, speaking in concert of the desperate need to do so for agency benefit. Companies will act in what they perceive as their own best marketing interest until market forces convince them otherwise.
Carrier management always thinks, first and foremost, about what they can do to make their agents “love them best” and “forsake” the competition (except, of course, for the risks they choose not to write). Expensive projects that chiefly benefit the independent agency system without quick production improvement or long-term expense reduction benefit to the company will always meet considerable internal resistance.
Added to this reality is a limited carrier IT budget (often painfully so) which will always be primarily directed to internal generated projects intended to distinguish the company from the competition and thereby produce additional market share. It is not that agent workflow interests are unnoticed in the scarce resource allocation decisions, or that agents don’t have advocates within the company ranks speaking for their needs. More often, universal agency efficiency considerations are simply placed second by senior management to more pressing internal development needs and deferred to a time when additional funding is available, which seldom occurs in a universal expense conscious environment.
Independent agency carriers and independent agents themselves are not partners, at least in the truest sense of the definition. The notion of partnership is pretty much a fairy tale. Carriers and agents are more like allies, sometimes reluctant, who have both common and divergent interests, united for some mutual benefits. Both have issues and problems that are uniquely theirs and of substantially less concern to the other. SEMCI, or single workflow, is one of those issues. SEMCI solutions have major internal impact for independent agents and comparatively little impact for carriers — and some company managers believe it has negative marketing impact and should therefore be avoided for as long as possible.
Convincing the carriers
Nevertheless, carriers can be convinced to help implement single workflow technology solutions. The operative word, though, is help. Some carriers will do it because senior management understands that an efficient and financially healthy distribution system is in their best long-term interest. And because they are confident they can successfully compete based on the quality of their products, price competitiveness, superior service, and automation excellence above and beyond the mere mechanics of interface. These carriers also realize that helping agents is a smart marketing strategy when their competition resists providing that help.
Others can be convinced by widespread and on-going pressure from their key agents — the 20 percent who generate 80 percent of their business. Still others will have to be convinced by the loss of market share to carriers who decided to fully support their agents by implementing workable technology. Yes, with a coordinated and focused effort, carriers can be sold that single workflow really is in their best marketing interest.
Agent leadership imperative
If single agency workflow isn’t a “natural carrier concern,” but carriers can nevertheless be convinced to get on board, who needs to do the convincing? In my view, the decision to convince becomes an association leadership problem to solve using their own resources — the IIABA, the PIA, and the vendor user groups. The various boards at both the national and state levels must make real-time transaction implementation their primary “cause celebre.”
These boards, not just the technology groups or committees, must lead their memberships to take action and they must vocally speak with a common voice. The national boards must lead their state boards that, in turn, must lead the local agents. Such an effort means a serious commitment of resources — a huge amount of their time and money — to getting real-time technology widely adopted. It is a serious mistake to under-estimate the effort and will necessary to accomplish this difficult task. To date, under-estimation, along with focus on other priorities, has been a big part of the problem.
Perhaps 80 percent of leadership’s mission is to arouse the motivation and determination of independent agents. The other 20 percent is spending a great deal of agent money as evidence that agents are finally serious. It also goes without saying that leadership will need to encourage the carriers to do their part, which will be pricey for carriers to develop. Agents must also be willing to pay the additional third party multiple company transaction cost of doing business, something no carrier is happy to incur for business they may or may not write, especially when their Website performs the same function at no extra cost. Reimbursement deals can always be negotiated based on production considerations.
The IIABA, in particular, can play a valuable role. IIABA is a politically sensitive organization that should best appreciate what needs to be done. The Big I needs to put the same kind of focus, energy, and funding into the real-time interface issue as they do into their legislative and lobbying work. It takes deep understanding of the issues, unwavering focus, organization, commitment, strong leadership, a huge commitment of time by many influential people, plus lots of money to win elections. The same kind of effort will be necessary for implementing real-time interface. Nothing less is likely to get the job done.
Willing and dynamic leadership and significant resources for such high-profile agent representation are at the heart of the “What does it take?” question.
An important efficiency dynamic
Real-time transactions are not particularly valuable to the independent agency system unless the lion’s share of the personal lines and small commercial business (the vast majority of the items) can be processed with a single workflow that does not vary markedly from carrier to carrier.
The efficiency gained from such a single (and uniform) workflow approach will likely do more for the independent agency system than any other single strategy. In fact, the single workflow concept has the very real potential to positively change the financial dynamics of the agency business. The question, then, is whether or not real-time interface is really a major driver of the agency economic engine. If it is, for that reason alone it should be virtually the most important thing on the agent associations’ agendas. And until it is — I mean really is — the situation is unlikely to change significantly.
The baggage of the SEMCI acronym
Is the SEMCI acronym itself part of the problem? Perhaps it is, at least with the technology idealists. Others think of SEMCI as a joke. For many, though, especially those who appreciate the issues involved, the term is just a simple way to describe a complicated concept. It serves its purpose if agents think of the acronym as merely describing an efficient methodology without implying a specific technical solution. On the other hand, if the acronym itself is baggage that gets in the way by creating misunderstanding or resurrecting bad memories and disappointments, then it should be discarded.
Actually, the Internet and the possibilities it brings to the communications interface issue might plead for a new term to replace SEMCI. Think about a term like NETART. It means Nominal Entry To Anyone Real Time. The “NET” makes highly efficient real-time interface using ubiquitous standards possible. The “ART” comes in assembling the various technology solutions in such a way as to provide the maximum benefit in individual agency and carrier situations. NETART more clearly describes a desirable model achievable with current technology than.
Moreover, the Internet takes us well beyond the idea of single entry. Today, it is possible to import existing data with little or no entry. Furthermore, it’s possible for customers to do much of the data entry themselves. Clearly, nominal entry is more the world of the future than single entry.
The internet also takes us well beyond the idea of multiple company interface. Today, we have the potential to interface with virtually anyone with a computer or other (Web-enabled) device. Low-cost, real-time, wireless options entering the marketplace are becoming the norm, enabling virtually unlimited communications and connectivity potential.
So, for the good of the independent agency system, perhaps it’s finally time to use a new name that unmistakably signals the need to move forward implementing current technology.
Finally…
Must we all act fast lest all will be lost? Probably not. Our industry will still move forward, albeit slowly. Sometimes we forget that slow progress is still progress. After all, no one in their right mind would want to go back to the way we did business just 25 years ago — before we had all this technology we have come to love to hate. Twenty-five years in the history of the insurance business is a short time. Continuing the way we are going, in 25 years, no one will want to go back to the way it is today.
But if we don’t soon pick up the pace, what will be lost, however, is the ability to quickly make significant improvement to the way agents do business and to their agencies’ profitability. If this opportunity is lost, it will be a shame for all of us who failed to do our part in making a good business really great.
Anyway, for better or worse, that’s my opinion — and I’m sticking to it.
Contact John Carmody: johncarmody@comcast.net
Sounding Line interview of John Carmody in May, 2003.
Carriers and agents are more like allies, sometimes reluctant, who have both common and divergent interests, united for some mutual benefits.
The Big I needs to put the same kind of focus, energy, and funding into the real-time interface issue as they do into their legislative and lobbying work.
© Copyright 2003 by Sound Internet Strategy. All rights reserved
Independence, however, is a two-edge sword. Independence has also been independent agents’ collective weakness.
Carriers can be convinced to help implement single workflow technology solutions. The operative word, though, is help.