What has changed? Simply put: the Internet, XML and IVANS' “Transformation Station.” The combined technologies enable 100 percent accurate, multiple-company, real-time quotes against carrier edits from the agency management system desktop. With this technology broadly in place, the way we do business changes dramatically, and for the better.

What is Transformation Station? It is a “black box” that sits between the agent and the company (and any other business partner, for that matter), and translates data formats and manages messages. The translation allows applications using dissimilar data formats (XML, AL3 or others) to share information with each other.

Business can be conducted through a single infrastructure regardless of platform or programming language. In the final analysis, Transformation Station is a viable SEMCI solution, a workable technology, and one that can be implemented quickly.

The new technology actually transcends the original concept of SEMCI. Today, a term such as NETART–nominal entry to anyone real time–more accurately describes the potential for interface.

Nominal entry suggests the potential for directly importing information from other databases, or having the customer do data entry. To anyone incorporates the possibility of easy data sharing with all trading partners. Real time means instantaneous, as compared to batch communications. The “NET” makes significantly improved communications and workflow possible, while the “ART” comes in assembling the technology in such a manner as to reduce operating expenses of companies and agencies in the process.

How have the stars aligned to permit SEMCI to become a viable option? The really big difference–the one that genuinely changes the game, is the fact that both Applied Systems and AMS Services (the two largest agency management system vendors) are working closely together to facilitate Transformation Station development. Additionally, DORIS, a smaller vendor, has decided to incorporate the product.

In effect, over half of the independent agencies in the country will soon have a potentially SEMCI capable platform through Transformation Station, with the hope that additional vendors will join this effort in the future.

The Transformation Station sales story to agents, obviously, is significantly enhanced agency effectiveness and cost reduction. If customer service representatives can get multiple-company, real-time, bindable quotes without leaving their management systems, and without duplicate data entry, why would they want to do business any other way (no matter how good the proprietary technology)?

One answer, of course, is if a carrier without Transformation Station capability has a substantially better price/product value combination. All things being equal, however, placing business with Transformation Station capable carriers is likely to become the preferred course for many agencies.

What has to occur to make SEMCI a reality over the next three years?

First is widespread adoption of the ACORD XML standards for insurance. Use of these standards is absolutely critical to positioning the company and vendor to use Transformation Station and other real-time technologies most effectively.

Standards simply help solve big problems, and SEMCI is one of the biggest problems we face. Here, we need a mantra: “The application must have ACORD XML on board.”

Second, agent associations, user groups, agency management system vendors and IVANS must evangelize the Transformation Station story. It has to be a massive agency education campaign.

In turn, agents have to regularly and repeatedly tell their inefficient workflow and real-time processing needs story to carriers at all levels of management. The stories have to be told until decision-makers get tired of hearing them and say, “Okay, okay, we get it; we'll do it.”

Third, and certainly not least, we all are going to have to make a very large financial and development effort investment. This includes carriers, management system vendors, IVANS and agencies. SEMCI is possible, but not inexpensive.

Carriers must come to identify with the negative impact that dealing with a multiplicity of separate company Web sites is starting to have on agencies because of the separate log-ons, the entry of data multiple times, and the need to master a host of different company work flows and codes.

The net result is that rather than freeing up agencies to sell and grow as the companies want, technology is overwhelming agencies with servicing work. Agents need single-entry with multiple companies and real-time processing. Transformation Station is the technology that has emerged that has the best chance of achieving the necessary industry critical mass.

The agency management system vendors must understand and appreciate that multiple-edit systems are a substantial barrier to carriers adopting Transformation Station in significant numbers.

Essentially, carriers all have unique approaches (for example, underwriting questions, pricing, coverage) to any particular piece of business. Their technology applies unique “edits” to the transaction before the company can present a bindable package back to the agent.

This is a major issue. The edit problem has to be solved. A common-edit methodology is necessary and it needs to be put in place soon.

IVANS needs to look at Transformation Station transaction pricing very closely. It is another substantial barrier to carrier adoption. The price structure has to be made more attractive with the promise of further reductions as volume builds.

Agents have to invest in upgrading their management systems to versions that support Transformation Station functionality. This means hardware, software and training investment. Today, unfortunately, many agents systems simply are not ready for SEMCI.

Moreover, agents need to appreciate that however attractive SEMCI is for them, it is often perceived negatively by carriers, which see it as comparative rating in real-time at the click of a mouse. SEMCI, whether we like to face it or not, is perceived as something of a marketing risk to carriers–and perception is reality.

Agents, then, have to make taking the marketing risk worthwhile for companies. How? Simply by committing to grow with the carriers that invest in Transformation Station technology, and then actually following through with that volume as long as the carrier is within the competitive arena.

The payoff for following this simple but difficult formula for success is achieving SEMCI critical mass and a quantum leap forward for our industry.

The technology is no longer the primary obstacle. There is no one to blame but ourselves if we fail to seize this opportunity. In this respect a quote favored by an old mentor comes to mind:

“Upon the plains of hesitation bleach the bones of countless millions who, upon the verge of achieving success, sat down to wait, and waiting they died.” Let's not wait to leverage the technology available in the hope that something better will come along. If we do, some innovator, probably from outside our industry, is liable to trample our bones into dust.

(The Agents Council for Technology is a group of agents, companies, vendors and associations assembled by the Alexandria, Va.-based Independent Insurance Agents of America to promote and facilitate the use of effective technology solutions and business processes within the independent agency system.)

John Carmody is assistant vice president of corporate marketing and communications for Seattle-based SAFECO Insurance, which is a member of the Agents Council for Technology. Opinions expressed in this column may not be reflective of the entire ACT membership.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, July 22, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.