By Virginia M. Bates
--John McFall, McFall Agency, Dayton, Ohio
A homily once started, "Faith can move mountains; but bring a shovel." Users of all agency automation software want the ability to move data from their systems' databases directly to the carrier's database to prompt policy issuance, change processing, and loss handling. Seeing the progress of some of their peers has given many agencies faith that single-entry multi-company interface (SEMCI) could happen in their office, too. But like anything else of value, it comes with a price of determination and hard work.
For almost a decade, users of Applied Systems' agency management system software have benefited from SEMCI availability and are enthusiastic about its benefits and their vendor's commitment to increased SEMCI availability.
Murphy Insurance in Waunakee, Wisconsin, is not atypical in having SEMCI ability with three carriers. All applications for personal lines are uploaded directly from the agency's Applied system to West Bend, General Casualty, and Heritage. Applications for commercial lines are uploaded to General Casualty and West Bend, and personal and commercial change requests are uploaded in single-entry mode to all three carriers. Heritage's upload truly is single-entry and paperless at the carrier's side. General Casualty and West Bend are not yet technologically able to bring the application or change data directly into their database, so they print the change request form or the application and rekey it at the branch office. The agency benefits from handling business for all three carriers in a consistent and efficient workflow and respects all three carriers for recognizing what is best for the agency and providing it.
Central Mutual Insurance Company has been providing SEMCI functionality to its agents for the last year. "It is the most profitable way to do business for both the agency and the company," according to Tom Coon, agency automation director for the Central Mutual. "At the agency, there is one system to learn and a singular, simple workflow so everyone does things one way. At the company, SEMCI cuts expenses because we eliminate incomplete applications and follow-up phone calls that eat up not only our time at the company, but also distract the agency personnel from sales and service to their clients."
Central Mutual originated its SEMCI upload with agency management system vendor AMS via APT (Alliance for Productive Technology) for auto and homeowners new submissions. The insurer also worked with DORIS system, another agency management system vendor, for auto new business only. Central Mutual will begin SEMCI upload of new business with Applied and hopes to offer SEMCI processing of policy changes both in the second half of 1997. Coon mentions that APT offers access to a specific technical person directly to company interface personnel. Even though Central Mutual has many Applied agencies, implementation with Applied has been slow because Applied doesn't dedicate a specific person to each carrier's interface team. This creates lots of phone tag and delays. Coon hopes that eventually all Central's agents with agency management systems will be doing SEMCI. "Some agents don't see the payback. We need to show them the benefit."
While Central Mutual does not pay for the Applied agency download software (or for the Agency or Stand Alone APT module), it does pay for the electronic data exchange costs via IVANS. "Agencies are not used to entering as much data as we require so edits can be a problem for them at first. Time and good training of our agency plant will solve that problem."
Coon emphasizes an essential point. "Agencies need to get used to comparative and integrated rating solutions. If the agency has to use several company-specific stand-alone rating products to get a rate, they may not see any value in entering it again into their agency management system in order to do a SEMCI transmission, but may prefer to upload from the carrier's proprietary system (where they just got the rate) and wait for an electronic download from the carrier." But when an agency can get a comparative rate for several carriers in one rating software product and transfer that data directly into their agency management system electronically, then not only will the agency be able to use SEMCI successfully, but they also will cut down on repetitious input and simplify workflow and training.
A problem that Coon has encountered is that some rating vendors won't load and maintain the rates of a carrier unless that carrier has a minimum threshold of users, say 10, that will agree to pay support fees for that carrier's rates. "If we have just entered into a geographic area, we may not have enough users to interest that area's rating vendor so those agents may not have comparative, integrated rating available to them. SEMCI may not seem so attractive to those agents." Central Mutual is actively working with such rating vendors to find solutions of mutual benefit.
Bill Horton, Peter Bakker Agency in Avon, Connecticut, gives an agency perspective to Coon's points. "It just makes sense to have producers do input directly into Applied because of the way Applied integrates rating with its policy system. We learned from our old system, on which only CSRs input, that all staff had to use the new Applied system. Our agency principal simply said to our producers, 'If you are going to get paid, you must do the work and the work will now be done on the system, so you the producer must learn and use the system.'"
The agency expects producers to quote on-line and merge the rating data into an application in the system; but for the agency's SEMCI carriers, the producers had difficulty in clearing the company-specific edits. Horton wants to share his "trick" with other agencies: he created a special producer code on the agency system for each producer that allows the producer to print the application for signature but not to have to deal with the edits. Horton has taken on the personal responsibility of clearing any edits prior to transmitting to the carrier.
"Everyone in our office knows the ease of doing business with our SEMCI carriers so those companies get more business from us. It saves the company money without us doing any extra work--so it really saves money, rather than just shifting it onto our shoulders the way interactive interface does."
John McFall, McFall Agency in Dayton, Ohio, doesn't need persuading of SEMCI's power. McFall's agency was a SEMCI beta site for both AutoOwners and Grange as early as 1989. AutoOwners supports both new and change transactions for auto and homeowners coverage; Grange supports new business transmission for both auto and homeowners and change processing only for auto. "A new carrier would have to offer me an awful lot if they didn't have SEMCI, to get into this agency," says McFall who knew as far back as 1989 that there would be two kinds of interface--good and bad. In his view, interactive proprietary interface is the bad kind. For almost 10 years, the McFall Agency worked with one carrier that relied on interactive interface and tried to convince them that SEMCI was the way to go. "Wouldn't you know! As soon as we parted company a few months ago, I heard they are now developing SEMCI." Another one of McFall's carriers has installed proprietary software in McFall's agency, but he explains, "We never use it except for e-mail. The only one who can do the interactive input is out on maternity leave anyway so no one uses that at all."
Hanover Insurance Company supports both batch upload (non-proprietary) and proprietary interactive. "We don't want to dictate our agents' level of automation and hardware upgrades," explains Gail Falvey, director of agency automation. Hanover currently works only with Applied for SEMCI transmission due to the degree of penetration of Applied in the Hanover agency plant. Hanover's sister company, Citizens, is planning SEMCI testing with Applied in 1997. "Agents are at different levels of releases," explains Falvey. "Some are very slow to get educated on the benefits and logistics of SEMCI and it's an investment for them to upgrade to the hardware required for new releases." But it is also expensive for Hanover or any company to keep interface working when the vendor's software is constantly being changed with upgrades and new releases. "We have to limit SEMCI availability to agencies on more recent releases and not older ones. Our proprietary product is there for agents who choose not to be current on their agency management software."
Falvey sees a new and very valuable benefit from SEMCI development. In developing edits and company-specific fields, the carrier begins to understand that there is a real cost to gathering additional non-ACORD information. "It forces us to rethink our business philosophy and the level of detail that we require. It forces us to ask ourselves whether this data has a benefit as high as the cost of developing the edits and fields." Some company-specific data is gathered simply because it has always been gathered. Doing a cost-benefit analysis brings the underwriters into the loop and makes them put a value on the additional information that companies require of agents. Ideally, in the process, underwriters take a fresh look at their whole underwriting process. SEMCI leads not only to input simplicity, but also to deeper questions of when, how and by whom business should be underwritten.
Joanne Litwin, principal of Litwin, Castle & Christ in Orchard Park, New York, lists Travelers/Aetna, General Accident, Merchants, Hanover and Central Mutual as her agency's SEMCI carriers. As a veteran of SEMCI, Litwin sees a need to educate other agencies that it does exist and then to energize them to get the message to their carriers. She has worked with both Applied and IIA-New York on both of those agendas. "Insurance is the last industry to get into automation. The year 2000 has given us a push because most agencies will have to upgrade their systems to deal with the change of century. Any agency system that can handle the year 2000 should be expected to handle SEMCI."
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The author
Virginia M. Bates has 20 years of experience in managing insurance operations for both a carrier and a large regional agency. She has a background in all property and casualty lines, experience as director of a country-wide underwriting school and direct involvement in many automated systems. As co-founder of VMB Associates, Inc., she has worked with many agencies on reducing E&O exposure, internal operations, marketing strategies, carrier relationships and successful automation. She speaks often on the evolving exposures and preventive strategies related to automation and electronic processing and documentation. She has conducted E&O audits and rehabilitation projects for agencies at the request of E&O carriers such as Fireman's Fund. She is a licensed broker and licensed insurance adviser and conducts the Licensed Insurance Advisers Exam Preparation Course in the state of Massachusetts.