SOUND INTERNET SOLUTIONS
Canadians cooperate to solve vexing industry problems
By John Ashenhurst
Early in 2002, Canadian brokers (independent agents) will be able to go to one Web site, the CSIO insurance portal, to get accurate and up-to-date comparative quotes and to do policy maintenance at multiple carrier systems.
Are you an agent? Do your carriers provide self-service Web sites where you can get accurate quotes, change a policy, review a claim, and check direct bill status? Are you delighted to have these services and more control--but frustrated because each carrier has its own logon/password scheme and screen layouts and because going from site to site to do "comparative quoting" isn't much fun.
Are you a carrier that offers its agents a self-service Web site? Do you recognize that the proliferation of carrier sites can create inefficiencies for your agents? Would you like to participate in a multi-carrier solution but don't know how to go about it?
Are you a vendor that provides a remote Web service you want to make available to agents? Is it difficult to sell the service to agents on a stand-alone basis? Would you benefit from being an element of a more comprehensive Web solution?
If you answered "yes" to any of the above sets of questions, there's good news. An organization has created a Web portal that serves the needs of agents, carriers, and vendors as described above. But there's not-so-good news as well--at least for the majority of Rough Notes readers. You have to be in Canada to use it.
Early in 2002, Canadian brokers (independent agents) will be able to go to one Web site, the CSIO insurance portal, to get accurate and up-to-date comparative quotes and to do policy maintenance at multiple carrier systems. Not a complete solution perhaps, but an improvement over what is available to agents in the United States. Could we get an agents' portal in the U.S. as well? Maybe.
Who is CSIO?
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. The United States has no direct correlate to the CSIO. It's a bit like ACORD, IVANS, and a national vendor rolled into one.
Over the years, CSIO has created electronic data interchange (EDI) standards, 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 this with a staff of nine. Imagine that!
I had a chance recently to talk with Klaas Westera, CSIO president, about CSIO and its portal effort. What's behind the portal effort? According to Westera, the CSIO insurance portal "is a new vision of broker-company communications through the use of Internet technologies. It will provide the industry with a modern and efficient way of trading information and transactions between all stakeholders." Westera added that the design of the portal is based on six key concepts:
* A common industry approach, owned and controlled by the industry.
* A foundation for single point-of-entry for the broker into company portals and other Internet-based services.
* Guaranteed quotes to the broker for the consumer based upon company underwriting filters and rating engines.
* An all-inclusive approach for all CSIO member companies and all brokers regardless of current technology.
* A single-entry (SEMCI) solution for the broker with point-of-sale forms printing.
* Support of existing EDI and batch technology (but encourages movement to new XML and real-time technologies).
It's worth unpacking these points a bit.
The Canadian industry didn't want to leave the process to chance--or one or two vendors. They thought the results wouldn't meet their goals.
The industry agreed that it made no sense for each carrier to create its own portal and then expect brokers to come to it. That would mean redundant expenses and chaotic broker workflow.
The quotes are issuable. They come from the carriers themselves and the process uses carrier underwriting rules. The problem with "traditional" comparative quoting via third-party vendors is that the rates may not be current and the premium quoted is usually an estimate, not what the carrier would actually write the business for.
Carriers and brokers have a wide variety of installed technology. The design of the CSIO portal is to be flexible enough to accommodate everyone. So, for instance, carriers that cannot provide real-time rating through their mainframes can use third-party ASPs as a stand-in.
The process must be single-entry. It doesn't make sense to proliferate technology and services if the broker must re-key information to pass it between platforms.
And finally, since stakeholders have invested a great deal in batch interface via AL3 standards, the portal must accommodate them while they, over time, convert to real-time interface via XML.
What will the portal do?
At least to begin with, the portal will focus on two areas: personal lines point-of-sale support and single-login to multi-carrier policy systems. Point-of-sale means pricing and creation of appropriate documents for new customers with download of data to broker management systems (BMS) for internal processing and/or submission to the carrier. If the broker wants to rate a renewal, the broker can upload the data to the portal from the BMS.
One of the problems with the proliferation of multiple carrier Web sites is that brokers need to keep track of and use multiple logon/password schemes--one or more for each carrier site. Then they must deal with different screen layouts from each carrier--even though they treat the same line of business. The CSIO portal is intended to allow agents to do one sign-on that will be good for multiple carriers. The broker comes to the CSIO portal, logs on, and then clicks through to a carrier site. The CSIO portal passes the identifying information on to the carrier, which then should have enough information (and confidence in the CSIO process) that an additional logon won't be needed.
When all is said and done, the critical difference between Canada's case and our own is that Canada enjoys strong industry leadership with insurance and the Internet and the United States has none.
In addition, CSIO has created screen layout standards that 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. Even though the broker will be using multiple carrier Web sites, the broker will use only one sign-on and have only one look-and-feel to learn. Given that the CSIO portal will also support upload and download with broker management systems and XML interaction between portal and carrier systems (with carriers doing download to management systems), there isn't much to complain about--it's single-entry and acts pretty much as one system.
What about the special features that carriers like to include in their products? How will this comparative rating environment support them? Besides the presentation level standards, CSIO has created standards that specify the messages that flow back and forth between the portal and carrier rating systems. One part of that standard allows for the inclusion of company-specific information. So when quotes come back to the portal, they can contain additional information the carrier considers important to fully describe what's being offered for the price--and the portal will display that information as part of that carrier's quote.
CSIO does not insist that carriers that already have broker self-service sites dismantle them. If a carrier wants its own site to present its particular mix of products and services in its own special way, that's fine. It's important only that the carrier also participate in the CSIO effort--so that brokers wanting comparative rating and single logon can have it. It's not either/or; it's and.
What happens to rating vendors?
Like the United States, Canada is home to a number of personal lines comparative rating vendors. How will they make out? Won't the CSIO portal put them out of business? According to Westera, the vendors can have a good future providing carriers with ASP rating services that the portal will tie into.
Many carriers cannot support real-time rating today--something the portal demands. Their mainframe policy systems are designed to do overnight rating. Rather than try to create a real-time facility, the carriers can contract with rating vendors that already know how to handle quoting interactively. So rather than providing retail service to brokers, rating vendors can change the focus of their businesses to private label real-time rating services for carriers. According to Westera: "This will also create an opportunity for these vendors to move from the business of supplying approximate rates to more accurate or guaranteed rates. This strategy would help vendors solidify their new niche by taking pressure off of companies to implement their own real-time rating ASAP. The non-guaranteed status of rates will force company development if vendors don't provide more accurate rating."
Ideas for enhancements for the second (and future) editions of the portal include:
* Submit button--It would return the quote number to the carrier. The carrier could then pick up the quote from the portal as a submission and go about the process of issuing the policy.
* Carrier rating manuals--By making the manuals available online, carriers could save the expense of distributing them and brokers could have convenient access to current manuals without dealing with paper.
* API--Publish integration specifications for providing external services in a way consistent with the operation of the portal. That would allow the portal to become much richer without CSIO having to create lots of new services on its own.
* Links to other services--Click-throughs to other industry sites/services.
* Excess and surplus lines tie-in.
* Simple policy change form--For carriers that can't handle direct broker access--as well as personal and commercial lines claims forms.
Where does the money come from?
To start with, CSIO is funding the effort through use of its available surplus. This, together with a relatively modest special assessment to carrier and broker members, will see the project through to a break-even cash flow position.
Once the portal is running, continuing development is to be funded out of some of the incoming revenue. Though subscription pricing hasn't yet been made public, it's expected that brokers will pay about what they do now to comparative rating vendors but the brokers will have the advantage of guaranteed quotes and single logon.
Will it work?
Once the portal is made available for general use in early spring of 2002, we'll know more about the quality of its technology, its operational responsiveness, and the brokers' real interest. But early signs are positive. Seventeen carriers are already committed to the project and intend to be ready by spring. The carriers represent about 55% of broker-placed personal lines premium, enough to develop critical mass and some momentum.
A few years ago, several Canadian carriers put together a project called Synchron, a technology service intended to perform some of the functions that CSIO is now implementing. The project never got off the ground and is seen as a major industry fiasco. Supported by six major carriers at its high point, Synchron wasn't really an industry-wide effort, and it didn't make use of Internet technology. Westera is confident the CSIO portal will succeed and its rollout won't be diminished by the Synchron experience. In a sense, Synchron's failure helped guide CSIO in developing a more suitable industry solution and approach.
CSIO isn't trying to do all the work itself. The CSIO insurance portal has been designed by CSIO but is being implemented by IBM and DWL, a Canadian vendor that focuses on the insurance industry.
Will it work? I don't know. But I do know that the pain of failure (chaos) will be more intense than the pain of cooperating for the common industry good.
But is the CSIO insurance portal relevant to us in the United States? Some would say the obvious answer is "no." After all, Canada has a population one-tenth the size of the U.S., with perhaps 250 P&C carriers. That's equivalent to one large U.S. state--California. Creating a portal for one state wouldn't be a trick; it just wouldn't be relevant. Scale makes a difference and the United States is on a different one than Canada.
And there's a difference in culture. The Canadian industry appears willing and able to cooperate. In the United States, cooperation among carriers is limited by law. The marketplace, not central planning, is thought to be the route to great products.
All good points. But surely the independent agency community in the United States can do better with the Internet.
When all is said and done, the critical difference between Canada's case and our own is that Canada enjoys strong industry leadership with insurance and the Internet, and the United States has none. The trade associations pay passing but not passionate attention. ACT is focused on education. ACORD can't lead the independent agent segment at the expense of the rest of the industry. IVANS is too conservative. AUGIE is more involved in trying to find out what agents think--and then following that path--than in establishing a position and bringing the industry to it (leading the way). Major vendors are more concerned about selling what agents seem willing to buy rather than trying to solve industry problems. Who can blame them?
The industry technology leadership vacuum is a recent reality. A generation ago, and then more recently, agents seriously considered the creation of the kind of shared service that CSIO is now implementing, though without the Internet and using time-sharing and other technological artifacts of those earlier times.
To begin the process of moving us off the dime, we should be paying attention to the Canadian initiative. The press, IIAA, ACT, ACORD, IVANS, AUGIE, and U.S. vendors, for a start, should become keen observers of the interesting experiment being undertaken in Toronto. We need to be less parochial and more aware of ideas that come from outside our borders, that is, outside the box of our assumptions.
Fresh blood should be brought in to play leadership roles on the various boards and committees of industry groups. Young agents have a vested interest in the future that old-timers may lack.
Surely something of the Canadian experiment could prove useful to us in the United States. But we won't know unless we look. If we stay on the current track--that is, proliferation of carrier Web sites--independent agents will soon be worse off than the competition and the opportunity for real, substantive, useful change available through the Internet will be lost forever.
For more information go to CSIO: www.csio.com or CSIO insurance portal: www.csioinsuranceportal.com. *
John Ashenhurst is editor of "Sounding Line," a monthly newsletter covering insurance and the Internet. His company, Sound Internet Strategy, provides consulting, Web site evaluation, and seminar services to independent agents and their trading partners. He can be reached at email@example.com or (360) 376-1090.