We recently posted on the current state of Single Entry, Multiple Company Interface (SEMCI) between independent distributors and insurance carriers. In spite of consensus on objectives and serious time, energy, and money spent over almost five decades, we are nowhere near a critical mass which would allow realization of the benefits promised.
In this post, we will look at what we see as a serious structural issue which we feel has been a barrier. We believe that the major actors cannot achieve sustained success with the current, diffused organization.
(An aside: we are grateful for the feedback we received on our first post and we ask you to continue to provide candid comment. For this exercise to provide value, we need the wisdom of the crowd.)
The three legs of the SEMCI Stool
There are a number of organizations surrounding the agent/broker connectivity community, including standards setting bodies (ACORD, CSIO), industry associations, consulting firms, media commentators (present company included), etc.
We believe there are 3 primary stakeholders:
- Independent agents/brokers
- Vendors of technology for the other stakeholders
These organizations spend money directly on providing and implementing solutions and have a direct, vested interest in success of the initiatives. We like to call these the legs on the SEMCI stool, as they all have to be at the same height at the same time, or the stool is unbalanced.
And for most of the history of SEMCI, the stool has been unbalanced.
In the early days (late 70s, early 80s), broker/agency system vendors (suppliers included Redshaw, AMS, and others) took a strong leadership role in early implementations of data exchange and the development of data standards. The motivation was to increase sales.
Unfortunately, the adage “build it and they will come” didn’t hold true. Several vendors got too far ahead of their users, and ended up supporting applications with insufficient revenue stream. By the late 1980s, most vendors had moved to a wait-and-see approach, undertaking serious development only after the demand was very clearly articulated.
Also, in the early days, insurers took a leadership role in introducing SEMCI. The agent/broker associations had identified SEMCI as a priority, and insurer marketers saw an opportunity to gain market share by supporting their distributors. Some insurers bought systems for leading agents.
Insurers also were the primary architects of the standards (few agents/brokers had in-house IT personnel). Virtually all of the early standards were intended to have the agent/broker enter and send business transactions (initially focused on new business) to the carriers. This would reduce the manual effort for the insurers, but actually increased the workload at the brokerage/agency.
As with the vendor pioneers, the insurers learned to move at the pace of the brokers/agents, and introduced Download, which benefited the broker/agent, with the primary cost being carried by the insurer. It is only a 50% solution.
Agents/brokers, through their associations, have been the champions of SEMCI since the outset. Individual brokers have made significant contributions as members of working groups, committees, and boards. Many brokers have invested heavily in technology which enabled various SEMCI functions.
However, we believe there have been two consistent weaknesses:
- There is no single broker/agent voice. For example, in the US, ACT (the technology arm of the Independent Insurance Agents & Brokers of America), have been heavily promoting a SEMCI construct called RealTime for over 5 years. However, the 2013 survey had only 2,200 responses (on a base of approximately 40,000 agencies in the US). Wwhat the priorities are for the balance?
- As important as SEMCI is, it has never been a number one priority for brokers/agents in selecting insurance carriers. When making a choice of insurance carriers, brokers have a number of other factors – financial stability, product features, service, price, etc. which typically take priority.
What does all this mean … to you?
We believe that the 3 legged stool has been , and continues to be shaky, with no one vision, and no one in control.
However, this past could be just prologue. The real question now is whether there are other approaches, different constructs, that could move this forward. Perhaps a fourth leg for the stool.
We’d like your thoughts. First, from your experience, have we got the situation right? Or are we missing something.
Second, what are your thoughts on a going-forward strategy for SEMCI?
In the next post, we’ll offer a collection of your comments as well as our thoughts what could be the way forward.