By James P. Kellner
Reprinted with permission. ASCnet Quarterly, Third Quarter 2006

As with any customer-facing enterprise in today’s fast-paced business environment, your success depends on speed, efficiency, and accuracy—three qualities not yet typical of today’s relationship between independent agencies and their partner insurance companies.

To compete today and in the future, you must run your agency as efficiently as your partners and your competitors run their businesses. That means inserting your business directly into that of your carriers so you can process business as one unit. How to accomplish this? Through agency-company interface.

For most participants in our industry, interface means download. Almost all Applied Systems agencies use download. In fact, Applied Systems has won the ACORD Download Vendor of the Year award for 13 consecutive years, and 58 percent of all industry download is sent to an Applied Systems product.

For the past six years, however, Applied Systems, ACORD and many leading carriers have designed, developed, and deployed real-time interface technologies to provide seamless interaction for policy sales and service among your agency, TAM® and Vision™, and your carrier partners. The new transactions include Inquiries, Policy Rating, Policy Issuance, Real-time Claim Reporting, and the new Applied Alerts!™ .

Each transaction is designed to provide you with more efficiency in selling and servicing insurance. Are these transactions perfect? No, but they are a step in the right direction for enhancing efficiency and partnership between you and your companies.

The Simple Life?

In the pre-Internet days, life was simpler for an independent agency:

• Rating and underwriting rules were straightforward, and comparative rating software was cheap, easy, and accurate.

• MVRs, Credit, CLUE, and other reports were mostly insurance company tools.

• Policy submission for issuance was Upload-Print-Mail or Print-Fax. Regardless of method, the policy was issued.

• Inquiries were easy because you knew your underwriter, claims manager, and branch manager as well as you knew your own family.

• Trust was the dominant form of security and privacy.

• For the most part, you knew who was competing against you for customers.

Then, our world became complex, FAST!

• In an effort to predict better underwriting results, carriers are producing new rating and underwriting logic that grows more complex every month. Frankly, the profitable results indicate this trend will continue. As a result, existing comparative raters simply cannot keep up, and more and more carriers are withdrawing support.

• Underwriting systems have an endless supply of third-party information about your customers to insert into their pricing and tiering models. Gone are the days of asking, “Had any tickets or accidents?”

• Carriers are trying to reduce operational costs, in part by outsourcing policy data entry to you. This trend is evidenced by the number of companies requiring your agency to enter all new and endorsement business directly into their Web sites, making it necessary for your agency to learn how to operate each of your carrier policy systems.

• Your agency’s policies, claims, and billing might be handled halfway across the country or the world, and the entity handling them may not be your partner insurance company. Your branch manager could be your best friend but still be unable to service inquiries in a quick phone call.

• Security and privacy of customer information are more than critical. They are becoming mandated.

• The insurance companies you represent may now compete with you for customers—joining the likes of your bank, Internet provider, and various affinity programs.

Moving Forward

The old ways of rating, underwriting and policy service are not working. As an industry, we must accept that and move forward. It is up to you and your agency to embrace real-time interfaces as if the future of our industry relied upon it. Embrace and extend them. Take ownership of them. If they don’t work, tell someone. Tell everyone. Make the interfaces work for you. Take control of the future.

Consider download for a moment. Most agents could not function without it. But it was not always as efficient as it is today. Download is what it is because agencies embraced it, extended it, and made it work. In fact, many agencies realized how to use download to grow their agencies.

James P. Kellner is chairman and CEO of Applied Systems, Inc.