The Breakthrough in Agency Automation
Based upon a brief history of agency automation written for the 80th anniversary issue of American Agent & Broker, this article describes how agency automation has moved over the last decade from being a source of frustration for many agencies to a major contributor to increased agency productivity. Whether you are talking about agent-carrier interfaces, download, or the emergence of agency management systems, the history of agency automation is an interesting one characterized by independent agent, carrier, and vendor leaders who articulated a clear vision and made a real difference in the efficiencies that independent agencies enjoy today.
For much of its history, agency automation was a source of agency frustration because of its cost and unfulfilled promises. Remember “Paper-free in 83” or the promises to achieve SEMCI (Single Entry, Multiple Company Interface) in the 80s and 90s?
Fortunately, there has been a sea change over the last decade in the quality and functionality agency automation now offers, coupled with agent-carrier interfaces that really deliver. Agencies taking advantage of these advances are cutting redundant and time consuming processing and replacing it with revenue generating sales and pro-active service.
Many agencies are virtually paper-free in personal lines today and increasing numbers are working on small commercial business now that carriers and vendors have improved their commercial lines download. The great progress being made with Real Time is putting independent agencies within striking distance of achieving the agents’ vision of SEMCI—and it is only going to get better.
The history of agency automation is also the story of how independent agents and carrier and vendor leaders can make a real difference in the evolution of the technology and workflows available to our distribution system by becoming involved at the industry level in user groups and organizations like ACT (Agents Council for Technology) and AUGIE (ACORD User Groups Information Exchange).
Agents’ Vision for Carrier Interface
The agents’ overall vision to be able to work in a consistent manner with multiple carriers has been remarkably constant over time. In 1906, an agent petitioned the National Association of Insurance Agents (NAIA, now IIABA) to take the lead in developing standard applications and procedures for dealing with the carriers! This agent was ahead of his time, but as a result of the foundation work of several California agents and western based carriers starting in 1968, NAIA and 12 carriers formed the ACORD Committee within the agents association in 1970 to begin the development of standardized applications and forms.
In 1975, ACORD became a separate corporation and has since grown into the international standards body for the insurance industry. In the early years it was extremely difficult to get the carriers to agree on common forms, especially applications. But through agent persistence over several years and the leadership of several companies, the logjam eventually broke and today there are thousands of standardized ACORD forms without which the agency management systems of today would not have had the standards necessary to design the data fields in their systems and generate common applications.
In addition to having standardized forms, however, the prescient agents in 1975 wanted to develop an agency universal terminal that they could use to access multiple carriers electronically. To further this goal, NAIA formed the EPIC Committee which had a meeting with several carriers in Point Clear, Alabama that lead to the formation of the Insurance Institute for Research (IIR) in 1977 to study agent-company operations automation. IIR studied the concept of the agents universal terminal and also began the development of batch electronic standards which eventually became the basis for the downloads that save agencies so much time today.
Out of IIR emerged the need to create IVANS in order to provide the industry with a shared data communications network to save cost. IVANS today is still the entity that most carriers and agencies use to aggregate and transmit carrier downloads to agencies each evening. While IIR was successful in creating the first electronic standards for the industry along with the creation of IVANS, there was not sufficient support to move forward with the universal terminal concept that many agencies wanted to see. In 1982, ACORD & IIR merged bringing together the entity that developed both the paper and electronic standards for the industry that we know today.
During the 1980’s and 1990’s, the agents made great progress with standardized forms and personal lines download but still had to contend with the inefficient uploading of data to the carriers. First the carriers placed their proprietary terminals in agent offices and then some carriers and vendors tried to achieve SEMCI by implementing batch uploads using the standards but this approach only met with limited success.
The Internet Creates Major Change
With the advent of the Internet in the late 90’s, carriers saw an opportunity to build their own carrier Web sites to increase the information and functionality available to their agents as well as to reduce their own processing costs. As these Web sites proliferated, agents again were faced with having separate and inefficient workflows for each carrier, including the need to logon to each carrier’s site, remember the carrier’s password, learn how to navigate the site, enter the same data again and again to compare quotes (even though the data was already sitting in the agency management system), and train each employee on multiple carrier workflows.
Fortunately, the Internet and the Web services used by carriers for their proprietary Web sites also sowed the seeds that enabled enterprising agency management system vendors to create a workflow that allows agencies finally to realize their long held vision of a SEMCI workflow. It is called Real Time.
Real Time – A Major Breakthrough
Real Time enables agents to work with multiple carriers in a consistent way through their own systems; it handles logons and passwords to carrier systems and Web sites automatically; and it eliminates having to re-enter data that is already in the agency management system. Real Time includes inquiries (billing, policy view, claims, etc.), endorsements, and quoting through their agency management systems and comparative raters.
In the 2008 IIABA Future One Agency Universe Survey, agencies ranked Real Time billing, claims, and policy inquiry as the technology having the greatest impact on their productivity. And it is no wonder. In the January, 2009 Real Time Campaign Agency Survey, the agents using Real Time (inquiries, endorsements, and/or quoting) reported saving ten hours a month per employee on average. One agent calculated that this time savings translated to the equivalent of $3,000 annually per personal lines employee!
Real Time is fast becoming the predominant workflow used by agents to perform transactions with carriers, supplanting carrier proprietary Web sites. That same 2009 Real Time Campaign Survey indicated that 54% of the agencies with agency management systems are doing Real Time inquiries and endorsements. 43% of agents are using personal lines real-time rating through the agency management system or comparative rater and 18% are performing commercial lines real-time rating. The amount of real-time quoting in both personal and commercial lines is growing significantly in 2009 because of the tremendous time savings agent users of this functionality are deriving. Another very positive sign is that 180 carriers and carrier groups are now offering at least some real-time functionality. That’s a 58% increase in two years!
The Evolution of Download
In 1988, a group of savvy agents and carrier representatives under the auspices of the associations and ACORD stepped forward to spell out the actual functions effective interfaces must possess from the agents’ perspective. They formed the Interface Systems Requirements (ISR) panel which made the crucial recommendation in 1990 that download should be the starting point for current interface development. This gave a clear direction to interface development for carriers and vendors that broke a log jam and resulted in a proliferation of download implementations. Personal lines download is one of the greatest success stories to-date in the advance of agency automation in terms of the productivity enhancements that have resulted from it. Even today, agents encourage carriers to implement download first, then Real Time.
Agent-carrier pairs implementing personal lines download continue to grow. Today there are 170,531 such agent-carrier pairs. Agencies can save significant additional processing time by implementing direct bill commission download that automates the entry of commission statement information into their systems. Agents are also taking advantage of claims download where available to get back into the claims loop and to automate the entry of claims data into their systems.
Commercial lines download is the next big opportunity area now that significant steps have been taken in recent years by individual carriers, vendors, and industry groups to improve the quality of these downloads and to reduce the overwriting of agency data. Today there are 42,067 agent-carrier pairs that have implemented commercial lines download representing an 18% increase over the prior year. Commercial lines download is providing many agents with significant productivity benefits and I encourage agents to test it again with their carriers now that these quality improvements have been made.
Agency Management Systems Become the Hub of the Electronic Agent
It all started back in the 1950’s when vendors emerged to do agency accounting on a batch basis. From these roots, the first agency management systems emerged still focused on automating the accounting function. With the approval of ACORD standard applications, these management systems were then in a position to create a policy and client data base so that agencies could service clients from the system and use it as a marketing tool to cross sell. Agency management systems also were sensitive to the E&O risks agents faced and developed activity logs that track every transaction performed by the system as well as permit the capture of client conversations and events. Most recently, the focus of agency management systems has broadened importantly beyond internal agency operations to agent-carrier connectivity using tools such as Real Time and download.
During this evolution in the functionality of the systems, we also saw the introduction of the PC, windows, color, email, and the laptop which made these systems much more attractive for agency principals and producers to use. Now agency managers can generate invaluable management reports from these systems to oversee their agency operations.
Today the truly electronic agency is emerging, eliminating paper wherever it can. The agency management system provides the hub for the agency’s information, and the agency’s other systems, if needed, integrate with the management system as much as possible. Thanks to the Internet, agencies no longer need to have their agency management system on site. It can now be housed at the vendor allowing the vendor to be responsible for updates, maintenance and proper back ups. In addition, agents can access their systems and work from anywhere that the Internet is available.
Agents once again have played a key role in the evolution of the automation available to them by working with their agency management system vendors through their user groups to provide continuous improvements in functionality. These user groups also provide invaluable education and online services to their agent users to help them get maximum benefit out of their systems.
Agent Advocacy at the Industry Level
We have seen how small groups of agents have made big impacts in the evolution of agency automation for the better over time. That critical agent involvement – coupled with carrier and vendor leaders having similar foresight – continues today.
In 1999, the Independent Insurance Agents & Brokers of America (IIABA) created the Agents Council for Technology (ACT) to put a more consistent and permanent focus on industry automation issues from the agents’ perspective. The immediate catalyst was the impact the Internet was starting to have on the industry. At the first ACT meeting, the carriers made an urgent plea for the development of new standards based on XML for transporting data across the Internet. ACORD responded promptly and its XML standards today provide the basis for the industry’s Real Time transactions.
The agents, carriers, vendors, associations, and user groups involved in ACT are working on:
improving agent-carrier connectivity and workflows in the standard as well as E&S markets
promoting best practices agency workflows
addressing agency and agent-carrier interface security issues
helping agents with their online marketing using Web sites, search engine positioning, and social networking
extending quoting and servicing functionality to clients through agency Web sites and
assessing major technology and societal trends that will impact our distribution system and identifying the industry’s “Must Do” issues arising out of these trends.
ACT has created a number of resources to assist agencies and the industry in these areas which are available at www.independentagent.com/act.
Also in 1999, ACORD established AUGIE (ACORD Users Group Information Exchange) to bring together all of the agency management system user group leaders. ACT and AUGIE closely coordinate their activities and often meet back to back, so that they avoid duplication and communicate a consistent message. AUGIE has created several reports and tools to assist agencies in adopting the latest workflows (www.acord.org, click on “Advocacy” and then AUGIE). AUGIE’s top priority in 2009 is to increase the implementation of commercial lines download.
A key to ACT and AUGIE’s success has been the unprecedented level of involvement and insight being provided by carrier, vendor, user group, and agent and industry association leaders. The interest by the carriers and vendors in working together to further the agents’ ease of doing business is greater than I have ever seen it in my 34 years in the business.
The coming together of the industry to create the Real Time/Download Campaign in 2007 is a great example of the high level of industry partnership that is currently occurring on agent-carrier workflow issues. The Campaign has been hugely successful in driving increased agent and carrier implementation of Real Time and now hopes to accomplish the same result with commercial lines download. The Campaign has also developed excellent materials to assist agents with their Real Time and download implementations (www.getrealtime.org). Another great resource on what Real Time and download functionality particular carriers and vendors offer is found at www.ACTtech.org.
Agency automation tools are meeting the needs of agencies better than ever before and are critical to the functioning of the successful agency today. But the evolution of agency automation is a journey and our work will never be done as we continue to react to and incorporate the technology enhancements that become available. It is reassuring that the industry has ACT and AUGIE in place keeping a constant focus on these issues with unprecedented support by the different stakeholders. But we need more agents, carriers, and vendors to get involved at the industry level. As this brief history has shown, a few committed people can make a real difference in the evolution of agency automation, creating lasting benefits that improve the daily work of virtually every independent agency employee.
Jeff Yates is the executive director of the Agents Council for Technology (ACT) which is affiliated with the Independent Insurance Agents & Brokers of America. Yates can be reached at firstname.lastname@example.org. See ACT web site at www.independentagent.com for The Best Practices Guide to Agency Business Processes and Workflows. This article represents the views of the author and should not be construed as an official statement of ACT.
[Editor's Note: If you haven't visited the ACT area of the IIABA web site, please do so. There is a wealth of knowledge in the form of publications, audio and video presentations that will assist you in taking advantage of technology. In addition, you'll find out where the Agents Council on Technology is heading on these important issues.]