“If [commercial lines carriers] could get automation they felt they could go after market share,” said Smallwood. “Some were able to leverage a lot of the platforms they had developed for personal lines.”

While the middle market for commercial lines will be able to automate their processes to some level, Smallwood doubts that middle market underwriting will ever reach straight-through processing because the underwriter remains involved in the final process.

“There are ways to automate workflow, present external data to the underwriter and run some models on the side and that’s where [carriers] are headed,” she says.

Smallwood believes every insurer that has both personal and commercial lines has to set up an environment where they get paper, electronic faxes, pdf forms via email, or they have a portal or real-time access.

“You have to create that multi-channel distribution and bring it into your back-end system and be able to navigate depending on the line of business,” she says.

Smallwood also believes the carrier’s business process has to be able handle all of the various connectivity methods.

“There are still many insurers with policy administration systems that are legacy so trying to connect data from all those sources into a legacy system is a problem,” says Smallwood. “I’m still hearing stories [from carriers] about being unable to do straight-through processing or real-time access or they can’t hook up to a comparative rater until they fix their legacy systems. The investments for policy admin are just huge. Fifty-five percent [of insurers surveyed by SMA] say they still have to invest in a modern policy admin system in order to do underwriting automation.”

Resources and dollars have helped the larger insurers tackle these issues, but Smallwood believes it is more difficult for the mid-tiers and smaller carriers.

“When you go down to the midtier, there are some companies that have made progress,” she says. “The regional carriers that are single state or single line of business have made progress, but I think those regional carriers that have both personal and commercial lines are struggling because there’s just so much to do.

What’s My Line

When discussing how well a carrier connects with independent agents, Smallwood explains you have to differentiate based on the line of business. And even those lines get broken down as well.

“If you talk to one of the top 10 carriers, the agents for personal lines and small commercial lines are entering data into systems with the ability to do real time,” says Smallwood. “But with other lines, even if they have modern agency management systems, they aren’t set up to capture all the data. When you start to peal the onion it becomes very complex.”

Smallwood estimates that only half of independent agencies have modern agency management systems that can connect them to carriers with real-time access. A higher percentage—80 to 90 percent—have agency management systems, but they are either older or outdated.

SMA research has also uncovered that for the market leaders, the majority of their business—80 to 90 percent for personal auto and small commercial—is coming through either an agency management system with real-time upload, a portal, or a comparative rater.

“Those market leaders are probably pushing anywhere from 60 to 80 percent straight-through processing,” says Smallwood.

But SMA also asked these insurers if they had mastered automated straight-through processing and only 15 percent of personal lines carriers believe they have reached that level. Another 20 percent indicate they are almost there.

“That leaves the rest in progress, just getting started or struggling,” says Smallwood.

For small commercial, just seven percent have said they have mastered the technology and 14 percent report they are almost there.

Reasons cited for these failures include workflow or the technology the agents have in place. On the back end, though, the ones that report they have mastered the approach or are almost there have built both real-time access and a portal.

“It’s not one or the other,” says Smallwood. “Depending on their book of business, some carriers have more coming business through the portal and some have more coming through real-time access, but there is still a lot of room for improvement.”

As the risks get more complex, the slower the process, points out Smallwood. Her research shows that for middle-market commercial lines, about 80 percent of the carrier’s business is being submitted via email with a PDF attachment.

“It’s not coming through the agency management system because the agents either don’t have a system that can upload or they are not keying in all that extra data that is needed for the more complex risks,” says Smallwood. “They have more than the application; there are a lot of attachments.

Portals are not a good option for the agents because they don’t want to key in all that information into several different portals.

What they have found is it’s easier to create an ACORD app using PDF and send all the attachments by email to all the carriers,” says Smallwood.

Not surprisingly, SMA’s survey found just one percent of insurers claim they have mastered connectivity and 12 percent said they are almost there. Fifty-eight percent of carriers report the primary method for receiving applications for middle market is email and 16 percent report the data is still coming to them on paper or through fax.

Of the remaining 26 percent, 20 percent is coming in through a portal and six percent through real-time access.

“To me, the middle market has stalled because it’s so much work for the agents to key in data,” says Smallwood. They don’t have the systems to accommodate that.”

Mobile Options

SMA’s research shows between 15 and 20 percent of insurers have some type of mobile project taking place in 2011.

“Most are pushing it more on the personal lines for the consumer and not necessarily for agents or brokers,” says Smallwood, pointing to services such as self service, paying a premium, or first notice of loss. “Larger companies in the more complex lines are looking at how they can leverage mobile for the brokers, but they haven’t figured that one out yet.”