Online Certificate Systems Reap Benefits for Agents and Consumers

Large commercial insurance agencies, issuing perhaps tens of thousands of certificates of insurance per year, often face a dilemma: how can the process be made more efficient and effective? However, technological developments over the past few years have resulted in a variety of electronic certificate of insurance solutions.

Currently, agents and brokers, insurance companies, insureds and risk managers can choose from roughly a score of companies that provide for the electronic delivery and tracking of certificates. Two major players in this arena are San Diego-based ConfirmNet Corporation, whose first product is CertificatesNow.com, and the VeriCert Exchange Network™, based in Dallas, which recently released an enhanced version of its product, VeriCert 2000.

The breakdown

A rough comparison of these products shows that both serve a variety of clients, including agents and brokers, insurance companies, direct writers, insureds, and, in the case of VeriCert, risk managers.

The CertificatesNow.com system is 100 percent Internet-based while VeriCert utilizes both the Internet and software for the delivery of certificates. This delivery can be accomplished by fax via the Internet or e-mail. There are download, print, renewal, self-serve insured access, and certificate tracking options.

“We’re an Internet application service provider (ASP), meaning that companies access the product through our CerficatesNow.com web site and use the services on a pay-as-you go basis,” explained William Mudge, president and CEO of ConfirmNet. “[We bring] the entire package, from certificate creating, delivery, data and storage.”

“We are the only certificate service that has been exclusively endorsed by the Independent Insurance Agents of America [IIAA]…as a part of their thrust to help agents become more Internet-oriented,” Mudge added.

Big “I” Certs, powered by CertificatesNow.com technology, is being offered at a reduced rate to IIAA members—$150 for the annual subscription fee and a 5 percent discount off transaction fees.

Another major feature of CertificatesNow.com is that it has eliminated the need for duplicate data entry, a boon that can significantly reduce an agency’s errors and omissions liability exposure.

However, Gene Eisenmann Jr., VeriCert’s senior vice president, noted that his company is “creating portals to every agency management system available to where they will communicate back and forth [and] the double entry argument will no longer exist.”

Eisenmann also commented on recent changes at VeriCert. “At the time [VeriCert originally developed its first product] three years ago, connectivity wasn’t fast enough for a browser-based system to be effective…We developed a 32-bit, client-based software product for certificates of insurance…Essentially, we are an application service provider network (ASPN). We can network between the client and the agency, between the agency and the insurance carrier, between the agency and the certificate holder, and between the agency and the risk manager.”

Eisenmann said that while VeriCert will eventually go completely browser-based, it hasn’t yet done so due to the speed of connectivity. Clients can therefore make a choice between having VeriCert software for speed, or they can use the browser request.

VeriCert also made some recent significant changes in its pricing. “If you’re an agent, you can get VeriCert for free,” Eisenmann said. “The pressure from the risk management community to tear down the barriers of usage so they could require it led us in that direction.” The charge is 32 cents per certificate.

Clearing up agency anxieties

Most agencies already have agency management systems—which do everything from being a contact manager for clients to accounting to managing all of the office aspects of running an insurance agency. The question may arise that when an existing agency management system provides options for issuing certificates, what would be the benefit to that agency of signing up for an online certificate product?

“With many agency management systems, you have to create a certificate of insurance as an original event,” Mudge said. “Every time someone needs [a certificate], you have to physically print it out and mail it. In our system, you only create a certificate of insurance template once for a client. Then, because it’s resident on the Internet, you can replicate new certificate requests for your client.”

Moreover, insureds can issue their own certificates and the system allows those certificates to be e-mailed and faxed. “Most, if not all agency management systems don’t have all of that horsepower,” Mudge said. “We’re not trying to necessarily replace [agency management systems]; we turbo charge the process.”

VeriCert’s Eisenmann agreed. “We’re trying to develop and enhance customer service and efficiencies for agents,” he said. “We’re currently in negotiations with a very large agency management vendor to form a joint venture and integrate completely into their software…Pretty soon everyone’s going to have access to our product just due to the fact that they have access to this certain agency management system.”

Addressing agent fears

Another conundrum for agents goes back to a reluctance to relinquish a value-added service and risking disintermediation. How do these companies address the concerns of agents who believe that allowing insureds to issue their own certificates will eliminate some of the contact agents have with those insureds?

Eisenmann said it is a question he addresses every day. On the other hand, he points out that past fears that direct bill by the carrier would result in a loss of connection with the client were unfounded.

“Your connection with your client is providing them with the best service,” he said. “The client’s going to find out about the availability of this service, and he’s going to question the agent, ‘If you’re so good, why did you not make me aware of this?’ Now, the person who orders five and 10 certificates a year is not going to suffer, but the person who orders five and 10 a day really wants the service.”

Indeed, Mudge said that many clients get frustrated with their agency because they can’t get a certificate when they need it. “[Often] they don’t [even] talk to their agent to get a certificate,” he said. “They talk to a service rep in the agent’s office to get a certificate.”

Other than giving the customer back some of the power in the transaction, Mudge believes an agent’s value is enhanced by virtue of the fact that agency resources are freed up. This allows an agent to be more available to insureds as a risk management and claims consultant.

But how eager or even willing are insureds with respect to doing the work themselves? “There’s nothing in our system that mandates that insureds have to issue their certificates,” Mudge said. “It’s merely a service available for the agent to give to their insureds…Even if the agent doesn’t give the insured that capability, we save the agent probably in the neighborhood of 80 percent or more of their operating costs that are related to creating, issuing and managing certificates of insurance.”

Self serve certificates

Mudge gave two examples of clients who prefer to self-serve. An agent customer on the West Coast has insured clients operating on both the West and East coasts. The East Coast operations of that insured always had to wait three or four hours a day for the West Coast operations to be open for business.

Meanwhile work is happening in New York and Florida and Georgia, but those people can’t get their certificates. Having a self-serve option to issue certificates 24/7 is extremely desirable to that customer.

“The fact that their business is now not dependent on time zone changes and their agent being open for business has given them a real lift in terms of their relationship with their agents,” he said.

Large contractors, who must provide a sample of a certificate of insurance on all of their bids, can also greatly benefit from being in control of their ability to bid their own work. “They feel they are in charge of their business again,” Mudge said.

While the insurance industry has been sometimes taken to task for not exactly embracing the consumer, innovators are working towards making it clear that there is a new way of doing business.

“The way that business has been sold and the way that business has been serviced in the past has to be looked at with a new eye, both in terms of empowerment of the customer in the process as well as the economic advantages of the service equation,” Mudge concluded. “Doing business the old way is not going to be a recipe for success going forward.”