02 April 2007
Sixteen months after the last debate, the panel looks again at imarket...
Richard Adams: In the research for the programme, brokers were keen to hear how imarket plans to grow in the next five years, the benefits it provides to brokers and the ways in which the system will be revamped and developed.
Martin McLachlan: Brokers can access imarket via the web browser or through an integrated software house. With the web browser, the benefits are that with a single user ID and password, brokers can gain access to a range of insurers, 10 so far, and get quotes for around 14 business classes. So, that is a considerable benefit rather than faxing some insurers and e-mailing others, by using a single data submission from imarket. It saves time is secure and free. The great benefit though comes when the system is integrated into a software house system and, from a single data keying, comparative quotes are produced to go on cover, to handle mid-term adjustments or renewals. So, there are two sets of benefits but I think the major target for the insurers, the software houses and Polaris is the integration into software house systems so it is part of the broker's normal workflow.
David McDonald: In the past few weeks, a major new unit at Swinton has gone live with Acturis. This is totally focused on packaged small to medium-sized enterprise business, and a team of 70 people are now transacting all of its business through electronic trading, mainly imarket. That shows the huge processing efficiency benefits from a single keying of data - multiple quotes, around 40 products quoting electronically, comparative quoting and all documentation, the accept process, all done with a single key of data.
Jason Potter: We have looked at very manually intensive services, to see how we can make those available online. One example is making product documentation available. More recently, we have been working to make cover notes available on line, so we now have an electronic cover note facility. For 2007, we are currently working on account settlement availability online as well. So, in addition to the quotes services, there are also a number of other administrative services that we are making available online for brokers to access at their convenience. So, they are no longer constrained to the working hours of the insurers.
Jim Noakes: Brokers are usually time-pressured people and one of their frustrations is the inability to complete a process in one hit. Quite often, brokers have multiple files open on their desktop because they are waiting for insurers to respond to decisions on underwriting and documentation. The technology now available means much of that frustration can be removed by completing the process in one go. Brokers can get the paperwork off their desk and lower error rates - commonly, the number of policies issued incorrectly is more than one in five.
Richard Adams: How will the system itself be developed?
Martin McLachlan: We have accepted the X-form criticisms that they are too long - and we have introduced a new technology to sit behind it, which gives a much fresher look and is easier to complete. That will be launched, we hope, in June. The software house integration, however, is key and we have an enormous amount of Polaris resource devoted to that at the moment. We also want to extend product areas such as engineering, business travel and personal accident. So there are a number of simultaneous development directions.
David McDonald: One major development is mid-term adjustments, which is now live, and renewals will be live in the next few months. We believe that is a big part of what imarket can do because suddenly brokers are able to do the full life cycle electronically and not having to do something different for mid-term adjustments and renewals.
Jason Potter: In terms of what is in the pipeline, by Easter our property owners' product will be live and also a commercial combined.
Richard Adams: A question from Simon Hickman of Access Underwriting, he asks: "Early use indicated that if there was anything slightly unusual about the risk, it went to a refer or a no quote. Is this still the case?"
Jim Noakes: The challenge is certainly on the insurers now to look at the management information coming through to see how many risks have been referred and why. Then you can start to break that down and attack the referrals. And that is exactly what we are doing and it is our ambition to improve that month in, month out.
Richard Adams: Dane Douetil recently said Brit would be joining in the second quarter. Martin, can you say how many others you expect by the year end?
Martin McLachlan: We are talking to a number of insurers and now they are asking us rather than us approaching them. imarket is becoming an accepted way of distributing product by insurers. So, I am quite confident we will be announcing some new joiners in the not too distant future. I can't release their identity and can't comment on the company that you mentioned but we will be adding a few new insurers in the very near future.
Richard Adams: David, I imagine that brokers using imarket through an integrated software house are having very different experience?
David McDonald: Brokers who have segmented their book and thought about how they can do things most efficiently are using electronic trading very aggressively. Outfits like Swinton and Oval are deriving huge benefits from electronic trading. However, it starts with the business segmentation.
Jim Noakes: As an industry we tend to be perfectionists and want everything to work in an absolutely pristine way before we will switch the way we do business. However, that ignores the benefits that are already there. So I would urge brokers to try it because if you sit back and wait until everything is fully developed, you won't be influencing the insurers in the course of the development. So try it but do give your insurer and software house feedback about your experience and be open to the fact that this can significantly improve the service to your customers, reduce costs and can take some stress out of your day.
Richard Adams: Are insurers giving incentives to brokers to use imarket or does the reduction in the use of your own extranet or e-trading facilities cause you concern for any reason?
Jason Potter: With imarket we are starting to take some of that transaction cost out and what we are looking to do is to feed that back to the broker and the customer in the premium. So we are hoping that will give incentives to people to use imarket, that we are offering a competitive premium which comes from the cost savings we are making.
Jim Noakes: I think the question is often asked 'will we increase commission?' And the answer is no. This is about making life faster, simpler and more accurate. The work that Acturis has done indicates something like a 30% cost reduction for brokers switching from paper to electronic systems. So, there are financial, service, and accuracy advantages. Also, an electronic record enables you to see when the policy was issued, who did it and what the response was from the insurers. So it cuts down the debate about whether an excess was applicable at the time of the quote or whether there is a warranty on the policy. Typically, for a package type product, for insurers to make profit the loss ratio has to be around 55% to 58%. That is just not enough value for the customer. We should be able to trade this business at much higher loss ratios than that and return more value to the customer. Unless we make this transition, we are just sitting here waiting for the direct market to grow.
Richard Adams: Are insurers extranets then a prequel to imarket and eventually imarket will become the main focus?
Jason Potter: Well the approach we have taken with our extranet is that we will make it available to brokers, we are quite happy to do that but we want to do that through the imarket portal.
Jim Noakes: At the moment we have got brokers coming in both ways but as the transaction volume grows our expectation is that the number of brokers coming through the extranet will fall.
Richard Adams: Is it time to revise imarket's ambition to be the industry standard portal because clearly it won't ever be used by all brokers for all risks?
Martin McLachlan: At the smaller end, using a cost effective mechanism like imarket to provide rapid quotes means brokers can deal with business they cannot afford to spend an awful lot of time on. As you move up to the more complex risks the real benefit is the data quality and rapid data delivery. While yes it won't be appropriate for all risks but, as one insurer said, if you could take all of the premium transactions worth less than £3000 and put those via electronic placing, that would handle 95% of their transactions. So yes, it does work for the small risks but at the larger end, the benefit is data quality, and a single process for all risks for all brokers.
Jim Noakes: Everyone can always come up with the 3% of risks that won't be capable of going through. But even with very complex risks, you can still make sure the insurer is getting the right data into their system. And if you are an underwriter and have got a pile of quotes - some paper-based and some electronic - I think as an underwriter you are going to show preference for the electronic stuff because the system will calculate the premium and for you and you can concentrate on making the underwriting judgement rather than doing a lot of manual tasks.
Richard Adams: What is commonly the thing that will persuade the sceptical broker?
Martin McLachlan: If both principals sit down, do the strategy and realise that the technology is here and that it is proven that is often the tipping point. When brokers begin to look at costs and the requirement for cost reduction in order to protect as much commission as possible, the requirement becomes clear there too.
David McDonald: If you look at the examples where folks are taking this by the scruff of the neck, you can see it is here now. I don't think there is really much excuse for brokers to frankly risk their business by sitting back and expecting that things won't change for another year because they will.
Hear this debate in full, and previous debates, by accessing the archive on the website at www.brokermanagementforum.com.
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Richard Adams, Editor, Professional Broking magazine
David McDonald, Chief executive officer, Acturis
Martin McLachlan, Managing director, Polaris
Jim Noakes, Distribution leader, Zurich
Jason Potter, E-trading manager, Allianz Cornhill
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