Technology can be a tough row to hoe for small and mid-sized agencies, Fuher acknowledges. Among the benefits that the ASPN network offers agencies is a significant reduction in the start-up expense for hardware and software.
Ask any farmer about the impact of technology on agriculture and you're certain to get glowing comments about how much more efficient and productive agriculture has become because of technology. For insurance agencies, however, more technology hasn't always yielded similar results. But a partnership between computer consulting firm Fuher & Associates, Inc., and Applied Systems, a provider of automation software, systems and services to the independent property/casualty market, is capitalizing on the idea that in certain instances, less means more. The concept is known as a server farm.
In order to understand where insurance technology is going, it helps to understand how it's evolved. Here's a quick history lesson. In the early stages of agency automation, during the 1970s and early 80s, batch systems were about the only game in town. In the "good old days," agencies would type invoices on standard multi-part forms that included customer codes along with policy and commission information. At month-end, one part of each of the invoices processed was "batched" with other accounting information, such as accounts payable and accounts receivable records, and mailed off to Safecom or ARC to be processed. Within a week to 10 days, the agency would receive a package back in the mail with monthly customer statements, P&L statements and other documents and reports.
The next stage of automation enabled agencies to shorten the access time to month-end information. Agencies began buying computers and bringing them in-house. A large number of vendors sold software systems specifically designed to help agencies run their offices. The advantages to having direct control over the back office processes are obvious, and it would be hard to argue with the efficiencies that most agencies have gained with in-house computer systems.
Craig Fuher, president and CEO of Fuher & Associates, Inc., at the farm--the server farm, that is.
In the process of gaining these efficiencies, though, there was a downside. Many agencies had to add staff to manage their in-house automated systems. And, in addition to all the other aspects of the agency that need to be managed, the automated system became one more. Add to that the accelerated pace at which technology changes and agencies are hard-pressed to keep up.
The emerging stage of agency automation may offer relief from the unrelenting pace of technological change. Using Internet technology, agencies now can rent time on an agency management system that is running on a computer that is located in another part of the country. The full functionality of the system is available without all of the demands of having to purchase and manage the equipment in-house. Essentially, this is an updated approach to the "batch" system many agencies started with and one which may help agents get back to doing what they really should be doing: selling insurance.
Fuher & Associates' (FAI) Application Service Provider Network (ASPN--pronounced "aspen") is one of the first examples of this new type of service, referred to as a "server farm." FAI has a number of network servers set up in its office, just as your agency has its own server on-site if you currently operate a network. The difference is that FAI personnel manage the network and take care of any problems that arise for each individual agency subscribing to the ASPN network service. FAI is working with Applied Systems to provide the Applied Advantage software program to agents using only an Internet connection.
Among the benefits that agencies realize from using the ASPN network are a significant reduction in the start-up expense for hardware and software as well as having Fuher & Associates provide the agency the expertise necessary to manage the computer system.
The system itself is relatively simple. The individual user in the agency connects to the Internet service via dial-up, ISDN, DSL, cable modem or frame relay. Each individual workstation in the agency is running a small piece of software that has the appropriate IP address and security information to connect to the ASPN system located in Fuher's office in California. The agency employee simply clicks on the ASPN icon and when the connection is established, the employee sees a screen that is similar to a Windows 95/98/NT desktop. This screen is actually running from the ASPN computers. Each user has a unique profile that allows the individual to customize his/her desktop so that it looks the same each time he/she connects.
"There are independent agents who haven't had access to a top-of-the-line agency management system ... We provide access to such a system so that agents of all sizes can do what they need to do technologically."
Once the user is connected he/she simply clicks on the Applied icon and starts the Advantage product just as if it were located on the agency's office network. While connected to the ASPN servers the agency user still has access to the agency's local printers, CD drive and other resources. For the user, ASPN screens look just like another Windows session on the PC.
At FAI's California location, the "server farm" computers are set up so that each agency on the system has its own section of hard disk space for data and software program files. The access to that portion of the disk is available only to that individual agency. FAI does not commingle agency data and uses NT-level security to prevent one agency from accessing another agency's data. The Internet connections at the FAI office consist of a group of high bandwidth lines (all at least T-1) with direct connections to the Internet backbone. FAI is already planning for an even higher bandwidth connection in anticipation of continued growth.
FAI is currently targeting agencies that can use Applied's Advantage software product, typically agencies with between one and five employees.
FAI and Applied are looking at the ASPN network as a new software distribution model. There are no technical limitations in this type of operation. According to Robert Juracka, senior vice president, national sales manager for Applied Systems, "FAI exhibited the ability to handle the technical aspects of this initiative and, even more importantly, has the insurance expertise to assure that the end users' needs are served by the most competent of hosts." Juracka says Applied benefits because, "This is a great development opportunity and testing environment for new features/EDI initiatives/and e-commerce technologies."
An agency also can use the ASPN network to run other complementary software products such as rating and premium finance programs, if that software application is capable of operating in a Windows NT/Terminal Server environment. However, appropriate licensing issues must be addressed with each individual software vendor. FAI continues to test specific rating applications and carrier-specific software products to determine if they will operate properly in the ASPN environment.
Whether an agency needs to have an internal network also depends on the particular requirements of the individual agency. Some offices may benefit from having a small network at their location for third-party applications. A common solution for two- to four-user agencies is to use a peer-to-peer network arrangement for printer and file sharing. This is an inexpensive solution that has the added benefit of allowing each user to share the agency Internet connection.
Want to give it a try?
Once an agency lets FAI know it's interested in more information about the ASPN network, FAI gathers some preliminary data and arranges for a representative from either FAI or Applied Systems to visit the agency for a demonstration of the ASPN system with the Advantage product. The agency needs a higher speed direct Internet connection, any Pentium-class computer workstation with Windows 95/98 installed, and a laser printer capable of printing the Advantage ACORD forms.
Because of the interest in ASPN, FAI and Applied are creating migration paths for agencies that are already using the Applied software to enable them to move onto the ASPN system. Currently each request is being handled on a case-by-case basis. According to Juracka, "Advantage is a logical place to start because of our initial target market. Now that the concept has been validated, we are formulating a strategy for additional product offerings."
The cost of the ASPN system includes a $6,995 initial fee. A flat fee of $250 per month for the first user and $75 per month for each additional user also is charged. This fee provides complete access to the Applied Advantage product, two days of on-site training provided by Applied Systems (Internet-based distance learning may be introduced soon), an initial copy of the Advantage Interactive Computer Based Training CD, and telephone support on the Advantage product. In addition, FAI provides support on any connectivity issues.
According to Fuher, insurance carriers are excited about ASPN also. They see the ability to interact with one technically competent source as a great advantage in interacting with small agencies. They also see it as a mechanism to exploit other data exchange opportunities not yet adopted by the industry.
Other issues
Internet connection One of the challenges for the smaller agency is finding an affordable high-speed connection to the Internet. The new higher speed connections are generally available in major metropolitan areas; however, high-speed access in other areas is getting better daily. An agency can always use a standard dial-up connection if it can consistently get a speed of 40K or above. While the performance is not as good, it may be good enough for many agencies.
Software performance Will software applications run satisfactorily over the Internet? The technology underlying the ASPN network is already proven and is being continually enhanced. The reason the performance is so good is because only keystrokes, mouse clicks and video changes are actually being sent over the Internet between the computers at FAI's server farm and the workstations in the agency.
No telephones What happens when telephone lines don't work? The Internet was built to withstand a nuclear war, so the chance of the entire Internet going down is unlikely. This is not to say that in certain instances a local connection will not fail or an abnormal increase in activity won't cause the response time to slow down. However, with access to high-speed connections, the reliability of the Internet keeps improving.
If the telephone lines are down for an extended period of time, all you need to do is find a working telephone, connect your computer, and your office is up and running. This also means that anyone with an Internet connection can be working--anywhere.
Conclusion
There are many factors to consider when an agency is thinking about outsourcing its mission critical software applications.
Craig Fuher highlights some of the more important points. "I think that the conversation, or debate in some cases, about this new type of software distribution mechanism is often misguided. The issue should not be whether or not it is cheaper for the agency out of the gate, but whether it makes sense economically over the long run. Have independent agents gotten so bogged down in the day-to-day management of technology that they don't have time to do what they are in business to do?
"What's more, there are independent agents who haven't yet participated in the technology arena for all the reasons we have discussed: cost, lack of expertise, recurring cost, etc. These agents have not had access to what I consider a top-of-the-line agency management system. What FAI and Applied provide is access to such a system so that agents of all sizes can do what they need to do technologically.
"This project will allow the industry to leverage the Internet and take advantage of EDI (electronic data interchange) opportunities that did not exist previously. I can see a day when an agency will be able to interact with the carriers on a real-time basis and potentially trade blocks of risk at predetermined intervals by posting all the necessary underwriting information in a secure area and letting the carriers bid on the risk. We are not there today, but remember, we live in Internet years, which are equivalent to dog years."
Taking advantage of what the server farm concept has to offer is not right for every agency, but it is an option well worth exploring for many agencies.*
The author
Steve Anderson is a licensed agent and head of American Insurance Consultants (AIC), which provides consulting services on how to maximize profits using common sense technology. He is a founding partner of MarTech, Inc., and is a member of the TAAR Network. He can be reached via e-mail at steve@SteveAnderson.com or by phone at (817) 684-0713.
Applied Systems
University Park, Illinois
Web site: www.appliedsystems.com
Contact: Bob Juracka
E-mail: rjuracka@appliedsystems.com
Phone: (800) 999-5368
Fuher & Associates, Inc.
Brea, California
Web site:
www.fai-net.com
Contact: Craig Fuher
E-mail:
craigf@fai-net.com
Phone: (800) 789-2567