The potential savings for agents and carriers using real-time interfaces amounts to thousands of hours-and dollars-each day.A billing inquiry initiated through an agency management system takes two minutes, whereas the same inquiry takes eight minutes by phone, and nine minutes by carrier Web site. Those are the results of an agency workflow study conducted last year by Applied Systems Client Network (ASCnet), the user group for Applied Systems Inc., University Park, Ill.
If every one of the 40,000 independent agencies across the country initiates only three billing inquiries a day, the entire distribution channel could save at least 12,000 hours per day-hours that could be spent-with fewer people-selling policies or servicing more customers.
So why haven't more agencies signed up for real-time capabilities through their agency management systems? That's the question many carriers are asking.
"We're really glad that some agents are finding these services to be valuable, but the (progress) is slow," says Chris Garson, agent business IT leader at Progressive Casualty Insurance Co., Mayfield Village, Ohio.
Progressive works with approximately 6,500 independent agents who use Applied's agency management system. And, after Progressive launched billing inquiry for those agents last October, 50 to 100 agents have been signing up for the service each month. At this rate, "it will take me years to get this deployed," Garson says. "I'd love to see the pace step up."
Adoption is slow
Progressive is not alone in experiencing slow agency adoption rates. Travelers Property Casualty Corp., which has been a leader in developing and implementing ACORD XML standards, also has seen fewer agents sign up than the company anticipated, particularly for electronic inquiries, which are relatively simple, single-carrier transactions.
Approximately 2,500 independent agents who use Applied Systems' software sell Travelers insurance, according to Patrick Gee, vice president of operations for personal and small commercial lines at Travelers, Hartford, Conn.
By March, about 400 of those agents had signed up for the carrier's billing inquiry, policy viewing and claims-loss run for commercial lines. Several hundred agents are using Travelers' real-time new business quoting service for commercial lines, and about 50 are using it for personal lines.
Part of the challenge for new business quoting is that few carriers are offering this service, Gee says. Therefore, although agents want comparative rating for more companies through their agency systems, it's still not a reality.
"We would characterize (agency) adoption as not having our initial assumptions about where we'd be at this point, especially for e-service transactions," Gee says. "We really believed there would be broad immediate acceptance. So it has been a little surprising."
It's surprising because agents have been asking carriers and vendors to provide real-time capabilities within their agency management systems. Real-time inquiry and single-entry multi-carrier interface (SEMCI) promise to eliminate re-keying of information and reduce the number of steps an agent takes to receive and compare quotes, issue policies, and make billing, policy and claims inquiries.
Call for SEMCI
"Companies should be directing their investment dollars toward single entry and away from company-specific duplicate entry," said one agent responding to a survey conducted early last year by ACORD User Groups Information Exchange (AUGIE). Nearly 9,000 agents and customer service representatives participated in the survey, which found that duplicate data entry was the biggest time waster for agencies (see "Agents Reveal Tech Headaches," August 2002, page 8). When asked where carriers should spend their money, respondents said endorsements, new business, quoting and billing status were most important to them.
Also, this year, the AMS Users' Group collected 2,100 signatures from AMS users petitioning for SEMCI reform. This agent population alone represents $14 billion in annual premium.
Extrapolating from these figures, AMS users collectively represent $48 billion in annual premium volume, 106,000 in daily billing inquiries, 74,000 in daily claims inquiries, and 102,000 in daily quotes.
Heeding agents' call for real-time communication, carriers have been responding over the past six months-although some say progress has been too slow.
Following the AUGIE survey, Applied Systems, eight insurance companies and IVANS Inc., Old Greenwich, Conn., made real-time interfaces available in October to 7,500 Applied users. Since then, several top carriers have been launching real-time transactions regularly.
Until recently, Applied users had access to more real-time transactions than AMS users through the IVANS Transformation Station-an Internet data exchange based on ACORD XML standards, which was developed by Applied Systems and licensed to IVANS.
That changed in March, when Windsor, Conn.-based AMS Services Inc. unveiled TransactNOW, which uses the TIER Platform from BCF Technology, Carlsbad, Calif.
Easier for carriers
Initially, TransactNOW provides billing and claims inquiry with eight carriers, but the technology is designed to deliver additional real-time transactions between carriers and agents.
According to sources, TransactNOW requires no development for carriers to use it, because it interacts with the carriers' Web sites at the network level, whereas Transformation Station is based on carriers and agency systems "meeting in the middle" using ACORD XML standards. On the other hand, with TransactNOW, the onus is on the agency end to adapt when carriers make significant changes to their Web sites.
This is causing some controversy about the effect TransactNOW will have on the adoption of ACORD XML standards. "The benefit of using Transformation Station is the data I'm passing to the (carriers) is all ACORD-so I don't have to deal with proprietary data," says Doug Johnston, executive vice president of Applied Systems. "When (a carrier) changes from an in-house system to a Castek system, for example, I don't have to worry because we're (using) ACORD in the middle."
Carrier neutrality
Carriers are claiming neutrality toward TransactNOW and Transformation Station-and support for ACORD standards.
"From our perspective, it doesn't matter if we use a Transformation Station path or a TransactNOW path-as long as we're able to deliver the functionality that agents are looking for," says Ken Fries, assistant vice president of e-business at The Hartford Financial Services Group, Hartford, Conn. "But we will use ACORD-standard processes wherever possible where (transactions) interact with our mainframes."
AMS developed TransactNOW because carriers haven't been able to deliver transactional capabilities quickly enough, according to John Day, senior vice president of AMS Services. "We were hearing from a lot of carriers that they wanted things quicker, faster, better," he says. "They wanted to leverage the investment they had already made-and they were talking about the robust Web sites they had spent millions on."
So far, agents and carriers are impressed with TransactNOW, according to Day. Seven days after TransactNOW was introduced, 350 agencies were using it, and 50 to 100 were downloading the plug-in every day. "The carriers are saying, 'Wow. This is a lot more (response) than we've ever seen,'" Day says.
As for Applied users, at press time, 1,300 were using real-time carrier capabilities via Transformation Station, according to Applied's Johnston. Transaction traffic has increased 40% every month for the past four months, he said, expecting March to end with 15,000 transactions.
In addition, in one week alone, Acuity had launched billing inquiry through Applied, National Grange Mutual went live with business owners policy quoting, Royal & SunAlliance launched billing, and Encompass Insurance began offering claims inquiry, Johnston says.
"Just like upload and download took five to six years to become the standard way to do business (a decade ago), real-time will take awhile," Johnston says.
There are two primary benefits to real-time transactions, says Mark Galante, e-business manager for personal insurance at Warren, N.J.-based Chubb Group of Insurance Cos. Chubb is launching real-time inquiry for agents through both IVANS Transformation Station and TransactNOW.
"The first is happier, more productive agents-because now they have information at their fingertips and they can provide world-class service without as many steps." The second is lower costs for Chubb. "If we can move a lot of these transactions to a self-service channel, we can benefit from that with our expense ratio," he says.
Indeed, in addition to agency savings, carriers can save millions of dollars each year if agents use real-time interfaces. For instance, Progressive reported that it saves $3 every time an agent makes a billing inquiry via IVANS Transformation Station, which costs only 15 cents per inquiry, rather than calling customer service.
Because Progressive receives 1.5 million to 2 million billing inquiries per year, it could conceivably save $4.5 million per year if all those inquiries came through an agency management system instead of through the company's call center.
Carrier savings
Eliminating one phone call is equivalent to eliminating 20 cheap transactions, according Progressive's Garson. "So it wasn't a huge leap of faith to say, 'This is going to have a good balance sheet return for me.'"
Still, transaction volume needs to increase significantly before Garson can statistically prove his point. "I'm going to watch how this goes," he says. "Agents can obtain billing information in several ways from Progressive. They can use real-time interfaces through (their agency management systems). They can call customer service. They can go to Progressive's Web site. And, they can use the interactive voice response (IVR) system.
"I don't have enough volume to analyze what (channels) I'm cannibalizing yet," Garson says. "I save a lot of money if I'm eliminating a phone call. But if I'm eliminating an IVR transaction or a Web hit, I'm spending money."
