Such a tool is emerging into the insurance marketplace today. It is called real-time interface, and it arguably will bring the biggest productivity gain that the independent agency system has ever seen. Real time takes the benefits of the personal computer, combines them with the efficiency of single-entry comparative-rating products, and supercharges the mixture with the data richness of carrier systemsall while utilizing the connectivity power of the Internet.

The marriage of mature and new technologies is beginning to reap previously unimaginable efficiencies in independent agencies. The genius of real time is that it finally brings to fruition the dream of SEMCI (single-entry, multiple-carrier interface). SEMCI allows agents to enter the client information into their management systems only once. They are then able to performin minutesan ever-increasing variety of functions without leaving their management systems.

Its not a batch process that sends information to carriers to be processed on their end and later downloaded back into the agency management system; its done, exactly as the name implies, in real time. Some functions available today include policy rate and issue, checking a billing status, reporting a claim (including receiving a claim number), getting a claim status, and retrieving loss runs. These are available for both personal and commercial lines accounts, depending on the carrier and the state in which the agent is located.

How does real time translate into great productivity and profitability for independent agencies?

Lets go back in time about 20 years to the introduction of the personal computer. The PCand the personal and commercial lines rating programs that followedallowed many agencies to do their own rating much faster and more accurately than they could do it by hand. Agencies that adopted this new technology were able to write more business more efficiently because the carriers often would accept the agents rating, rather than face doing it themselves, a process which could take months.

The next generation of rating software was known as comparative raters because they allowed agencies to enter the client information once and then rate multiple carriers all at once. Agency management system vendors integrated these comparative raters with their programs to allow the transfer of client data into the rating program and the rates back into the agency management system.

These programs evolved from rate-based programs requiring the agent to determine eligibility and manually enter surcharges as applicable, to underwriting-based models that automatically surcharged or even knew when not to provide a quote based on the carriers underwriting rules. Although not necessarily ideal, these rating-integrated systems allowed the agent to enter data and manipulate it to provide premium quotations for multiple companies with little to no additional data entry.

The Internet was the next major innovation, and while promising, eventually led to the loss of much of the productivity formerly gained with comparative rating. As each carrier raced to put up the best Web sites for the agents, they began requiring the rating of their products to occur on their Web sites.

At first, agencies were excited and pleased with the immediacy and perceived convenience of the Web sites. No longer would the agency have to worry about their rating programs having the most recent rates or eligible classifications. The flash and thrill of the dot-com boom made agents excited to use a company Web site.

However, if ever it was possible to have too much of a good thing, company Web sites were it. As information had to be entered repeatedly at each company Web site in order to do comparative rating, agents were being pushed back 20 years. It was a great tool for the company and a hindrance to agents.

What is the difference between upload/download and real time?

Upload/download processes utilize third-party electronic mailboxes to transmit data between agencies and carriers in a batch process. Throughout this upload/download process, there is no direct communication between the agency system and the carrier system. Electronic mail is simply put into a third-party mailbox to be “picked up” electronically by each party.

On the other hand, real-time processes send data, one client at a time, to a third-party computer that translates the agency data into the appropriate carrier data format and then sends it directly on to the carriers computers. The carriers computers receive the data, interpret it, and send back the requested data to the third-party computer that translates it back to the agency in a format appropriate for their agency management system.

The growth of real-time transactions has far outpaced any other agency-carrier interface model. In September of 2002, there were four insurance carriers participating with 200 agents. In October of 2003, there were approximately 25 insurance carriers participating with 2,800 agents. In terms of “communicating pairs” (one pair is one carrier interfacing with one agency for one line of business such as personal auto, BOP, etc.), it took real time one year to reach an activity level that the traditional batch model needed 17 years to achieve.

So why are some agents not able to utilize this valuable tool for every carrier and line of business in the agency? There are two answers.

The first is the historical conflict between the way that carriers choose to provide agents access to their proprietary systems and the agents desires for single entry. However, as real-time utilization continues to grow exponentiallynot only in the number of transactions but also in the number of agencies utilizing itcarriers are beginning to see this is something they must adopt or risk being left behind.

Second, the reality of the fiercely competitive agency management system marketplace is that some vendors are muddying the waters with mixed messages and short-term solutions. The current promotion by some of “screen scraping” technology as a long-term solution is an unfortunate and ultimately counterproductive diversion from the promise of a uniform industry standard solution.

In a nutshell, the “screen scrapers” differ from true real-time SEMCI in that they dont take an agencys data stream and convert it into a format compatible with a carrier. Instead, “screen scrapers” take the agencys data and fill in the blanks on the carriers Web site. It does not send a compatible data stream back to the agency management system in real time.

This may sound acceptable to some agencies at first, but when it is understood that any change to the physical layout of the carriers Web site will result in time-consuming reprogramming by the carrier, it quickly loses its appeal. Throw in the fact that “screen scrapers” require agencies to manage separate user codes and passwords for each staff member for each carrier (something not necessary with industry solutions), and it becomes clear that this isnt the “one click” solution already being delivered by other industry solutions.

The adoption of real-time SEMCI by carriers and agency management system vendors alike is in direct proportion to the number of agencies that are demanding it.

If you are doing business with carriers that arent yet implementing real-time SEMCI and/or you are utilizing an agency management system that doesnt support it, you are falling behind the productivity curve. If you arent able to utilize real-time SEMCI today, talk with your carriers and your agency management system vendor, and dont stop asking them for it until they deliver.

Robby Dunn ([email protected]) is vice president and agency manager, Hotchkiss Insurance Agency Inc. in Houston, and vice president of Altamonte Springs, Fla.-based Applied Systems Client Network (ASCnet), the user group of Applied Systems technology.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 2, 2004. Copyright 2004 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.