TECHNOLOGY
E.L.M. offers special Web site for professional liability and E&O coverages
By Len Strazewski
Frederick J. Fisher is president of Executive Liability Managers (E.L.M.) Insurance Brokers, Inc., based in Los Angeles, California.
Access accuracy and accelerated response. Agents and brokers are always looking for broader, faster and more effective service from their wholesale brokers and underwriters--and as the commercial insurance market continues to harden, producers need more help than ever.
"In this market, agents and brokers have to shop their clients more than ever to get them the best price and coverage available. And what causes us the most problems is getting bogged down in the application process--waiting for a response from the underwriters about whether or not they will be a market in some reasonable price range," says Carol Lantz, president of Professional Insurance Brokers, a Phoenix, Arizona-based commercial insurance brokerage.
"We need to know where we stand in terms of coverage availability and pricing as fast as possible so we can know what to tell clients about their prospects for renewal or replacement coverage. That has become essential to the service we provide," she says.
For the past six months, Lantz has been jumpstarting the marketing process for errors and omissions and professional liability coverages by using a new online application and quotation service from E.L.M. Insurance Brokers, (http://www.e-o.com) a Los Angeles, California-based wholesale brokerage and managing general agency that specializes in professional liability coverages.
Since December 2001, E.L.M. has been receiving applications for coverage at E-insurebynet.com, a special Web site that serves as an automated clearinghouse for E.L.M. insurance markets serving Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Utah and Wyoming. To date, more than 500 producers have registered as users.
The free Web site allows producers and commercial insurance buyers to prepare a simplified application for coverage and then automatically forwards the application to underwriters at a list of pre-approved insurers. The underwriters respond--usually the same day--with non-binding premium indications that could become binding upon review of a formal underwriting submission.
"It simply expedites everything," Lantz says. "It saves us a lot of time in determining what level of coverage from what market is available and at what pricing level. In this kind of market, the expedited service can be a real business edge."
Frederick J. Fisher, president of E.L.M., says E-insurebynet.com is a natural development in technology that improves the efficiency of the insurance marketing and underwriting process--coming after nearly 20 years of his personal interest in computers and office automation.
E.L.M. staff includes (seated) Amy Scaccianoce, claims manager and assistant underwriter; and Fil Cawili, Program Department underwriter.
Fisher, a California insurance broker, has more than 20 years of experience in professional liability claims adjustment and underwriting. He is senior technical advisor for The Professional Liability Manual published by the International Risk Management Institute and is a member of the Southern California steering committee of the Professional Liability Underwriting Society.
As a professional liability claims adjuster in the early 1980s, Fisher was an early adopter of personal computers, creating a personal computer-based office network before many systems were available for the insurance industry. He developed a Web site for his wholesale brokerage operations in 1996 and explored insurance industry portal sites that attempted to create online insurance markets for commercial and personal lines consumers.
He founded E.L.M. late last year with 20 employees and launched
E-insurebynet.com in January to host a proprietary application automation and forwarding system for professional liability and miscellaneous errors and omission coverages.
Unlike insurance industry portal sites, E-insurebynet.com doesn't attempt to do too much, Fisher says. The system supports only a limited number of insurers and a narrow band of coverage classifications. Quotations are not binding, he adds. It is designed to support but not replace the advice and counsel offered by retail agents and brokers.
"Personal lines insurers have had some dramatic success selling personal and small commercial lines with automated underwriting systems, and that is clearly the way that part of the industry is moving," he explains. "But large commercial risks and more complicated coverages such as professional liability and directors and officers liability insurance require a higher degree of service.
"Each case is unique and buyers rely on their agents and brokers to communicate their unique underwriting situation. One risk is definitely not exactly like another, and pricing and availability of coverage relates directly to the unique information," he says.
The new Web site is designed to facilitate and accelerate that process, helping buyers and their agents and brokers to focus their work on the markets most likely to provide the right coverage levels and most appropriate prices, he says.
Agents can also use the site
as a marketing resource by
providing a transparent link into
the E-insurebynet.com application process on their agencies' own
Web sites. Mid-South Insurance Office, Inc., a Memphis, Tennessee-based agency with eight employees, has been experimenting with
E-insurebynet.com for about three months and recently added a transparent link to the site from a special risk management Web site designed by the agency to promote eight classes of professional liability insurance.
Mid-South President Tommy Thompson says it is too soon to tell if the online application service will be a boom or a bust for the agency, but he says the design of the system matches what he believes his customers want.
"Most of the professionals we work with need to expand their day. They want to take care of administrative business matters in the off hours when they are free from more pressing business activities. This includes shopping for commercial insurance," he says.
"What they are looking for is some sort of 'ballpark' estimate so they can plan their budgets and start the coverage process rolling," he says. "E-insurebynet.com is designed to do just that."
Thompson says the service will also improve his own agency's efficiency in responding to interested customers. "Too much of our time is spent playing telephone tag, taking information from faxes and telephone conversations, typing it and forwarding it to underwriters. This system lets our customers and prospective customers enter their own information and automatically check the markets.
"When they know about what they can get for about how much, we can take it from there and provide the completed service and risk management counseling they may need," he says.
Fisher says the online operation has already proven itself for the wholesale brokerage. Volume has been increasing steadily as the firm has promoted the Web site with its producers, and the ratio of initial submissions to coverage binding has jumped from about 25% for initial online applications to more than 75% after the firm follows up on the online apps. Fisher says the brokerage has an overall binding ratio of about 90%.
Automation has also saved the salary costs of about two employees that the firm would have hired to handle the increase in application volume on a manual basis.
E.L.M. represents about 18 admitted insurance companies receiving applica-tions online for more than 40 categories of errors and omission and professional liability insurance, including accountants, architects and engineers, attorneys, real estate brokers and insurance brokers. The brokerage firm also markets specialty liability risks, including employment practices liability insurance, directors and officers liability insurance for public, private and nonprofit corporations
and partnership and fiduciary liability insurance.
Key markets include Continental Casualty Co., Employers Reinsurance Corp., Executive Risk Indemnity Co., National Casualty Insurance Co., National Union Fire Insurance Co. and Philadelphia Indemnity Insurance Co.
While the online process has been popular with agents, underwriters are still unwilling to migrate completely to Web-based underwriting.
Gregg Higgins, underwriting manager in the Mission Viejo, California, office of Philadelphia Indemnity Insurance, says that while his company's experiments with E-insurebynet.com have been satisfactory, he remains skeptical of online underwriting as a regular business practice.
"The insurance industry in general has failed to develop an effective online application technology for agents and brokers that supports multiple companies in more than 10 years of trying," Higgins says. "Individual companies have built their own systems for their own brokers and even those have had only mixed success."
Higgins says his company participated in the early trial of
E-insurebynet.com and in general has found few flaws with the application technology, but he still has some concerns about the prospects for a steady flow of qualified business.
By giving direct access to buyers over the Internet, the site does expedite the application process, he says, but delays the screening process by which a broker builds an underwriting history and communi-cates critical information to insurers for serious buyers seeking renewals.
"At the moment, there doesn't seem to be an effective way for us to tell the serious coverage applicant from the price shopper who is just testing the market. When a user requests a premium indication--which is all we can offer with the limited underwriting information we can receive online--we can't know if this is an important prospect for new business or someone who is just trying to find out in the mid-term before renewal if his broker is getting him a fair price," Higgins says.
As a result, Higgins says he is more interested in the follow-up e-mail from brokers, which is more likely to provide additional underwriting and business information about the application than the automatic application from the Web site.
Application volume "hasn't been overwhelming so far," he notes and the insurer has bound only a handful of risks from more than 70 online applications. However, Higgins admits that the technology shows promise and says he hopes the Web site builds a steady volume of business of serious applicants.
"Even if the Web site starts to generate a high volume of applications, the key issue for us will be the hit ratio--the number of risks we actually underwrite and bind. That's what will make it worth our while," he says. *
The author
Len Strazewski is a Chicago-based freelance writer specializing in marketing, management and technology topics. In addition to contributing to Rough Notes, he has written on insurance for Business Insurance, the Chicago Tribune and Human Resource Executive, among other publications.
For more information:
Web site: www.e-o.com