SEMCI: Not Yet Ready for Prime Time

In this age of Blackberries and instant messaging, insurance carriers and agents alike are focused on finding high-tech solutions to conduct their businesses. Enter: Single Entry Multiple Carrier Interface-also known as SEMCI.The concept of SEMCI technology sounds simple. Vendors create applications that enable independent insurance agents to access one site, hopefully through their own agency management system, enter data once and then communicate with multiple insurance carriers to obtain real-time quotes.

Some programs that achieve at least part of the SEMCI goal have existed for 20 years, but according to industry sources, the creation of products that offer real-time access to multiple carriers is still in the infancy stage.

"SEMCI sounds wonderful in theory, but in reality we need many more insurance carriers and agencies to invest in it to move it forward," says Kimberly Harris-Ferrante, vice president of research for Gartner Inc., Stamford, Conn.

Gartner and the Council for Independent Agents and Brokers (CIAB), Washington D.C., conducted a study earlier this year to determine trends in electronic transactions for agents and brokers.

"The technology itself needs to mature and evolve," Harris-Ferrante says. Right now, many of the larger carriers have invested in SEMCI technology and many agencies are willing to pay for upgrades to their systems, but many more medium-sized and smaller players have to invest in the technology to maximize its potential, she says.

Benefits, concerns

In addition, Harris-Ferrante notes, studies show that despite less investment at this time, small and medium-sized carriers will reap the greatest benefit from SEMCI when the technology matures over the next couple of years.

At this point, however, the cost of SEMCI and other concerns are still deterring smaller carriers and agencies from getting on board.

In addition, many large carriers have invested heavily in their own company Web sites, populating them with unique and proprietary information that make it difficult to obtain accurate quotes from many carriers at one time, industry sources say. In this environment, agents have to access individual company Web sites, one by one, to obtain quotes.

What's more, even if agents could enter data once and obtain quotes from several carriers, comparing price isn't the only consideration agents make when recommending a carrier to a customer, according to the Gartner/CIAB study.

Service, claims handling and company solvency ratings are also important. In addition, some agents are wary of new technology pushed by carriers-saying it often comes with little support.

"Carriers make the big investment in getting products installed, but training for agents doesn't always come with the product," says Jerry Fox, vice president of James M. King & Associates, a medium-sized agency based in Bloomington, Minn.

Fox, who is also president of the AMS Users Group, speaks to agents around the country about AMS products such as Transact NOW, Transformation Station, and AMS 360-as well as a Rackley Solutions' product called SetWRITE.

"SetWRITE is ready to accomplish the SEMCI goal, but the product is in its infancy," he says. Moreover, right now 40-plus insurance carriers are contracted for SetWRITE, which represents a small percentage of the country's P&C insurers, he adds.

"Property/casualty insurers tend to be reticent when talking to their peer companies about SEMCI, but from the way they are interacting, SEMCI or something SEMCI-like has to be an increasing trend," says Alpa Patel, CIO for Hartford's property/casualty e-business & technology, Hartford, Conn.

"When an agent can easily pass application information to multiple carriers using limited data entry, that agent is far more likely to send those carriers more business to consider and ultimately to write," he says.

Yet, another stumbling block has been adoption of standards by companies and agents that enable computer systems to speak to one another using the same language, industry sources contend.

"ACORD XML standards are paving the way for implementation of real time, Internet-based interfaces," says Hugh Anderson, director of connectivity for AMS Services Inc., a Bothell, Wash.-based agency management system vendor.

Standards count

Anderson says ACORD (Association for Cooperative Operations, Research and Development, Pearl River, N.Y.), developed the newest XML (Extensible Markup Language) standards and that many-but not all-carriers have already adopted those standards.

"The growth and adoption of the XML standards by all parties is essential to delivering real-time single entry workflow," says Anderson.

"Instead of an agent accessing multiple carriers' Web sites, each with their own unique log-in and data entry, our agents can now retrieve comparative quotes, process policy changes and obtain inquiry information from multiple carriers from a single point of connection," he explains.

"We continue to work with our carrier partners to drive awareness and education with the agents so that they can take full advantage of the efficiencies this technology enables."

Others agree about the importance of ACORD's XML standards.

"The Internet and Web services are defining global standards for real-time business communication and transactions. XML has become the universal message format" says Doug Johnson, executive vice president, interface services of Applied Systems Inc., University Park, Ill., a SEMCI pioneer.

Johnson explains that the Internet and Web represent the basis for a new form of SEMCI, and ACORD has defined insurance-specific messages in the form of its XML standards.

"It's important as we evolve SEMCI into the world of Web services and that vendors and companies agree to base the messages on ACORD XML. If we do not get buy-in on this, then we will end up with a proprietary mess," Johnson says.

Other alternatives?

CIAB's answer to the lack of adequate SEMCI solutions is to create its own universal Electronic Insurance Exchange, which will enable agents to enter or upload middle market and risk management submissions to one Web site for all their carriers-and then exchange data with those carriers in one format. The Exchange is expected to be operational by mid-2006.

The Electronic Insurance Exchange will address the issue agents who must spend 25 to 45 minutes just entering or uploading one carrier's information, and memorizing multiple passwords, according to Frank Sentner, CIAB's director of Strategic Technology, Washington. D.C.

"Multiply the need to access five or six carriers separately and you begin to see that agents must choose between their own profitability and their customers' expectations of receiving the broadest possible range of choices to meet their insurance needs," he says.

According to Sentner, seats on the Exchange will be sold to insurance agents and brokers. "Those carriers who choose not to be represented on the exchange will have to be accessed the old fashioned way-a disadvantage that will surely translate into lost revenue for them," he says.

What specific factors will hurl SEMCI into greater use in the coming years? That's unclear. Will CIAB's Electronic Insurance Exchange be the answer-or will carriers, large and small, implement SEMCI for agents?

One key finding of the Gartner/CIAB study is that SEMCI in today's market is not required to drive new business with agents and brokers. Industry sources agree that as SEMCI products evolve in the next couple years, as standards are adopted and as more carriers implement SEMCI, this finding will likely change.

Susan McKenna is a business writer based in Chicago.