Although agents have been pressing carriers to support Single Entry Multi-Carrier Interface (SEMCI) for years, from the carrier point of view, SEMCI may not be the only or the even best solution to the real problem: how to make it easier for independent agents to do business with carriers.
In a recent Celent survey of independent agents, only 29 percent of respondents said that carriers supporting upload and download functionality through agency management systems were more likely to get their business than carriers that did not. Ten percent said they actually prefer proprietary systems (apparently because they have more robust, customized functionality), and 61 percent said they would use either type of tool, "as long as it makes my job easier."
That last phrase is, as many carriers have decided, a Holy Grail worthy of an Indiana Jones adventure. "Easy to do business with" has become such a ubiquitous goal among channel managers and is repeated so often in writing and in conversation that some feel compelled to shorten it to "ETDBW," an unwieldy acronym that is hard to say and equally hard to achieve.
Does SEMCI equate to ETDBW? It certainly can, for some agents. Celent's survey results suggest that producers are inclined to shop at least half of their property/casualty new business to multiple carriers, which means that agent complaints about re-keying business into multiple systems and inconsistent new business processes across carriers are in line with their behavior. SEMCI does, in fact, address these issues, which are of critical importance.
What Price, SEMCI?
If SEMCI solves the critical re-keying and process uniformity problems, it does so at a considerable cost to carriers. Unfortunately, the trade-offs aren't as positive as some agents have suggested.
The most obvious cost to carriers is the required investment in technology. Supporting uploads and downloads through agency management systems is not a "just add water" activity. Not only is the technology immature and evolving, the agency management system market is highly fragmented, making it difficult for carriers to meet the needs of their diverse producer population. The 78 respondents to the Celent survey, for example, used 12 different agency management systems, along with several different carrier connectivity tools (e.g., IVANS, TransactNOW).
Another, more hidden cost is the degree of commoditization suffered by carriers that successfully meet the SEMCI challenge. The first carriers to provide good SEMCI capabilities may capture an increased share of independent agent business, but what happens when competing carriers follow their lead? The price of admission will be higher than ever, and carriers will have to find other ways to ratchet up service levels to differentiate themselves. We believe this is already happening, despite several success stories with SEMCI approaches. This could be considered a good result for agents, but it is not the best case for carriers looking to reduce their distribution costs or at least target them specifically to their most valuable agents.
Even if the cost-benefit of tackling SEMCI makes sense for a carrier, we believe it is clear that some agents -- and perhaps even most -- are willing to use proprietary solutions -- as long as those solutions are thoughtfully designed with the agent's needs in mind. Survey results suggest that producers are more satisfied with proprietary systems than agency management systems for certain tasks, including application entry and new business status. Apparently, the trade-off of richer functionality versus no re-keying is one that agents will make, at least some of the time.
It is clear that most carriers have a way to go in terms of getting the most out of their distribution technology investments. No one seems to have gotten it just right, despite years of tinkering. We believe the stakes are high enough to justify a renewed effort, and we make the following suggestions for carriers that are willing to rethink their strategies:
Want to know what your producers think? Ask them, regularly. We believe it is important for carriers to do their own primary research with their own producers, at least once a year, and to correlate producer responses to behavior.
Key producer roles and attitudes are similar across all channels, so focus on functionality and try not to make artificial distinctions between channels. While their role in representing competing carriers in the sales process is unique to independent producers, the basic steps in the sales process are similar for both independents and captives: create a quote, create and submit an application, deliver a policy, and provide post-sale service. Improving these functions for producers will improve producer satisfaction (and sales), regardless of the methods and tools used.
Let producer needs dictate how functionality is delivered. We believe that carriers should support both agency management systems and proprietary carrier sites, and let producers choose one or the other on a case-by-case basis. Producers with relatively straightforward needs may find that the multi-carrier approach of an agency management system works. But producers who require custom functionality and tailored support are more likely to find it on carrier Web sites.
Craig Weber is a senior analyst with Celent Communications. This brief is based on the Celent report, "Desperately Seeking SEMCI: Producer Views That Might Change The Debate," June, 2003. The report includes the results of Celent's online survey of 78 independent producers in June, 2004. For more, go to www.celent.com.