In the summer of 1967, hippies made the Haight district in San Francisco ground zero for the development of revolutionary ideas and behaviour. About 45 minutes down route 101, at the Stanford Research Institute (SRI), a group of researchers, were developing other cutting edge ideas for actions to preserve the independent agent and broker system. The SRI report set in motion a number of initiatives which continue today under the banner of ‘Broker Connectivity’. Our question is, over the 45 years since the inception of this activity, what have we accomplished, and what have we learned?
SRI was acting on behalf of the National Association of Insurance Agents (the predecessor to the IIABA) The resulting report, ‘Planning for the Future of the National Association of Insurance Agents’ was a response to agents concerns about:
- Increased market share of direct-writing companies
- Mass mechanizing marketing experiments conducted by independent broker companies which reduced or eliminated the independent distributors’ role.
- Increased company penetration in the relationship between the independent agent/broker and the consumers.
The researchers concluded that there was an opportunity to to streamline agency management “to reduce costs and to generate additional time for selling and servicing accounts.” One area of specific opportunity was the emerging use of electronic data processing (EDP). The researchers warned against fragmentation and recommended that the independent agents, through their association, “demonstrate leadership by initiating and spearheading an industry wide effort to develop uniform EDP methods that can be applied throughout the industry.”
The SRI report stimulated other research and by 1975, the first design for single entry, multiple carrier interface – referred to as the Universal Terminal System – was in place. And a tidal wave of activity, accompanied by a flurry of acronyms was unleashed. In 1990, Perot systems – in a controversial analysis sponsored by the Independent Insurance Agents of America – estimated that an annual spend on agency automation and interface of US$550 million to US$870 million per year was yielding limited results. Perot recommended that the US agents establish an agent-owned, for profit Information Systems Facility (ISF) which would be professionally staffed and dedicated to managing implementations of technology in support of agents need for connectivity and internal efficiency.
Another 20 years goes by, and we are where we are now. The sentiment is somewhat hopefull with actions by IBAC, IBAO and ORBiT. ACT in the US has got momentum as well. Some say that we need to redouble our efforts with standards and work groups and new initiatives. Others say that the Holy Grail of full function Broker Connectivity in support of independent brokers is destined to stay just out of our reach. We believe that the answer is someplace between the extremes.
For agents, the original recommendation for a UTS was never realized, but the structures established became organizations we now know and use, including ACORD, IVANS, CSIO. Perot’s recommendation for an ISF was never fully realized, but important elements were realized with the establishment of ACT. All of these benefit the industry generally, and independent distributors specifically.
(As an aside, hippies didn’t see the establishment of a world of peace and love, and many joined the culture that they originally rejected. In so doing, however, their influence has been felt in politics, business – e.g., Steve Jobs – and civic action for decades.)
But never mind our opinion, what do you think? Will recent progress gain momentum and finally achieve a critical mass which will become a complete, singular industry solution? Or will we see hope stolen from our hearts and hands yet again?
Put on some Grateful Dead, break out your old tie-dye tee-shirt (or Jerry Garcia tie), and put a virtual pen in hand. Tell us what a long, strange trip it’s being!