Truly Altruistic

Imagine those two guys in the MacIntosh v. PC computer commercials agreeing for the common good to integrate their different operating systems and compete instead on product, price and service.

The event would indeed be momentous, and is somewhat analogous to a big moment in broker technology that occurred at the Insurance Brokers Association of Ontario (IBAO)’s AGM last October. At that time, two well-known competitors in the field of broker management systems, Keal Technology and Applied Systems, announced they would be integrating some of their featured technologies and competing with each other on the basis of product and not on data entry standards.

The partnership, now in place, sees Keal’s flagship broker management system (BMS), known as ‘sigXP,’ integrate with Applied Systems’ real-time solution known as WARP.

In a separate agreement between the two companies, Keal’s commercial management system (CMS),ComXP, will integrate with Applied Systems’ broker management system, The Agency Manager (TAM). ComXP allows commercial brokers to do a proposal to a client, issue policies and manage production with the important accounting and other functionalities contained in the broker management system. TAM is insurance agency software designed to provide brokers efficient, relevant workflows that enable CSRs to quickly and efficiently dispatch agency business.

One interesting feature of the deal is the residual question of what possessed Applied Systems to hand over one of its core business features, the WARP technology, to its competitor, Keal. The answer appears to be one of those rare moments that happen in a competitive market environment — altruism. Both Applied and Keal point out that their partnership is intended to help out the insurance industry as a whole.

Put very simply, WARP is a technology interface that allows brokers to communicate (seamlessly and in real-time) the data collected in their BMSes to multiple insurance companies. Its technology solution essentially falls in the category of a single-entry, multiple-carrier interface (otherwise known as ‘SEMCI’).

“WARP is essentially a secured Web service that sits between a broker and multiple carriers,” Doug Johnston, Applied Systems’ vice president of partner relations and product innovations, says. “It’s a translation program, authenticator, communicator.”

When a broker wants to perform a transaction with one or more carriers, an encrypted transaction is communicated out to WARP. WARP authenticates the broker as a trading partner with the end carriers to which the message is going. WARP then takes the message from the broker’s BMS and reformats it into each carrier’s agreed-upon version of CSIO for that line of business, province, time period, etc. It finally communicates the brokers’ data to each end carrier in the way the carrier’s technology is designed to receive the information.

WARP is updated with the latest CSIO standards developed for insurance data communication, relieving both brokers and insurance companies of the burden and necessity of constantly keeping up with CSIO standard updates (although it is recommended that they do so).

In the process, Johnston notes: “The carrier does not have to figure out, ‘How am I going to deal with 400 different brokers on different pieces of software for security or connection or something like that?’ Or, ‘Am I going to have to worry about updating to a different version of CSIO when I don’t know if my brokers are ready for it?'”

The creator of the WARP technology, Applied Systems, is based in the United States. Johnston said he made it no secret during his meetings in Canada that he would be willing to share the WARP technology with other BMS vendors willing to use it. He said he got the call from Pat Durepos, president of Keal Technology. The two companies then discussed how to hammer out an agreement that would benefit both sides — and most importantly their combined 2,000 or so broker clients.

For Durepos, the question was whether the partnership between the two competitors would benefit the broker industry as a whole. Durepos himself started in the insurance business as a broker in the early 1970s. “I’m the CEO of Keal, and I operate it with the idea that I’m a broker and, as a broker, does this make sense?” he says of his professional background and its influence in forming the partnership with Applied. “Is this something that brings value to the brokers? I think that that helps us.”

Keal is the exclusive distributor in Canada of a data-integrating product called Nexysis, which Durepos describes as “as close to being the same type of product to WARP as you can be.” Durepos notes Nexysis and WARP have a lot of the same functionalities, although he notes that WARP is “more robust,” handles more transactions, has been in the marketplace longer and is distributed in both the United States and Canada. Nexysis, on the other hand, is unique to Canada, entertains transactions in the personal lines business, and is unique in the way it handles basic functionalities such as uploading new business and endorsements, and looking after renewals.

The Canadian marketplace has insurance companies like AXA using Nexysis, while others, such as ING Canada, Royal & SunAlliance Canada and Aviva, are using WARP. Keal could have opted to develop new data communications technology to compete with WARP’s offerings. But Durepos said he didn’t want to “reinvent the wheel.” Partnering with Applied opened up the WARP market to brokers using Keal BMS systems, while at the same time giving Applied access to Keal’s clients using Nexysis.

Business-wise, the deal doesn’t really give WARP technology’s creators anything other than additional brokers. Johnston notes some in Applied’s sales force were scratching their heads wondering why Applied just gave away one of the core features of its products. “The software component that we plug into the agency manager in Canada that allows WARP communication with carriers can now be plugged into the Keal product,” Johnston says. “So what Keal gets out of it is not having to program all of that data communications, the security, the CSIO XML communications. Basically they can take this module with a programming hook and embed it into the Keal management system and instantly get the same communication that’s available to Applied customers. The advantage [for Keal] is, Pat doesn’t have to spend millions of dollars trying to figure out how to do this.”

And the advantage for Applied? “Well, the advantage to carriers in Canada is that instead of 1,000 brokers having access to this technology, now 1,800 have access to this,” Johnston says. “From a carrier’s perspective, it makes life a little easier now that there’s almost twice as many brokers that can be transmitting CSIO XML.”

Durepos agrees with Johnston that if Keal and Applied are to compete, they should compete on BMS systems and not on technology that will help the entire industry in its gradual conversion to CSIO XML standards. Over the long run, the consistent use of XML standards may do away with the need for translator programs. But until that time, Keal and Applied believe their agreement will be better for the industry as a whole.

“It’s kind of working with your competitor,” Durepos says. “But the way we look at that is that WARP may be owned by Applied, but it is a unique and good product that is also a beneficial tool for our clients. On that basis, I often compare it to ABS brakes that we all use [in our cars]. The ABS brake was an invention by one of the large automakers. But when I ask people who developed the ABS brake system, nobody can tell me. Chrysler uses it, Ford uses it, GM uses it and Toyota uses it. And guess what? ABS brakes have got better, they’re cheaper, so they’re part of every automobile.

“It’s really not important who owns the ABS brake technology. What’s important is that the consumers have a good, efficient technology at a reasonable price. When I go back to insuran ce, I say this is very simple. We’re going to partner with WARP — we’re really partnering with Applied — and we’re going to use that technology instead of reinventing the wheel and using our clients’ dollars to build the same type of technology.”