Advisen product levels the information playing field
for smaller agents and brokers
By Michael J. Moody, MBA, ARM
"Brokers can now begin to take a more consultative approach to their business."
-- David Bradford, Executive Vice President, Advisen, Ltd., New York City
Few industries in the United States are more information based than insurance. Despite this fact, good quality data (i.e., recent and relevant information provided in a timely fashion) is in short supply in the insurance industry. Everything that we do revolves around information and yet, as David Bradford, executive vice president of Advisen, Ltd., New York City, points out, "We do such an enormously poor job as an industry in leveraging our available information."
And for the most part, the cost of this lack of quality data is borne by the insureds. Lack of credible data is a pricing consideration that is built, in varying degrees, into every underwriter's premium indication. While the industry has made investments in its information technology systems, the payoff, on an aggregate basis, has resulted in little improvement.
A novel idea
Several industry professionals had long recognized this information shortcoming. And at a meeting in a Manhattan Starbucks in March 2000, Bradford, an ex-Swiss Re executive, and Tom Ruggieri, a managing director at Marsh, shared ideas about how to solve the problem.
They believed that there was a significant amount of information available to brokers, underwriters and risk managers. However, as Bradford notes, "none of it was being accessed or utilized properly." At that point, there were so many avenues to get the information that it was too difficult to track down. "Part of the problem is that users are unaware of the availability of critical data," he points out, "and part of it is they do not know how to get it." And as Conning & Company noted in its recent study, "Data Warehousing and Data Mining in the Insurance Industry: Floods of Information, Fountains of Knowledge," "The reality is that many areas are unwilling to give up control of their data and so access is limited to the traditional 'data elite.'"
After the founders reviewed the situation, they concluded that there was a "great opportunity to assemble a digital information product that was accessible and organized in a way that would be useful to professionals in the insurance industry." Advisen was launched in October 2000, and its strategic information product was introduced at the beginning of 2002.
The original information product was primarily directed at the management liability area. Bradford and Ruggieri both have extensive experience in the areas of directors and officers liability and fiduciary liability policy. They believed that the distressed state of the insurance market for these product lines created an excellent opportunity for a new business. Bradford says that the product essentially is "an aggregation of a vast amount of information on issues related to these lines of coverage." The information included specifics on financial, legal, and regulatory aspects as well as the latest coverage-specific news items. Also included was insurance-specific information regarding policy forms and exposure data, and the latest market information such as limits, retentions, and premiums.
In developing the product, Advisen began to utilize information from a wide variety of sources. For example, they have been successful in obtaining current marketing information, anonymously, from brokers on a continual, real-time basis. They are a repository for up-to-the minute news from thousands of newspapers and professional journals from around the world. Additionally, Advisen was appointed as the administrator of the Risk & Insurance Management Society's (RIMS) Cost-of-Risk survey. Results for the survey provide yet another valuable source of proprietary information.
Badly needed information
From the beginning, the target audience for the Advisen information product has been brokers and underwriters. And over the past couple of years, brokers have discovered the value of the product, according to Bradford. He believes that there are several primary areas that appeal to the brokerage community. The first area of interest is the extensive benchmarking feature that is included in the product. "Being able to incorporate the RIMS Cost-of-Risk data into the benchmarking information provides Advisen with a unique historical view of insurance costs. This, in turn, provides brokers with a broad base against which they can measure their own success. Brokers have found real benefit in having access to this up-to-the-minute, real-time data," notes Bradford.
Another aspect of the product that has met with success is its loss development feature, Bradford says. With this feature, clients can trend and develop losses. The loss analysis also includes triangulation and benchmarking. This portion of the service provides Monte Carlo simulation models and other risk financing models. Bradford points out that this is an important feature since many underwriters are beginning to require that losses be reported on a fully trended and developed basis.
In addition, the product has a comprehensive prospecting tool. This database provides brokers with significant amounts of data regarding a prospect's demographics. Included in this database is information about a prospect by industry groups, company size, location, number of employees, sales, and a variety of other marketing criteria. Access to this type of data "allows a broker to better focus their marketing efforts," Bradford says.
But it is the policy comparison system that Bradford indicates is "far and away, the most used feature by brokers." This section includes detailed policy comparison information and is currently available for directors and officers liability, errors and omission liability (both lawyers and accountants professional liability), fiduciary liability, environmental liability, and excess and umbrella liability coverages. Bradford also notes that Advisen has "recently launched a medical professional comparison module for hospital and nursing home professional liability." He says that workers compensation will be the next coverage line to receive attention.
The Advisen service also includes one other significant feature--research on insurance-specific topics, Bradford notes. Advisen acts as an outsourced research department for the broker. He says this greatly expands the research capabilities of the broker and puts them on a more even footing with national brokers. "It also lends itself to a more consultative style of brokering," he explains.
Right place, right time
After reviewing the Advisen product, many insurance professionals wonder out loud why this has not been done before. Indeed, Advisen's management team has also wondered the same thing. While the product was in the discussion stage of development, management did a competitive analysis of similar products. To their surprise, Bradford notes, "there were no insurance-related service firms providing similar types of comprehensive industry data." What competition did exist came from other financial service sectors and was not designed to meet the needs of brokers and underwriters.
Advisen currently has about 100 insurance professional firm clients. Most of these clients have more than one "seat" per location. Bradford states that there is a significant "buzz" about the company's product right now. As a result of this word of mouth endorsement, interest in the Advisen information product is quite high. The company will be introducing itself to the industry at several national insurance-related conferences, most notably RIMS.
Conclusion
Bradford believes that today's distressed insurance market can benefit greatly from the Advisen information product. Most people in the industry acknowledge that something new must be done. "If things are going well, the industry has never shown that they are very proactive," states Bradford. He also notes "transparency has never been high on the list of have to haves. At this point, however, many professionals realize that access to better information could help solve the problem. And not just better information is required; it must be packaged to make it more useful."
Bradford says that brokers that utilize the Advisen information product can bring value-added services to their customers, and thus differentiate themselves for their competition. Further, as he points out, "Brokers can now begin to take a more consultative approach to their business." It's the mid-sized brokers who can benefit the most, he says. "Clearly, the greatest benefit from Advisen comes from firms that do not have the internal resources to replicate the kinds of tools and databases that a large company would." *
The product essentially is an aggregation of a vast amount of information on issues related to various lines of coverage.
For more information:
Advisen, Ltd.
Web site: www.advisen.com