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Real-Time Multiple Company Rating: An Important Growth Driver for our Future

by Jeff Yates, ACT Executive Director
 
Independent agents and brokers and their companies are in a war for market share.  They face unprecedented competition, and these competitors are doing everything they can to increase their sales power and productivity.  In such a market, our distribution system should be doing everything it can to make the sales process as efficient and effective as possible for independent agents and brokers, so that they can easily compare among companies, rate business and then put it on the books.  But are we doing everything we can to enhance the sales process for our agents?
 
GEICO is doing everything it can to hone its sales power in order to take business from the captive agency and independent agency companies.  GEICO spent $502 million in advertising in 2005, and Warren Buffett in his annual report said he looks forward to spending more in the future.  He also stated that GEICO was working hard on its productivity and had succeeded in increasing it by 32% over the last two years, by growing its policy count by 26%, while reducing employment by 4%.
 
And we are seeing signs that the captive agency companies—having suffered market share losses in recent years to the direct companies and to some extent to the independent agency companies—are becoming more aggressive, as manifested by their increased advertising buys.
 
In this increasingly competitive environment, most independent agents or brokers will tell you that we have made their rating and sales workflow more difficult, not easier.  We have put new obstacles in the way—especially with third party underwriting information requirements—rather than to remove them.  It can easily take independent agents one to two hours to compare rates among a reasonable number of companies and to put a new personal lines policy on the books, using today’s predominant workflow, multiple carrier websites.
 
Agents really start to wonder when they see themselves moving backwards in the rating process at the very time when they can do a Google search and in about a second obtain information from around the world.  They are seeing improvements in their automation capabilities throughout their operations, including having the ability to interface with their agency systems from virtually anywhere using their wireless devices, but they have not seen this progress in their rating and issuance workflows—with the exception of some early hopeful signs in the real-time rating arena.
 
It was this growing frustration with the current rating process that drove the independent agents in New York to bring the real-time multiple company rating issue to the IIABA National Board of State Directors this past January, resulting in IIABA’s adoption of a major policy statement urging the industry to accelerate its efforts to implement this improved rating process. This IIABA action was generated by grassroots agents crying out for help and trying to make our business better.  IIABA is mounting a sustained campaign, with ACT’s full support, to keep focus on this issue and to report on the progress our distribution system makes.
 
Real-time multiple company rating enables an agent or broker to request and receive rates from multiple carriers simultaneously working through the agency management system or comparative rater of their choice. This improved agency workflow eliminates the separate logons, passwords, multiple data entry, and complicated employee training required in today’s environment of multiple company websites.  (See “Highlights” at www.independentagent.com/act for the complete policy statement.)
 
Real-time multiple company rating gives independent agents and brokers an efficient workflow that encourages them to write new business, instead of discouraging them.  This new workflow saves agency employees time, reduces their required processing, and frees them up to focus on new sales and nurturing their relationships with their clients.
 
Achieving new growth in this increasingly competitive environment is very much on the minds of both senior company and agency managements.  At this particular juncture, given the advances in real-time technologies, real-time multiple company rating is one of the most significant, lasting things we can do to facilitate new growth.  The carrier, vendor, and agency employees working hard to implement this new sales workflow should be fully supported as critical growth drivers for our carriers and agencies.  The pioneers who have shown us by their early implementations that this much improved workflow works deserve our deep gratitude.  Now we need to take these efforts to the next level, by broadening the number of carriers and agencies participating to make this improved sales workflow the dominant method for our distribution system.
 
As the noted technology futurist Dan Burrus discussed with us at the last ACT meeting, we need to look beyond our piece of the pie, the current Independent Agency System, and ask ourselves how we can collaborate to grow the pie for our distribution system.  In commercial lines, independent agents and brokers write over 80% of the market nationally, but in several states we write a considerably smaller share of this $241 billion market, creating opportunities for growth.  In personal lines, independent agents and brokers write only a little more than 36.5% of the market, and about a point less than that in the personal auto market.  This means we are not writing over 63% of the $216 billion personal lines market and have a huge opportunity to grow our pie.
 
Burrus also discussed with us a recommendation he had made to Yahoo that seems very applicable to our industry as well.  He urged Yahoo to change its mission statement from one where it strived to be the best media and advertising company on the planet, to one where it would be the best media and advertising company for the planet.  In the same vein, don’t we want to be carriers, vendors, agencies, user groups, and agent associations which are the best for the Independent Agency System?  Isn’t this the best way to secure the strongest position in the distribution system over the long term?  The change of this one word from “in” to “for” drives a whole new perspective on our willingness to work together to strengthen the overall position of our distribution system and to make the pie bigger for all of us.
 
What does this increased level of collaboration mean?  For carriers, it means that we enable agency management systems and comparative raters to request and receive our real-time rates, so we reach as many of our agents as possible.  We write very clear specifications regarding the XML feeds we require, we test them, and we keep them updated.  We use the ACORD standards and applications wherever possible.  We collaborate with the vendors to make the process of handling our unique company edits and third party underwriting information as simple as possible for our agent users.
 
As carriers, we concentrate upon positioning ourselves in our agents’ mainstream workflows.  We do not delay delivering a more efficient sales process to our agencies out of concern about “spreadsheeting.”  Instead, we manage our agency plant in other ways to make sure we are treated fairly and write a reasonable percentage of the policies we quote.
 
We educate our marketing field staff on what we offer with regard to real-time multiple company rating and make this improved workflow one of our selling points with our agents.  We offer a series of educational opportunities to help our agencies implement these improved rating workflows, including online Internet seminars, sessions at user group meetings, in person agency assistance, and help desks.  We keep the information on our real-time capabilities up-to-date on ACT’s ACTtech website.
 
For the vendors, the increased level of collaboration means accelerating investments where necessary, so that agents are given a positive user experience with as broad a group of companies as possible when they implement the technology for real-time multiple company rating.  It means encouraging widespread carrier implementation, by making implementation as easy and cost effective as possible for the smaller as well as larger carriers.  It is also important for vendors to continue to streamline the unique company editing process to make it easier for carriers to supply the information and to keep it up-to-date, and for agents to use the workflow.  Continuing to streamline the agent’s workflow for incorporating third party underwriting information is yet another significant factor.  It is also important for vendors to provide responsive help desks and abundant training for their agency users, in conjunction with their user groups.
 
Independent agents and brokers play the critical role in convincing their national and regional companies, as well as their vendors, to make real-time multiple company rating available to them on a widespread basis.  In addition to their advocacy, agents and brokers need to implement the new technology promptly when a company makes it available, because the companies and vendors are closely monitoring agency usage in deciding whether to invest in it further.  Agents and brokers also need to collaborate with their carriers, vendors, and user groups in testing and refining implementations of this new rating workflow.
 
For the user groups and associations, increased collaboration means working closely together so that the independent agents speak with one voice and pro-actively encourage our carriers and vendors to work together to move real-time multiple company rating forward for the benefit of all.  It is important for each of our organizations to make this issue a top priority and dedicate ongoing marketing to it.  At the end of the day, we need to deliver more agencies willing to commit to the issue, advocate for it, and then implement the new workflow.
 
Real-time multiple company rating offers our distribution system an important opportunity to replace the current inefficient rating process with one that will encourage increased sales activity and free up agency employees to be trusted advisors for their clients.  All of us need to see ourselves as growth drivers for our agencies and carriers, relentlessly making the rating and sales process as easy as possible for our distribution force to generate new sales and grow our market share.
 
Let’s all commit to work together—agents, carriers, and vendors alike—to make real-time multiple company rating a reality for our distribution system on a widespread basis, and let’s commit to do it this year—in 2006.

Jeff Yates is Executive Director of the Agents Council for Technology (ACT) which is part of the Independent Insurance Agents & Brokers of America.  Jeff Yates can be reached here.  This article reflects the views of the author and should not be construed as an official statement by ACT.
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