Dan Carmichael, President and CEO, IVANS, Inc.
"SEMCI is here now and it is working.
"Electronic communication between insurers and their customers has begun and is increasing rapidly. Both internal and external communication is being enhanced through messaging and private Intranets.
"And IVANS is at the center of this revolution with the solutions and creativity needed to help insurance companies and agents improve service, while at the same time, drive down the costs of insurance products," Dan Carmichael, president of IVANS, says.
"We are enabling Intranet connections right now and have taken the steps toward providing a full messaging center for the entire insurance industry--in effect, an industrywide Intranet," he continues.
"We introduced SEMCI Services™ in 1996 and it is working.
"IVANS has become much more than a consortium that helps to drive down communications costs for its insurance company and agent customers."
This is how a conversation with Dan Carmichael goes. It is a rapid-fire affair where his excitement can hardly be contained. You get the feeling that IVANS is moving so fast that he can't keep up with the progress with simple conversation. "We have to move from a company that facilitates transactions at a lower cost to one that reaches the decision makers of every one of our customers. The savings that have been realized thus far, thanks to our efforts to lower transaction costs through improved communication, are significant; but the big savings will come when we reach the decision-maker's desk."
Carmichael's dream--a dream that he is working to bring to fruition in the very near future--is for IVANS to become the insurance industry's pathway to electronic commerce. "This industry needs a unified approach to electronic interface," Carmichael maintains. "The benefit to all parties will be enormous--insurance consumers will enjoy lower costs and faster service; agents will enjoy reduced paperwork, improved access to more companies at lower cost and reduced expenses across the board; and companies will be able to communicate more effectively with both customers and agents. It's the classic win-win-win situation."
To accomplish the goal of becoming the insurance industry's unified pathway, Dan describes the current strategic directions being undertaken by IVANS. "We are focusing on four key strategy areas: growing the interface business; delivering electronic commerce solutions and services; developing consulting services for members that will help advance their business processes; and continuing to build our presence in industry organizations to develop communities of common interest."
The interface business
"This is our core business," he points out, adding that "it is the primary way that we attract new members and build our community of users." Carmichael goes on to note that 1996 was a very good year in terms of growth. IVANS added more than 25 companies, and the number of interfacing pairs grew to more than 60,000 pairs from just under 40,000 at the end of 1995. He predicts that when the market matures, IVANS will have around 125,000 interfacing pairs. "At the current pace, we should reach maturity in 18 months to two years."
He continues that, in order to continue this growth, IVANS faces two challenges--keeping its current company members which constitute most of the large property/casualty carriers (IVANS members write an estimated 80% of the P/C volume in the United States) and attracting more medium to small carriers. "The regional and specialty companies have been providing most of the growth in new members in recent years," Dan notes.
One of the keys both to retaining current members and attracting new members is lower costs. In 1996, IVANS introduced an opportunity for companies to lower their assessment fee payments by increasing their use of the network. "This will lower their cost of doing business via the IVANS network; and as companies increase their connections, their per-agency costs should decline. We view the lowering of costs for our members as one of our primary goals," Dan says.
In addition to lower costs, IVANS has introduced a number of services designed to help medium-sized and small carriers better utilize the network. SEMCI Services™ provides a package of services that offer a turnkey solution to companies who might not have the internal resources or knowledge to connect agencies for interface. The services include: interface education, interface strategy development, agency surveying, EDI translation and reformatting software and support, underwriting edit development software, data compression software, and help desk support. Companies who purchase all or part of the package of services receive upload and download implementation and on-site support. "It will take a company only 60 days to be up and running," Dan adds.
The Canadian property/casualty industry is another area for growth. Agency-company interface is not as mature in that country as in the United States. IVANS is working with a Canadian association of companies and developing a more aggressive strategy to build this market.
IVANS also is busy outside the traditional property/casualty business. The network already has more than 1,000 life company-broker connections and is very active in the health care area as well. The Blues represent one of IVANS' largest customer groups. In fact, the health care companies account for around 20% of the traffic on IVANS.
Electronic commerce
The huge increase in electronic mail has made it clear that more and more commerce will take place electronically. "Our new MailConnectSM product that was announced in September will support any mail product," Dan notes. "It is completely invisible to users, making it a perfect platform for communication between insurers, agents and clients."
This new messaging hub is the "foundation for the development of electronic commerce applications that will not be limited to standards-based EDI transactions." Point of sale products and connections to the Internet are among the services that will be available. The hub also will make it easy for customers to move seamlessly between mainframe and LAN or PC-based systems. Private Internets or Intranets is another area where both marketing and information exchange between insurers and their customers is expected to occur. In fact, analysts predict rapid growth in business Intranets. "We already are enabling Intranet connections for many of our customers," Carmichael points out.
Consulting services
"As long as we are viewed by our customers only as the lowest cost reseller of networking and telecommunications technology, then those same customers may go elsewhere for those services," Carmichael notes. "At the same time, we will not be able to attract new clients who believe that their own knowledge base is insufficient for them to take advantage of our product offerings. Those are the two principal reasons that we have entered the consulting field. Our members view us as partners in their quest to improve their business results. As we continue to provide new services that help them accomplish this, our consulting services will be there to convey the information to them. We want to reach the point where every customer believes (s)he needs our expertise to be successful."
Dan continues that consulting will be one of the best ways for IVANS to reach the decision makers at member companies and agencies. "The improvements to the bottom line that can be realized through our services will be most dramatic when implemented and utilized from the top down," he maintains. "That is why we need to become a partner with these decision makers."
Consulting already is a key part of IVANS' participation at advisory councils, user conferences, executive conferences, Customer Surveys and executive contacts. "These sessions are as important for us to find out more about our customers as it is for them to find out about our services," Dan says. "As we learn more about each member, the information viewed collectively will help us design products and services that best serve their needs and that help strengthen our close partnership with our members."
The new SEMCI Services product involves a large part of consulting in order to help small and medium-sized companies that don't have the knowledge to implement interface. "IVANS has a unique knowledge about agency-company interface as well as the largest group of users in the insurance industry," Dan says. "By imparting this information to potential clients, we help both them and ourselves."
Common interest communities
"While the original concept of building a large community of users to aggregate buying power and achieve lower networking costs still remains valid," Carmichael says, "it is equally important for IVANS to do this so that we are viewed as an integral part of the insurance community. When we enhance the abilities of service providers to the insurance industry, for example, we are ultimately helping our members achieve better bottom line results over the long term." He points to the use of the IVANS network by reinsurance companies via the IVANS/RINET initiative to verify payment as one example.
Reaching out to insurance industry groups is an equally important part of this strategy. The recent selection of IVANS to be the Internet access provider for the CPCU Society is an example of the success of this program. (For more information, see the separate article on the CPCU decision.)
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