The route from carrier to consumer often is a varied, indirect course that is full of alternatives. And the person charged with navigating the route - the producer - often is regarded as the most important player in insurance. As the producer's partner, it is the carrier's responsibility to make the journey as direct and easy as possible. To facilitate the trip, carriers must provide their producers with intimate knowledge of the territory in the form of a singular, connected view of the carrier's business, one that reflects the constantly changing industry universe.
The proliferation of disconnected distribution channels is a product of the competitive nature of the insurance industry, according to Ed Blomquist, a financial services technology analyst at Datamonitor, a New York-based independent market analyst company. "The industry is becoming more competitive now - non-life rates are leveling off and life carriers are expanding into new markets more rapidly with more push into international markets," he observes. "To be more competitive with each other and with international organizations, insurers will continue to consolidate" and increase pressure to find new markets, Blomquist asserts. This push, he says, has led to a shift from direct insurer-controlled distribution channels to independent channels.
Attracting those independent producers is a big concern for insurers like Greensboro, N.C.-based Jefferson Pilot Financial (JPF; $546 million in 2004 net income), which works with large independent marketing organizations (IMOs) to sell its full line of individual and group life insurance products and annuity products. "IMOs are investing a great deal in building technology to make it easier for them to do business with multiple carriers, so the challenge for carriers is to find a way to get in that game and be one of the ones that the IMOs are partnering with from a technology perspective," says Patty Creedon, vice president, product implementation and strategic systems, JPF.
According to Creedon, many of the large IMOs are partnering with a few large technology vendors, including Agencyworks (Salt Lake City, Utah) and E-Z Data (Pasadena, Calif.), to create and develop client management systems. "Those vendors have the capability to build upload systems so that the large IMOs can complete or partially complete life applications online and transmit them through these vendor applications to the carriers," says Creedon. "So we need to be able to accept those feeds into our business systems internally," she continues.
According to Datamonitor's Blomquist, as insurers consolidate and expand, agencies will keep pace. "So, in terms of technology," he says, "the larger agent networks, in many cases, will already have their own management systems in place, and insurers will need to cater to them."
The key to a successful carrier/producer relationship is partnering, according to Scott Hudson, partner, Bridge Strategy Group, a Chicago-based business advisory group. "The way to accomplish true integration with your producers, rather than dictating all of these technology and process requirements to the agency, is working in partnership with them, so even if you may not operate a wholly owned, dedicated distribution system, you are viewed as a meaningful partner to that organization and are aware of the requirements and constraints that are being made inside that agency," he explains. This type of integration affords the producer a holistic view of how the carrier runs its business, which can only benefit client relations, Hudson continues. "If you are an agent, you need not be directly involved in claims handling, but you do need to retain clients, so you must stay aware of the claims and underwriting processes to ensure that it is being handled in a fair and timely manner," he asserts.
Linking producers more closely to the claims and underwriting arms of the business means making claims and underwriting data readily available - and easy to transmit and receive. "We are focusing on IMOs that already have very extensive client management systems where they house data about their end customers," relates JPF's Creedon. "If we build our system with the ability to interface with that client management system, it eliminates duplicate efforts on the IMOs' part," she adds.
According to Russell Pass, partner, Bridge Strategy Group, one way to cultivate strong independent channel relations is with the use of industry standards. "Standards are an important tool because in dealing with multiple carriers, the last thing producers want is to have to interface differently with each carrier," he says.
The increasing use of standards can be seen throughout the industry, even with carriers that are less hard-pressed to become universally compatible. Appleton, Wis.-based Thrivent Financial for Lutherans ($65.4 billion in assets under management in 2004), which distributes life insurance, annuities and disability income insurance through a wholly owned wholesale channel, recently invested in New York-based relationship management software provider G2X's Agility:Insurance Web-based wholesaling application, which is built on ACORD industry standards.