- Where Insurance & Technology Meet

Broker Connectivity: Can This Circle Be Unbroken?

A recent post on the popular Canadian Insurance Strategy Group’s LinkedIn site generated numerous comments that provided a recap of the past plans, present status, and future desires for broker connectivity.  The result reminded us of the old quip:  “When all is said and done, there is much more said than done.”

We would like to get back to first principles here, providing an overview of the broker connectivity (frequently called SEMCI – Single Entry, Multiple Company Interface) landscape in this post and in a few to follow.  Our intent is to address a few simple questions:

  • What progress have we, as an industry in Canada, made in realizing the goals of SEMCI?
  • What are the barriers that implementers are, and will be, facing?
  • What are real options going forward to realize the benefits that SEMCI has promised?

We’ll start with some fundamentals in this post:  How did SEMCI get started, What has been the progress, and How valid is the business case.  We’d like this to be a conversation, and for that we need you to join in.

Why did we set out to drain this swamp?

In July 2012, we blogged on the origins of broker connectivity.  Brokers felt that attacks by direct writers and increased incursions by independent distributor carriers into broker-client relationships were threatening the traditional broker role.

Experts from the Stanford Research Institute (SRI) recommended that independent distributors come together to use technology to improve efficiencies in order to “reduce costs and to generate additional time for selling and servicing accounts.”   A key element was the use of standards to allow seamless connectivity between brokers and carriers.

Most proponents of SEMCI would concur with these objectives today.  The issue is that the SRI report was filed in 1967.  While there has been progress, now, 47 years later,  proponents and skeptics alike would agree that penetration has been substantially less than what was expected, and far short of what is required.

So what has been the progress?

There is no consensus on measurement.

Over the years, several industry organizations  (including ACORD and CSIO, the US and Canadian standards development organizations) have undertaken measurement of the implementation of SEMCI.  Most of these have been abandoned.  There has been a lack of consensus on several issues, including:

  • What constitutes an implementation?  If the technology is installed, but data is not being exchanged, is that an implementation?  If there is only one carrier in a broker’s office participating, can this be ‘multi-carrier’ connectivity? If there are multiple carriers, but there is only one line of business, does this count? And so on…
  • Who does the counting?  If the vendor reports success, but the carrier and/or broker disagree, who is the adjudicator?  If there is concurrence at one point, but no response in future questionnaires, do we assume it continues?

NOTE: The US  Independent Insurance Agents & Brokers of America (IIABA) ACT committee does survey reports every 18 moths or so, and have reported growth in utilization. The actual penetration within the agent community is not measured.

Is there a valid business case?

This has been problematic due to its inter-organizational nature.  What is a benefit for one participant may be a cost for another.

For example, looking  at the cost of using different processing systems yields a positive return for brokers in most instances.  (See, e.g., Patricia Alexander’s article Enhance Your Bottom Line with Technology, on the ACT website.)

However as Celent’s Craig Weber pointed out some years ago, “Commoditization of products and core services like new business makes it hard for carriers to differentiate themselves.”   Weber also notes that as important as it might be for agents, “SEMCI is a luxury item for producers, well behind product and price as a key driver of carrier choice.”

What do you think?

While the interest in SEMCI and broker connectivity continues, and there are a number of committed, caring, and wise individuals involved, we’re wondering how much of this interest is driven now by momentum alone.

We’d like your thoughts here.  Can a solid business case be made?  Can progress be measured? Are there other overarching concerns.

In subsequent posts, we’ll be looking at the vendors and other interested parties (including consumers).  Thoughts here would be welcome.

Improve the connectivity.  Leave a comment below.


Wendy Watson

As President of ORBiT Canada, a broker-driven initiative to deliver SEMCI in the broker distribution channel to level the playing field between brokers and the directs and drive efficiencies into the channel, I have to say that our working groups have built and delivered a business case for carriers, vendors and brokers for each Real Time Best Practice Workflow we’ve developed! Solid business cases – we certainly believe so!
Having shared that, we are struggling to support these Real Time Workflows – is there something we’re missing? If it isn’t about efficiencies on both sides of the transaction; if it isn’t about delivering better point of sale service to the customer, then we are at a loss.
We believe progress be measured with the efficiencies and service improvements which will translate into retention of business in the channel (perhaps growth) and more innovation for consumers.
Would love to know where the disconnect is – we’d be happy to work to connect the dots.

David Kerr

I think this article describes the issues around SEMCI quite well – there is a business case for change – but the multi organizational aspects to costs and benefits, funding, design, development and maintenance of a solution are complex to say the least. The Polaris example in the UK is likely the longest lasting and most successful industry initiative that addresses this domain – it required investment from both insurers and large brokerages to get off the ground and is an independent entity that represents all of its shareholders. There is no reason that the Canadian industry could not consider a similar model.

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