The Evolution of Cost Calculation

“The two most important requirements for success are: first, being in the right place at the right time, and second, doing something about it.”

The decision to develop the RMS iClarify application was triggered by a series of events culminated in the fall of 2008. The Canadian market was dissatisfied with the “status quo” approach to insuring to value. Property underwriting results were deteriorating. All inspection and valuation suppliers were under scrutiny with regard to the accuracy of the replacement costs that they were generating. The cost of the problem was determined to be $11 billion annually, and growing.

SCM Insurance Services purchased RMS in a deal that closed in August 2008. The partners in the deal quickly realized a number of synergies for the RMS division within the SCM Services continuum. For example, there was a shared cultural belief in using technology to drive value and efficiencies, which in turn presented encouraging conceptual workflow enhancements to the ITV dilemma. We received early validation by many industry stakeholders that our organization held more aggregate insurance total loss claims and construction data in Canada than any other organization. When indexed, this information provides tremendous insight into the fluctuating cost of claims on a very refined (FSA or policy) level, exposing the glaring industry problems surrounding ITV. Most importantly, in December 2008, every member of the SCM executive team unanimously agreed the time to act on ITV was immediate. Our solution had to be ready for first quarter 2010.

CREATING A NATIONAL APPROACH

Our strategy centred on the notion that iClarify had to be a national solution. In order to make this happen, we would require support from broker associations, insurers and industry stakeholders from across Canada. To this end, we could not have been more confident in the future potential of our solution when we received funding, partnership and endorsement from the Insurance Brokers Association of Ontario (IBAO) in August, followed by The Economical Insurance Group in September 2009. Equally important is the resounding support RMS received from Insurance Brokers Association of B.C. (IBABC).

RMS met with IBABC in September 2009. In a room filled with insurers, brokers, members of the Insurance Bureau of Canada (IBC) and the Insurance Brokers Association of Canada (IBAC), RMS presented a working prototype of the RMS ITV solution. We were nervous. We knew that previous meetings on the topic had not gone well with other suppliers. We also knew that if industry representatives from British Columbia were not onside with our vision, our dreams for a national approach would be dead. The meeting was a big success for our team. In reflection, it was a pivotal moment that helped us push forward to achieve support from other broker associations across Canada, including official endorsement from the Regroupement des cabinets de courtage d’assurance du Québec (RCCAQ) in December 2009.

iCLARIFY -AN INTEGRATED BUSINESS SOLUTION

Our understanding of insurance workflow practices is a key competitive advantage in the creation of iClarify. A paramount objective of our team was to make sure our offering not only integrated with point-of-sale distribution tools, but also aligned with anticipated best practices of the Insurance Bureau of Canada’s ITV committee process and CSIO data standards. In addition, at the forefront of the development process, we needed to make sure our back office application and support teams could process large quantities of in-force policies, enabling us to provide batch ITV updates on an insurer’s existing book of business.

The announcement of our strategic partnership with Compu-Quote in August 2009, providing brokers using the eZITV solution with data verification, street view and overhead satellite images, captured critical mass within the property quote distribution channel.

A similar distribution agreement with Powersoft was announced in November 2009.This agreement further enhanced valuations generated from the EvalWorks engine and was intended to increase our distribution scale and support for brokers in Western Canada.

These partnerships have allowed us to complement, streamline and enhance the new business process, while at the same time creating a much more accurate policy quoting process and overall customer experience.

IMAGERY AND INSIGHT

The original vision of iClarify focused exclusively on data, but the desire to provide streetscape imagery as part of the point-of-sale data validation process quickly became a strategic goal for the project in early 2009.This particular aspect of the iClarify process is very complex and required a great deal of innovation. RMS signed an exclusive contract in August 2009 to distribute iLookabout streetscape imagery to the Canadian insurance marketplace. The company has already captured the majority of homes in Canada and is uniquely focused on cities and towns with populations of 4,000 and greater. Equally important for RMS, iLookabout’s business model assures that photos will be updated on a regular basis to guarantee long-term accuracy and consistency.

One of the unique attributes of the service is that it is not easily duplicated. It has the ability to make sure the image of a home provided at point of sale is indeed the correct dwelling. Currently other suppliers provide imagery on homes in major city centres, but often the address does not correspond to the actual geographic location of the property. This may cause users to find themselves across or down the street from the actual home being queried. In effect, as a critical component of iClarify, our partnership with iLookabout and the value proposition brought forth by this relationship are not easily replicated.

THE PATH AHEAD

Using the Compu-Quote comparative quoting application, the iClarify data validation point-of-sale solution will begin pilot testing with a select group of IBAO brokers in February 2010. We are confident this testing will provide positive response and facilitate widespread release in Ontario in 2010 Q2.

The development of the service with Powersoft is scheduled for 2010 Q1, with hope that a similar broker pilot test can begin shortly in Western Canada.

Ideally, the project rollout for the validation service will be Ontario, Western Canada, Quebec and Atlantic Canada. Our goal is to have the service implemented in a majority of the country by the end of 2010.

Insurers have been testing the data outputs of the iClarify In-Force Renewal Tool with very encouraging results thus far. In fact, we are well within our targeted objective of being able to provide property valuation updates on in-force policies in comparison to total loss cost. RMS envisions several companies will begin using the application to help them quickly identify policies within their property portfolios that are dramatically underinsured, facilitating a refined strategy to dealing with this problem. We are hopeful that iClarify will provide ongoing support to underwriters across Canada to maintain proper ITV levels throughout the property renewal process for years to come.

iClarify continues to evolve. Not only does it offer tools to help the industry solve the ITV problem, it also functions as a property information services portal. Insurers, brokers and agents will be able to log on to www.iclarify.ca and obtain instant access to property underwriting services. Inspections, property images, valuation information, claims histories and demographic information can be purchased as a complete underwriting report or on an à-la-carte” basis. Furthermore, we will be expanding the service for commercial lines underwriters in 2010.We are in discussions with industry participants to determine how iClarify may have a claims application, providing pre-loss information after the occurren ce of a claim.

A PIVOTAL YEAR

2010 will be a pivotal year for iClarify and for the industry in general. The IBC is poised to launch a massive consumer education program educating Canadians on the critical importance of insuring to value. Property underwriting results are under a great deal of pressure and thus it is imperative for insurers to address ITV and shore up bottom line profitability. Our industry has an opportunity to solve a 30-year-old problem and to implement new best practices to ensure the ITV issue does not resurface once again in three, five or 10 years from now. The creation of iClarify is RMS’s next generation of enhanced information technology — an evolution of services.

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One of the unique attributes of the service is that it is not easily duplicated. It has the ability to make sure the image of a home provided at point of sale is indeed the correct dwelling.