Only a matter of time

The insurance industry has not always been at the forefront in embracing new technology. However, this is changing and today advanced technology is playing an increasing role in commerce and streamlining the transaction process. Many people heralded the birth of imarket as an ideal solution to changes in buyer behaviour and in how customers and intermediaries prefer to access services.

Most people recognise the need to reduce costs, particularly on activities that do not provide value for the customer or improve speed and accuracy of service. As an industry we have been talking about this for years. In personal lines, for instance, relentless competitive pressure and the application of web and full-cycle electronic data interchange technology has enabled great strides to be made in streamlining the transaction process. imarket lays the foundations for the pan-market integrated electronic trading that will underpin the cost and service improvements needed to meet customers' demands for value and service.

Historically commercial lines business has been perceived as complex but over the last 10 years or so more sophisticated actuarial analysis and pricing and the development of rating tools have enabled insurers to develop auto-rated, small-package business such as Shops, Offices and Tradesmen.

It should be natural to see the journey towards electronic trading in small commercial lines business as one of trial and error and yet the industry tends to focus on what did not work and label something a failure if it is not instantly successful.

Some initiatives did not have the intended success, such as the attempts to create commercial lines trading on the personal lines EDI model and the moves to create an industry portal. Perhaps these were false dawns but that does not mean the vision behind these efforts was wrong. Maybe the changes were just too early, or the approach was not right or the technology not sufficiently developed. Whatever the reasons for them not taking off, it became evident quite quickly that they were not going to succeed and the industry moved on, learning valuable lessons along the way.

At Zurich, our investment in developing our commercial extranet led to us launching the first fully synchronous quote and bind facility for commercial package business in 2000. Today many insurers offer brokers the facility to place business online.

The development of insurer extranets undoubtedly influenced calls for a broker portal, ultimately leading to the development of imarket. So what is different now? Why will imarket succeed when, arguably, history is against it and when use to date is lower than some might have expected?

The need as far as possible to automate the basic transactional process of placing and administering insurance business is widely accepted. The main target is to eliminate duplication of effort between broker and insurer since unnecessary intervention, potentially increased error rates and subsequent reworking add time and cost.

Technically that has been possible for some time but it is the development of XML-based web services and data standards that have enabled data exchange across the internet, allowing centralised rating services and real-time communication between broker and insurer systems.

That is an important distinction compared with conventional EDI, allowing insurers to offer a single rating service to multiple broker systems. A key role of imarket is to facilitate and manage the data standards these underpin. This is technical but important none-the-less.

Competitive edge

Most broker system providers have developed systems for commercial lines business that encompass full risk-data capture. As yet penetration of these across the broker market is relatively low but it is accelerating. It took many years before personal motor EDI systems were accepted as essential and, in time, a point will be reached for commercial lines systems when brokers that have not upgraded could be significantly disadvantaged. In the meantime early adopters have the potential to gain competitive edge.

Much effort is being put into integrating synchronous (real-time) quote and bind services for the main package products by the major software houses and imarket insurers. The founding panel has integrated available products with one or more software houses. Over the coming months and years this number will increase.

To some the speed of integration may seem slow but this is a technically complex process involving sizeable and costly projects. The fact that the first integrations have been completed illustrates that the composite infrastructure is in place and business is flowing between integrated software houses and insurers. Adding further products is not effortless but can be done more quickly than before.

The intention is for this process to be seamless but the somewhat invisible role of imarket, acting as the hub between the broker and insurer systems, should not be overlooked. It is not just about package products; more complex products such as Combined and Fleet are part of the picture, albeit with underwriter intervention and negotiation is expected to continue to play a key role.

Superficially it might be easy to assume that if an insurer has an extranet with auto-rated products it would be relatively simple to connect those to imarket to enable faster integration of products.

Mapping those products to open-market standards, however, requires a redesign of the rules that drive our rating engines to minimise the number of quotes that fail simply because the data received does not exactly match what the rating engine expects. Individual insurer extranets have generally been designed around their own products and rules. This is something Zurich is taking seriously and is committed to getting right. As more business flows through, experience will be gained.

What of the imarket portal, the website that brokers see? This offers brokers the opportunity to complete a single data-entry form for multi-insurer quotes. A number of insurers' extranets are mature and rich in functionality and continue to be a valuable tool to brokers. But many brokers do not wish to rely on a single insurer and to fill out a different data-entry form for each.

A growing number of products are available using imarket data-capture forms (such as Shops, Office and Pubs and Restaurants). As insurers integrate more synchronous auto-rated products over the coming months, instant comparative quotes will become normal. That will make imarket increasingly compelling, particularly for brokers with older commercial systems.

Some users have complained that the data-capture forms are too long as they are longer than the typical single insurer extranet data-capture form. This is inevitable, as they must meet the differing rating rules of many insurers but it is still quicker to complete than re-keying multiple individual forms.

The next development of imarket will look at improving the data-capture forms and making them more user-friendly. Technology in this area has progressed since imarket was first designed and better forms software is now available. Much like the transfer to imarket, this will not happen overnight but the project has commenced. This is an example of incremental improvement, which is a keystone of any long-term venture and demonstrates commitment to the portal and its users.

The quote-confirmation documents created from multi-insurer quote requests have also been criticised as being unfriendly and difficult to follow. However, these are open to individual insurers to format. For example, a shop-quote request to Zurich from imarket will result in a document similar to what the broker would get from the Zurich extranet.

Seeking improvements

Mid-term adjustments and renewal functionality are also being looked at as the long-term aim is to achieve full-cycle capability. Not everything can be done at once, however, and completing quote and bind across a range of products remains the priority. Some insurers hope to provide electronic cover notes via imarket, further enhancing its overall functionality. Collectively and individually we continue to seek improvements to the imarket experience.

Speculation about what has been achieved so far against expectation, in terms of the number of products available and the functionality, has led many to assume that imarket is failing. If there is a failure it is in the management of expectation. In imarket the foundations are being laid for trading that are expected to last a long time. It is not a sprint but a marathon, in which we have completed many miles but still have some way to go.

However, the core infrastructure is in place and it works. Products are beginning to roll out faster. The dynamics and drivers that led to imarket's formation remain valid. The momentum is building and it is now only a matter of time before trading via imarket, whether portal or broker system, becomes the norm.