Main Street America Group's new surety bond platform has been a huge success, the Jacksonville, Fla.-based P&C carrier reports. Main Street America Group (more than $800 million in annual premium) says the Main Street Station for Bonds platform, which was built in-house, has led to labor efficiency for both distributor customers and internal staff and has resulted in an increase of new business of about 25 percent annually since launching in January 2008.
The carrier embarked on development of the bond platform in order to address the highly fragmented and technologically antiquated surety bond market, according to Brian Beggs, VP and head of Main Street America Group's surety bond business. "The users of bonds are the customers of our [distributor] customers, who file the bonds with probate courts, federal or state courts, municipalities or others," he explains. "The number of people requiring bonds could be in the hundreds of thousands and, theoretically, each of them could have their own bond form."
Many surety bonds still are composed on the fly and created or modified using typewriters, copying machines and White-Out, resulting in inefficiencies for both distributors and carriers, Beggs adds. The lack of standardized forms, combined with low profit margins, has made the surety business unfertile ground for the developers of software systems. Consequently, in order to attract surety business through a superior process, Main Street America group had to undertake the development of the Main Street Station for Bonds platform internally with a blended team including resources from Keene, N.H.-based Computer Solutions of Keene. "There isn't a big enough market to get most software companies excited about building a bond system," Beggs notes.
Quicker and Better
In late 2006 Main Street America Group began mapping the surety bond submission process, including both internal and external workflow, Beggs relates. "We wanted to look at the whole process, not just what we had historically done internally," he says. "We looked at ways to utilize technology to eliminate steps and provide something quicker and better. We wanted to make sure that even someone who didn't have experience with bonds could still get through the process easily."
The carrier built a rating engine and printing functionality, added data storage, and developed underwriting logic, Beggs recalls. Key to the effort, he says, was a library of forms designed using examples that the carrier had accumulated in its surety business. "We built Adobe PDF versions of all the forms that had coffee rings and ink stains and then built rating and underwriting rules to go behind them," Beggs explains.
When the platform initially went live nearly two years ago, Main Street America's distributor/customers were able to access about 2,000 forms within the library, using a search engine that relies on keywords for jurisdictions and types. Currently the library contains about 5,000 forms. "Users can add words to refine the search," Beggs comments. "Once the form is chosen, the system automatically knows all the underwriting questions that will need to be asked in order to complete the form. It's completely automated, so all the agent needs to know is the name and address of their customer and some information for a few underwriting questions, and the system will do the rest."
Based on process analysis, Main Street America estimates that the forms library cuts in half the time it would take an agent to locate and fill out a form manually. The automated underwriting process enables business to be issued instantaneously, according to Sharon Petrell, IT program manager, Main Street America. "It could take days to get a response from an underwriter, whereas in this case the agent is operating in a real-time environment," she comments. "It's underwritten, the agent knows what it's going to cost, and they can print it on the spot."
The ease provided by the new platform has been followed by a 25 percent increase in new business and premium, which has persisted through an otherwise troubled market in 2009, according to Beggs. The system also has resulted in internal productivity gains of 35 percent to 40 percent, he adds. "We took the time and labor savings from automation as an opportunity to redirect our people into more productive tasks," Beggs says. "Interestingly, by shortening the timeline we have also increased expectations for us to be responsive to customers."
Beggs is happy to cater to increasing customer demands, given the business results of the platform so far, and since launching the bond platform, the carrier has worked on preparing for an automated renewal process. According to Beggs, the automated renewal process is projected to bring a further 15 percent to 20 percent efficiency improvement during the 2010 renewal season. "The challenge was that the bonds that predated the launch of the system lacked the data to drive an automated renewal process," he explains. "We had to go back and convert and add data, which we finished a few months ago."
Main Street America's next step for the platform is to deliver data in standard XML format in order to empower agents to delegate the creation of future bond business submissions to sub-users among their end customers, Beggs reports. "That will be delivered at the end of the first quarter of 2010," he says.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio