The Chubb Group of Cos. is making processing E&O insurance coverage easier for agents with an intuitive, customized Web-based solution that's proving to be a smart investment.Providers of errors and omissions (E&O) insurance coverage market the product knowing that corporations are eternally liable for their mistakes and oversights.

Chubb Group of Cos. figured if it didn't provide its agents with a more dynamic tool to market E&O insurance-a coverage noted for its time-consuming complexity-it would be a grave oversight on its own part.

That's why Chubb, an $11 billion (annual net written premium) provider of specialty, commercial and personal insurance, internally developed a tool to help agents and brokers push E&O coverage to a niche audience-information and network technology firms.

Tapping the resources of its internal IT department along with the support of an unnamed technology partner, Warren, N.J.-based Chubb in July began offering a tool called E&O SMART Application.

E&O SMART creates new and renewal applications that are customized to a company's operational requirements. The application is a departure from many traditional E&O selling programs because rarely are E&O policies customized and most make customers complete applications in their entirety at renewal time.

"Our agents, brokers and customers requested a faster, streamlined application process for E&O, and we built it for them," explains Tim Ehrhart, vice president, Chubb & Son, and global errors and omissions practice leader for Chubb Commercial Insurance.

"The tool customizes the E&O insurance application process by only asking for information pertinent to the company submitting the application. With SMART Application, our producers can increase the value they provide to their clients."

The technology provides an online repository for creating, completing, submitting and tracking applications. Throughout the application process, agents and brokers can communicate in real-time with clients through a protected Web site, called Chubb, eliminating the need for additional phone calls, faxes and e-mails.

Chubb is so bullish on what SMART Application can do to enhance its business-along with that of its agents and customers-that it's offering a 5% credit on E&O policies for the customers who use SMART Application with an agent or broker.

Easing the process

While the company would not provide numbers detailing market share or annual net premiums for E&O insurance, Chubb is regarded as one of the leaders in this segment.

With market share and new business at stake, Chubb thought it was incumbent to take a lead role with a quicker, more convenient selling program for both customers and its 8,000 independent worldwide agents.

"We asked, 'How can we make this process easier?'" Ehrhart explains. "We did focus groups and asked both agents and customers about the E&O process. We then built some conceptual changes, formulated a workflow and performed validation."

SMART Application involved close collaboration between Chubb's IT unit and its E&O business unit. "Sometimes solutions like these are built in a vacuum where the business side is not taken into consideration, but the business people had a lead role in this," Ehrhart says.

SMART Application represents an IT breakthrough for Chubb in that it had not developed an electronic solution quite like this before, according to Ehrhart. "We do have other e-solutions, but SMART Application was a 'guinea pig' so to speak," he says. "We plan to use it to develop similar applications to support other product lines in the future."

SMART Application contains several key features:

  • An application wizard that walks agents through the process by asking questions about clients' business products, services, contracts and license agreements, as well as merger, acquisition and subcontractor activity. Based on the answers, the wizard generates an application tailored to suit the clients' specific business. This process eliminates irrelevant questions.
  • A secure online system that provides user IDs and passwords to protect confidential client information.
  • A policy renewal component that reduces work for customers because they only need to input new information such as updated revenue, new merger and acquisition activity and loss history.

The SMART Application uses the prior year's responses to complete the application.
Painful process

In late 2003, Chubb laid the groundwork for what would become SMART Application. Working with an undisclosed vendor, the insurer established business requirements and then tested the product last spring.

The vendor performed programming duties, such as coding and mapping, while Chubb was internally responsible for the business design of SMART Application, Ehrhart says. The program is now available to Chubb's U.S.-based agency network, and will soon come available to Canadian agents.

SMART Application is only offered to technology companies. If the project proves successful, Chubb plans to expand it to other types of businesses. Expanding the program would seem logical since most businesses face the same level of challenges with E&O policy submittals.

When processing a policy using a paper E&O application, most insurers offer a standardized form where each and every question is included-even if some questions don't apply to a particular business. Then there's the problem of coordination: A large number of departmental groups within most companies have a role in completing an E&O application.

"Multiple parties, such as general counsel, risk managers, human resources and others, must sign off on it," Ehrhart explains. "And regardless if it's new business or a renewal, there is always an application required. It's a very painful process to collect information-and do so every year," he says. SMART Application dynamically builds a customized application for businesses. Using the Chubb portal, the online application enables a client to log on to answer a series of four to six underwriting questions.

"Some questions include, 'Are you a software or hardware company? Do you have large contracts? Do you engage in mergers and acquisitions?'" Ehrhart explains.

"Each department head can log on and complete their part of the application. SMART is dynamic in that it has decision-tree logic where a new question will populate the application based on a previously answered question."

Ultimately, a Chubb underwriter retrieves the application from the Chubb portal and finalizes processing. For the next policy renewal period, a customer does not have to complete the entire application.

"All they have to do is answer a couple renewal questions. They make any changes or updates, sign off and resubmit," Ehrhart declares.

Real-time transmission

One key feature of SMART Application that enhances policy turnaround time is real-time information gathering.

A customer can be logged onto the portal completing an application while an agent can also be logged on from their end, Ehrhart explains.

One person-perhaps the customer-controls the changes being made while the other-the agent-can view those changes. The client enters information and then hits the save button. Meantime, the agent hits the refresh button on their PC and can see the changes the customer made.

Another key feature of SMART Application is it can instantly flag missing data and alert customers.

As a result, applications can't be submitted incomplete. With a paper application, often the information comes back incomplete and has to be returned for follow-up processing.

"Taking into account all the processing that Chubb agents, underwriters and customers must do to process an E&O application, it's not uncommon for a typical cycle time-from start to finish-to take 90 days," says Ehrhart.

"With SMART Application, we estimate that this cycle time can be cut in half."

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