Leap Frog

When the CSIO Portal closed shop in late 2005, independent insurance brokers in Canada were left wondering how they would communicate in the future with multiple insurers through their broker management systems.

To a certain degree, their professional lives were — and still are — riding on the answer to this question. The CSIO Portal may have disappeared, but the brokers’ need for a single- entry, multiple-carrier interface (SEMCI)-style solution did not. So if the CSIO’s Web portal project wasn’t going to provide the solution, what was? Who was going to produce this magic solution and how would they do it?

At this point, two trends in technology have presented themselves.

First, at the same time it abandoned the Portal, CSIO said it would start to focus on establishing standards for data exchange between brokers and carriers. Its announcement had the same impact as telling brokers their professional fate was being placed in the hands of Clark Kent instead of Superman. Certainly the star power of standards paled in significance to a potentially much-cooler, marquee tech solution that might solve the brokers’ communication problems with carriers, thus saving the day.

Enter the proprietary tech solutions offered by technology vendors. After the Portal collapsed, it seemed as though the field had opened up completely for one or more companies to come up with the very type of technology for which brokers and insurers were looking — something that would allow brokers to communicate information from their broker management systems (BMS) to multiple insurers, each of which had their own proprietary data management solutions.

Just over two years later now, in 2008, it is interesting to see a leap-frogging trend emerging in the broker technology market. Proprietary solutions evolve, standards then become widespread, after which proprietary solutions tinker with and/or fill in any remaining gaps in the standards, and by then the standards are further refined and on it goes…

As expected, technology vendors are starting to fill the void left by the portal’s absence; they are now offering proprietary solutions to help independent brokers communicate data and information to their various insurance suppliers. They are doing this through the creation of various “translator”- style technologies.

Essentially, a brokerage sends data through its BMS not directly to an insurer, but to a translator program established by a technology vendor. Once there, the translator solution converts the broker’s data information into something recognizable by each and every one of the insurer’s separate data management systems. The data, in its translated format, is sent to each of the insurers.

These types of ‘stop-gap,’ proprietary technology solutions are now out in full force; temporarily at least, they appear to be a solution of choice since the portal’s demise. But if proprietary solutions have a weakness, it resides in the question of who owns and uses them. Brokers want to own the technologies they use to communicate with the carriers. Carriers supported the CSIO Web Portal solution probably in part because they would have owned the technology. And tech vendors want to own the technology that connects to their broker management. [The recent Keal-Applied Systems alliance is an interesting case of two vendors setting aside their proprietary claims over standards and engaging their competitive juices instead on broker management systems. But in a competitive market, one cannot assume such acts of altruism.]

This is where the emergence of XML standards comes in. At the same time vendors have been working on translator programs, CSIO has published its updated versions of XML standards for electronic forms in both personal and commercial lines. And one can easily see that as a greater percentage of the industry’s insurers adopt the standards, the need for translator programs will disappear as everyone begins using standard XML files.

We can easily see standards leap-frogging over proprietary solutions as the primary means for independent brokers to do business with multiple insurers. And in this area, vendors themselves may be on board. For example, at face value, following industry-established standards is far easier than third parties shelling out piles of cash to produce a computer language program that translates across multiple systems.

But even as the use of standards becomes more widespread — which is partly reliant on the brokers recognizing their full value and lobbying insurers to adopt them — one has to wonder whether the temptation in the future to change the standards or “customize” them may limit or trump the beneficial effects of their universal use in the industry. If that’s the case, we could easily see a new interregnum (perhaps a decade or so away) in which third-party vendors emerge once again to fill in gaps that arise in the absence of a universal standard.

Stay tuned to see which way the worm will turn next in the world of broker technology.