A Special Section Sponsored by Alliance for Productive Technology, Inc.

AGENTS SPEAK OUT FOR SEMCI

Carriers' interface attitude affects agency representation and underwriting decisions

By David Boling, CPCU, Manager, S.I.S. Communications

"Premium is a consideration, but hassle-free underwriting, quick issue, etc., play a large role in the selection process."

-- Mike Hofmeister, Bruce Grau Associates, Hunt Valley, Maryland

Strategic Insurance Software, Inc. (S.I.S.), is an industry leader in implementing single entry, multiple company interface (SEMCI). S.I.S.'s SEMCI Partner agency management system utilizes industry-standard APT software to make new business and policy change upload a reality for the independent agency distribution system. Using the APT Company Module, insurers are able to develop unique edits which allow uploading agencies to use a standard data entry and workflow process, thereby eliminating the need for carrier proprietary systems.

Mark Reilly of Blair Associates in northwestern Ohio and Mike Hofmeister of Bruce Grau Associates in Hunt Valley, Maryland, two strong SEMCI advocates, speak out on several critical issues that impact the independent agency distribution system today.

At issue: Do proprietary Internet-based systems provide "real" SEMCI for independent agents?

Mike Hofmeister: To maintain lower expense ratios, agents must (and will) take the "path of least resistance" when it comes to placing business with carriers. The inefficiencies of duplicate entry into multiple systems and added training expense make proprietary systems, Internet-based or otherwise, a roadblock to growth and expense reduction. SEMCI provides the real path that agencies will follow.

Mark Reilly: Companies that are still clinging to proprietary systems, even if they are Internet-based, are costing themselves big time in terms of lost productivity and increased expenses. These carriers just don't get it! The CEO of one of my primary carriers has told me time and time again that independent agents are the most expensive distribution system and that we are threatened by direct marketing. The interesting thing is this company has the highest operating expenses of any company we represent and they also use proprietary interface. They just don't understand that they are standing in the way of agency-company efficiency, added company revenue and a lower expense ratio.

At issue: How does SEMCI impact what carrier an agency chooses for a given risk?

Mike Hofmeister: Here again, the majority of agents select the "path of least resistance" when choosing a company for a given risk. Premium is a consideration, but hassle-free underwriting, quick issue, etc., play a large role in the selection process. Multiple-step proprietary systems are real roadblocks on that "path."

Mark Reilly: With our SEMCI-based agency management system, we can enter the prospect once in our rating program, move the information to our management system and then upload it to our company of choice. The carrier then electronically downloads the policy or endorsement to us. Without SEMCI, entering information into our rater, then re-entering it onto an application, and finally re-entering it again into the company's proprietary system is extremely inefficient and expensive.

At issue: How has the efficiency of SEMCI impacted your agency's approach to frontline underwriting?

Mark Reilly: One of our proprietary companies told me that only 33% of the paper applications sent to them are complete. With SEMCI, incomplete applications aren't even a factor because you can't upload an incomplete application. Frontline underwriting is about paying attention to detail, and SEMCI allows us to be more precise and profitable. With the proprietary systems we use, we have to generate a hard copy of the change we've entered into the computer and then fax it to the company. Added costs occur because of the paper, phone and/or postage, to say nothing of the cost in human resources and lost time. Bottom line, with SEMCI we've become better underwriters and our results prove it. If companies that use proprietary systems would change to a SEMCI-based system, they would recoup all of the dollars they are wasting and also improve their underwriting results.

At issue: How does the ability to upload using APT impact your agency?

Mike Hofmeister: With APT upload, we input data only once. This plays a large part in creating the "path of least resistance" for insurance processing. When the amount of duplication can be drastically reduced, it has a tremendous impact on the daily operation of any business. SEMCI allows us to upload to one or many companies with a single entry of the data. In addition, the APT editing capability that is integrated with our software ultimately improves frontline underwriting. Finally, with upload we are able to handle new business and policy changes at our desk without a paper file. This permits us to concentrate on the things that directly improve client relationships and perform activities that increase productivity and profitability. As a result, we are spending more time talking to our customers, which allows us to be value-added consultants, not just 1-800 numbers.

At issue: What impact does SEMCI have on an agent's selection of companies to represent?

Mark Reilly: When it comes to building a stable of companies to represent, the definition of what makes a competitive partner has to be expanded beyond just pricing. Agents have to strongly consider the automation alternatives a carrier offers, including upload and download. If two companies are vying for an appointment, the SEMCI company will have the advantage every time over the company offering a proprietary system. The need to add service personnel to handle antiquated proprietary systems will force agents like us to re-examine our relationship with companies that cling to these systems. Companies fear abandoning their technology investments; however, they stand the chance of losing much more by not changing. *