SEMCI PAST, PRESENT AND FUTURE

WHAT IS SEMCI?

Definition: Single Entry, Multi-Company Interface

Single Entry: In its purest form, single entry is a process that permits an agency to enter and store an item of information one time and in one way, regardless of how often or for what purpose it is subsequently used within the agency. Single entry also eliminates the need for carriers to re-key information captured at the agency into their systems.

Multi-Company: In a multi-company environment, the agency must be able to use its system to satisfy the unique requirements of all of its carriers in the normal course of servicing policyholders. To do so, the agency's management system must have access to a database from which all necessary information can be selectively retrieved and transmitted to its carriers. In order to operate in a multi-company environment, carriers must have the means of routinely conveying their unique underwriting and processing requirements to the agency's system.

Despite the far-reaching and explosive growth of technology and the profound cultural changes that have affected all aspects of the property/casualty business, the IIAA's decade-old concept of SEMCI has withstood the test of time remarkably well.

As the industry makes the transformation from its old ways of doing business to embrace all aspects of technology, including the Internet and its proliferating services, the ongoing importance of SEMCI should not be underestimated.

Following are frequently asked questions concerning the pace, progress and continued relevance of SEMCI to an independent agent distribution system that now, more than ever, is attempting to seize the initiative and shape its own future.

1. Is SEMCI taking too long?

There is no question that SEMCI has taken too long to implement; however, the baseline for any objective measure of recent progress must begin with the December 1990 IIAA-commissioned Perot Study which led to the formation of APT. From this perspective, everyone should agree that the major obstacles that have slowed progress finally have been eliminated or reduced to manageable proportions. As a result, we now are seeing tangible progress and significant market acceptance with nearly 10% of the agency force presently capable of SEMCI.

A major obstacle now seems to be lessening. Some carriers have been unwilling to endorse non-proprietary solutions such as SEMCI simply because they believe their organizations possess some advantage in technology or market share that they wish to preserve.

Another problem that has only recently been addressed by APT and other vendors is that the tools needed to implement SEMCI have been lacking. While there has been an incredible amount of new technology, industry standards and network capabilities, the glue needed to tie all of these important elements together in a user-friendly, cost-effective set of SEMCI tools has been missing.

Finally and perhaps most important, there has been--and to some extent still is--a problem of getting the majority of carriers and agents to understand that SEMCI is not about technology but is about workflow and how independent agents and carriers do business.

2. How have carriers, agents and vendors reacted to SEMCI?

Carriers: Surprisingly, considering the importance of SEMCI to the independent agency community, it has been the carriers that have been most active. However, despite this encouraging carrier support, too many insurers still are developing or planning to develop second or third generation proprietary interfaces. Over 50 carriers now participate in APT and a similar number are implementing SEMCI with other vendors. These totals could easily be five or six times greater if the agents were more vocal in expressing their preference for non-proprietary interface to both carriers and vendors and were more aggressive in utilizing SEMCI facilities where available.

Agents: In general, agents always have been positive about SEMCI; but, unfortunately, until recently it has not been high on their shopping list. It is only in the last few years that vendor user groups and the IIAA's Best Practices initiative have focused on the magnitude of the threat posed by proprietary solutions and have energized agents to demand SEMCI solutions from vendors and carriers.

Vendors: To varying degrees, all of the following have affected the pace of vendor support for SEMCI: shrinking agency plant, decreased profit margins, too many legacy systems to maintain, smaller agency budgets, attention to download, Year 2000 conversions and, most important, a surprising lack of agency interest in SEMCI, notwithstanding IIAA and PIA support for it. Since vendor priorities are ultimately driven by customer demand and agents are their primary customers, it is understandable that some vendors have been slow to implement SEMCI. Now as a direct result of the focus on SEMCI by many vendor user groups and the IIAA Best Practices initiative, agency demand for SEMCI has increased significantly, causing increased vendor commitment to its delivery.

3. If all records could be kept at the company and agents could have ready access to them, would there still be a need for SEMCI?

Where the data is stored is irrelevant. As long as independent agents originate data and require subsequent access to it, they will need a single way to enter and retrieve it.

4. Is SEMCI cost effective?

Absolutely. Technology has brought us to the point where the cost of the hardware, software and network connection needed for SEMCI is insignificant and promises to improve still further as the benefits of the Internet and object-based technology take hold. The lion's share of SEMCI cost savings comes from workflow. Independent agents save by not having to learn and maintain multiple systems in order to conduct electronic commerce with multiple carriers. Carriers save by receiving virtually error-free data the first time a transaction is uploaded. The consumer benefits from improved service at reduced cost. Everybody wins!

5. How well does SEMCI work on the various vendor versions and platforms?

In general, quite well but like everything else, SEMCI is not immune to the "legacy" issues affecting virtually all carrier and vendor systems. SEMCI has already been proven to work in a variety of vendor environments and, if necessary, can be made to work everywhere. All it will take is an indication of agency demand and a willingness to pay a fair price.

6. Does SEMCI work for change processing?

Yes, it is working and usage is growing. Many companies are developing, testing or using change processing in a SEMCI environment. Each month thousands of change transactions are being uploaded, and before too long these numbers will be in the millions. APT supports both the ACORD Action Flag and full image approaches to change processing.

7. It seems like we have seen too many unstructured approaches in the past that ultimately cost everyone time and money. Don't we need structure and industry support to make progress?

Industry standards for electronic commerce such as AL3 have provided plenty of structure. Until recently, what was lacking was an agency community that was familiar enough with SEMCI to differentiate between self-serving carrier agendas and what was best for the overall well-being of the distribution system. To a large extent, agents now are aware of these subtleties. Today's challenge is to get everyone to begin using the many new and powerful SEMCI tools that are available from a number of reliable sources.

8. With the advent of the Internet and object technology, has SEMCI become dated?

SEMCI is not about technology; it is about how independent agents and carriers do business. SEMCI and non-proprietary interface continue to be as relevant as ever. Agents still need a single-entry vehicle for uploadable transactions that are destined for different companies, and companies still need a way to differentiate themselves in the marketplace without having to resort to proprietary products. Consequently, the supposed choice between SEMCI and new technology, Internet-based or otherwise, is not a choice at all. Simply put, the value of new technologies to the industry is that future SEMCI products will be able to deliver SEMCI in a simpler, less demanding, more manageable way.

9. With all of the new technologies how will ACORD Standards evolve?

Nothing much needs to happen or should happen with AL3, which is the primary standard for electronic commerce. With a reasonable amount of tweaking, the AL3 standards have satisfied and can continue to satisfy the industry's upload and download requirements. Consequently, we do not see a business need for any major structural changes to AL3, only enhancements. The industry has two decades invested in AL3 and now it's time for the payoff!

It is most important that we recognize the fallacy in suggesting that the Internet and object technology somehow render the ACORD standards irrelevant or make proprietary data formats any more acceptable than in the past.

10. Will an investment in today's SEMCI products quickly become obsolete because of changing technology?

Absolutely not! Every responsible vendor recognizes the need to maintain backward compatibility, since multiple technologies always will be in use in an environment where no mechanism exists to legislate a cut-off date when everyone must move from one technology to another. For its part, APT intends to assure that today's Company Module™ can send and receive data from its upcoming Web-based products.

11. If, in the future, agents can access multiple carrier systems cheaply through a Web browser, why should they care about SEMCI?

Independent agents should not lose sight of the fact that a system, browser-based or otherwise, does not qualify as SEMCI unless it uses the same entry and retrieval facilities for all carriers represented in the agency. It does not matter if these facilities are presented in a Web browser; what does matter is that all facilities (proprietary or ACORD Standard) can be navigated by the agency in the same way for all carriers.

12. What additional functionality or other benefits will the Internet, intranets and object technology offer?

Due to the inherently shorter lead times required to develop solutions, Internet protocol networks and object technology will make SEMCI and other related products more accessible to everyone more quickly and at less cost. However, nothing we have seen thus far indicates that these technologies will alter the essential business objectives addressed by SEMCI.

13. How quickly can we expect the vendors to implement SEMCI using Internet-type networks and object technology?

It is already happening at APT and elsewhere--the tools are there and the race is on!

14. If the relatively simple personal lines have taken so long, when will SEMCI be implemented for commercial lines?

Several APT companies already are planning commercial pilots for 1997. Every indication is that the "structured data" component of commercial lines (as opposed to the "nonstructured data" component) will be the direct beneficiary of industry efforts already expended on personal lines upload and download.

15. It seems that SEMCI has been five years away for the last 20 years. What can we expect over the next two years... over the next five years?

SEMCI is already well beyond the proof of concept phase and is here to stay. At APT, we envision nothing but tremendous progress and new and exciting opportunities. How universal SEMCI actually becomes is entirely dependent upon how much independent agents want it--agents must be the catalyst! *

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