Author: Susan LaBarre, Co-Chair, ACT Real-Time Rating Work Group
In July 2015, ACT executive director Ron Berg held a discussion with a number of interested industry representatives to determine interest in the topic of real-time rating and see if a work group on the topic should be formed. The recommendation for the work group progressed when Jim Armitage and I hit the ground running in August as co-chairs of ACT's new Small Commercial Real Time Rating Work Group.
We are looking at how we as an industry technology community can help the small commercial segment take advantage of rating systems that decrease manual input and increase speed and accuracy in the quoting process. As we have talked, it has become clear there is general agreement on a handful of things: (1) carriers are spending a lot of money on developing real-time rating solutions, but—when they roll the product out—they aren’t getting robust agency uptake; (2) carriers and agents are frustrated because they see value in real-time rating but just haven’t achieved a consistent, workable solution yet; and (3) out of all the general commentary, we need to figure out what the most significant pain points are. Of course, we agreed on numerous other matters, but these rose to the top as focal issues.
The Real-Time Rating Work Group has attracted one of the largest memberships of any ACT work group ever—52 members at this point, evenly split between carriers, agents, vendors and association members. The size of the work group might present a great opportunity to develop subgroups that home in on (1) improvement of the current state (bridging) and (2) developing the desired end-state of true round-trip real-time rating, as Ron Berg mentioned.
We sought comments from our new work group members on the subject, and with their excellent and varied input, we were able to build a sort of collage depicting a segment in need of many solutions. There were, however, so many good suggestions and comments that we needed to distill them in order to provide a targeted road map that would allow us to take the first steps toward our destination: workable real-time rating for small commercial lines. We decided that, to hone the discussion in a manner that best reflects stakeholder concerns, we would send out a fairly simple survey to members of the Agents Council for Technology. The survey will help us determine how many agents and brokers are using a bridge solution and how many are using a real-time rating solution. It also gives those not using real time the opportunity to rank each of seven reasons they don’t use such a rating product.
Those seven reasons listed on the survey are: needing similar workflows among carriers, experiencing too much differentiation between underwriting questions, finding it’s easier to go directly to the carrier’s website, having problems with connectivity or setup, receiving too many error codes when we do use a real-time rater, having an overall challenge with commercial-specific data (e.g., loss runs etc.), and finding no solution that fits the agent’s current workflow.
The survey ran from Oct. 18 to Oct. 31 and went out to carriers, agents, vendors and association members in the ACT community. Once we get all the responses compiled, we as a work group will analyze the data and report it out. I hope we will be able to zero-in on the top pain points. Our goal is to work together as an industry to strengthen the independent agency channel. Maybe we will be able to develop from the survey and work-group members’ input a best practice guide that boosts real-time development and adoption. We will definitely be sharing what we learn with the wider ACT membership.
One of the things we are discovering as we receive stakeholder input, and that I expect we will need to tackle before we go much further in our recommendations and analysis, is that we as an industry need to clarify the definition of “small commercial.” Is it under 50 employees? Is it revenue-based rather than employee-based? How different is small commercial from “micro commercial”? These are issues that need to be hashed out because processes and programming are responsive to agency business profiles. It is important to keep in mind that the more complex the risk, the more difficult it is to rate and the harder it is to develop easy-to-use automated solutions that work for the risk.
Some of the challenges I expect we will hear about are technology-related issues across the industry and our inability to provide agents with an easy-to-use, consistent user experience and an accurate, fast quote they can “take to the bank.”
So can we fix everything very soon? No. But we feel we can build an informed coalition that grapples with the biggest obstacles to development and adoption of real-time rating. And we feel we must do that. There are cutting-edge companies out there already doing this online in the small commercial space, and we all know well how direct writers are grabbing market share in the personal lines arena using real-time rating. The independent agency channel in the small commercial lines market needs this competitive edge. When asked what sets the independent agent apart, most typically respond, “Service.” If the majority of agents think their competitive advantage is service, then it’s not a competitive advantage at all. They need to offer more as part of their value proposition.
Customers have spoken pretty clearly that their definition of service can be encapsulated in three words: speed, accuracy and expertise. If you are getting beaten on the first two, the third might not be relevant.
The survey results and Work Group focus areas will be a big topic of discussion for the Small Commercial Real Time Rating Work Group between now and the Feb. 17-19, 2016, ACT meeting in Scottsdale, AZ. Stay tuned for our findings, and join us in AZ if you can make it!
Susan LaBarre is the co-chair for the ACT Real-Time Rating Work Group. Susan is also the director of agency automation and quoting in the customer experience division of Liberty Mutual, Commercial Insurance.