The Connectivity Challenge and the Future of Insurance Agents

Connecting the insurance ecosystem through the power of technology could answer the decades-old problem of duplicate entry for agents. Agents still must navigate through multiple carrier portals to complete a single quote, despite the promise of integrated solutions. Or agents hit barriers trying to utilize agency data when one technology platform simply can’t “speak to” or connect to another platform.

When systems do not connect, the agency is stuck with the burdensome process of manually keeping up with the same information in two places. Brendan Mulcahy, vice president, technology & innovation partnerships at SIAA, believes connectivity remains the biggest barrier for agencies when it comes to implementing and adopting innovative agency technology.

“Connectivity between platforms – it’s an issue,” Mulcahy says. “I think it’ll get better at some point, but it is still one of the biggest pain points in the industry right now.”

Artificial intelligence (AI) shows promise in achieving greater efficiency across the insurance value chain through connectivity.

At the same time, there are those who question the focus and urgency of connectivity given that independent agencies are doing just fine.

Why Advancing Connectivity in the Agency Is Needed

Margeaux Giles, CEO of IRYS, agrees with Mulcahy that connectivity is a priority and decided to try to do something about the lack of connectivity with agency management systems.

As the chief operating officer of OIG Insurance, an independent agency in Tampa Bay, Florida, Giles managed all IT operations and experienced firsthand the shortfalls in what her agency’s management system could do, or not do, because it couldn’t connect with other platforms.

“At every turn I would try to do something and realized, well we’re limited by that, or I would try to run a report, or get analytics on something, and I was told, ‘No, you can’t do that,'” she said. Other times she would attempt to integrate the agency’s management system with a new insurtech platform. “And I was told, ‘No, we don’t want to integrate’ … I got so frustrated that I left.”

So she and her agency team decided they were going to build out their own system. Soon after they did, she found other agencies calling her asking for advice.

“That morphed into a consulting role because I started getting calls from my carrier partners and other agents asking what we did,” she said. “So, I opened up a small consulting firm on the side while I was running the agency and we blew up.”

Giles founded GoGiles, a consulting firm focused on technology for the insurance industry in 2017. Within two years, Giles’ consulting work had boomed, bringing in $3 million-plus in sales just on agency consulting.

The same questions always came up, she said. “We kept getting asked for connectivity and we kept getting asked to build agency and carrier APIs.” [An API, or application programming interface, is a set of defined rules that enable different applications to communicate with each other.]

“These big insurtechs kept missing the mark” when it came to connectivity, according to Giles. So she and her team set out to create a new agency management system that fills this void. That’s how IRYS was born, a cloud-based open API software platform for insurance distribution that focuses on connectivity across agency departments, locations and through various insurance industry verticals. Giles says by the end of the year, IRYS will have raised close to $10 million in funding.

There is room for improvement in the agency management world, Giles says. What many current technologies do not provide is open connectivity to fully utilize one of the most valuable assets of an agency – its customer data, according to Giles.

For example, with her old system she couldn’t accurately forecast what customers were going to leave the agency and who was going to stay.

“Because we had a CRM and an AMS that were two different systems and there was no crossover,” she said. That made running analytics between those two systems difficult. “Predictive analytics was impossible,” she added.

What pushed Giles and her agency to make the leap and leave their current AMS vendor was realizing that some new insurtech platforms that could help solve a specific agency problem were not available to connect at all.

“There were all these really good insurtech solutions – I call them end point solutions – that were solving one part of a problem like COIs (certificate of insurance) or compliance,” she said. “I would ask, ‘Do you have an API or a file I can export so I can get my data from your system to theirs and back?'” The answer was a firm no, according to Giles. Or the data would only be given in an “unstructured format,” she said. “So, you get all of your data fields, you get all of your data, but it’s all in a different format and there’s no way to map it,” she said.

For IRYS, the number one priority is to build on APIs, or open connectivity, she said.

“Our model of revenue is not the data, it is the software,” she said. “Software as a service company, we’re a SaaS company, so we don’t charge for data backups, we don’t charge for API access, we don’t charge for documentation, and we don’t shake the filing cabinet before we hand that data over,” she said.

ACT

Not everyone agrees that open connectivity is critical and not all agents want to be technology experts.

What forward-looking insurance companies and agencies are asking for is a truly open environment where all parties share the exact same set of standards and structure, says Chris Cline, executive director of the Agents Council on Technology. These companies and agencies are saying, “We just want everybody to open their stuff up and quit walling off the unique proprietary data.”

That sounds great but part of the problem lies in one of the hallmarks of the independent agency channel, he says. That is differentiation.

Part of what makes an independent agent and an independent agency carrier different are the nuances found within their product, pricing and appetite, Cline says. “I think for us to all differentiate, we probably need to ask different questions, and/or use different rating variables,” he said.

Cline thinks this might be where the future of generative AI can help.

“Maybe AI feeds that and it starts to help us, and the systems start to understand where to go to get the data for an agent or the carrier when a standard question set is used to generate a quote or an endorsement request or whatever so that it dramatically reduces or completely eliminates the need for an agent then to go in to two or three different websites.”

Cline admits that while there are many aligned interests when trying to create a more connected industry through technology, there are competing interests impeding that progress, too.

While there may seem “a lot of noise on social media, LinkedIn and Twitter from folks screaming for carriers to open their APIs and for agencies to get on board,” Cline says most agencies don’t really know what that means.

“What I’ve really deduced is that most agencies don’t want to be technology professionals,” Cline says. “They don’t have the capabilities to build that out, that kind of function.”

Most people just want their stuff to work in the morning, he says.

Another consideration – most agencies are already in pretty good financial shape today, he says. “I mean, if you use the Big I’s Best Practices data, agencies are worth more than they’ve ever been and their margins are increasing,” he said. “And so, it’s hard to convince somebody who’s doing that well to change.”

Cline has one utopian thought for the future of agency technology. “This is easy to say because I’m not running a tech company, but build a modular product suite so that everything that you build works phenomenally together and make it cool enough and easy enough to use,” he said.

He likens this idea to the Apple ecosystem. “You can do a whole lot of cool stuff as long as you’re inside it.” And people just don’t care that they can’t connect outside it.

More Work to Do

Andrew Wynn acknowledges that achieving seamless connectivity with carriers and industry vendors can be a challenge. But he believes that the integration of core workflows like claims, billing and policy management through technology is a critical step in streamlining operations for the industry.

Wynn is co-founder and co-CEO of Ascend, an insurtech and technology firm focused on online tools that modernize all agency bill related operations.

“The progress varies across different segments of the industry, with some carriers and vendors offering more robust integration solutions than others,” Wynn said.

“While some agencies benefit from advanced digital platforms, others still grapple with legacy systems and manual processes.”

To truly create a more connected insurance world for agents, brokers, carriers, networks and vendors, the industry needs to prioritize standardization, interoperability, and data sharing – not closed and proprietary systems, Wynn told Insurance Journal. “Only through greater collaboration and technology-driven initiatives can we achieve the level of connectivity that will empower all stakeholders to thrive in the evolving landscape of insurance,” he added.

One challenge is finding the right platform that everyone can agree on and then making the change, says A. Morris “Mo” Tooker, head of middle, large, specialty commercial, and enterprise sales and distribution at The Hartford.

The Hartford recently announced that it expanded its digital capabilities with new submission and quote APIs, and portal options for agents and brokers who write midsize and large businesses through a partnership with Highwing, Inc., an insurtech focused on providing data management and processing solutions for both brokers and carriers. The new capabilities could save time and increase accuracy, The Hartford says, giving agents and brokers easier access to share submission data and request a quote for general liability, auto, property and workers’ compensation accounts.

Tooker says that finding the right platform with enough interest from both brokers and other carriers is the first step toward better connectivity, at least in the middle market space. Highwing’s other carrier partners include Travelers, Zurich, CNA and QBE.

Another hurdle to overcome is just change management, Tooker says. “You’ve got agents against one wall, you’ve got carriers against the other, and nobody’s really dancing even though everybody’s signed up for the same platform,” he said.

That’s why The Hartford is choosing to invest and experiment through multiple tech avenues, Tooker said. “Our digital capabilities are built on agent and broker feedback,” he said. Experimenting is critical now. “That’s where we’re at, whether it’s a carrier or an agent, it’s time to get off the sidelines and put a little bit of time and money into this experiment to learn so that we all develop together.”

Benefits

There is tremendous opportunity for those firms willing to experience and succeed in connecting the insurance value chain, according to Ellen Willadsen, chief innovation officer at Holmes Murphy, an independent insurance agency based in Des Moines, Iowa. In 2019, Holmes Murphy leaders helped fund and launch BrokerTech Ventures, a broker-led convening platform and insurtech accelerator program focused on delivering innovation to the insurance broker and overall industry at-large.

“A great opportunity for the insurance industry is to improve the flow of data,” Willadsen added. New innovations around artificial intelligence could help close the gap in connectivity.

“The largest opportunity is if the AI systems are able to talk to each other,” Willadsend said. “The use of AI will (and does) help us today, but there is greater opportunity.”

Some startups have created tools to help with workplace efficiency, she said. A few that participated in the BrokerTech Ventures Accelerator last year include Comulate, Adapt API, and IRYS. But any technology that assists with reducing redundancy and eliminating repetitive tasks should be the focus for the industry as it strives to improve productivity, Willadsen maintained.

Giles and others agree AI will play a role in the future of agencies. While AI is not new for the industry – it has been used in many insurtech platforms for years – its accessibility to the average person is new, Giles said.

“There are a lot of use cases for generative AI, including training,” Giles said, noting that 40% of the insurance workforce population is retiring, and new people in insurance will benefit from having a generative AI knowledge center where they can ask questions on workflow or coverages.

There are other use cases involving claims management and policy checking as well, she added. But if that AI technology can’t connect to the agency management system, then how can it help?

Giles admits there have been plenty of other startups with the ambition to solve the connection problem facing agencies, carriers and vendors in the past. But in her opinion, the missing piece is connecting the agency management system, she said.

“Carriers do invest a lot of money in building out APIs, so they can put APIs around their quote and their bind and their billing,” she said. But if agents’ management systems don’t have APIs and don’t connect then those carriers are building bridges to nowhere, she said.

What agencies really need is to connect with their carriers more efficiently on their current book of business, Giles maintains. “It’s great that we can quote and bind – we love quoting and binding and everybody loves making money – but as an agent, my business model is on retention,” she said. “If I can’t service that account, if I don’t know if they’ve missed a payment or I don’t know that they’ve added a vehicle and I can’t manage the account after I sell it.”

That’s a big problem and it’s something that she’s hoping cloud-based, open API capable technologies can solve. “If we are connected to carriers directly for service API, that would be helpful to the agent,” she said. But even more importantly, connectivity will help the insured, she said.

Understand Agency Goals

Not everyone needs to be a technical expert to know what they need in their agency technology, says ACTS’ Cline.

“So when you think about an agent, most went into insurance because they wanted to be insurance professionals or they wanted to work in the industry but now they have to be a marketing professional, a cyber insurance professional, a data privacy professional,” he said. “Now we’re telling them they need to be technologists.”

SIAA’s Mulcahy says when trying to streamline efficiency in independent agencies it’s important to remember to go back to the basics.

“First, we tell everyone … and I wish I didn’t need to tell everyone this … but have a website, have a Google profile, and have an agency management system,” he said. “Yes, we still run into people who don’t have these things, unfortunately.”

Mulcahy sees some agencies making mistakes when they do not have a good process for keeping their data up to date, downloaded, reconciled and consistent. “That’s a big problem and I think a lot of people don’t focus on having the process in place by which they use their technology.”

He also sees a sufficient need today for agencies to have a good CRM in place. “I think in this day and age, most people should have one to manage your communications with your current customers, and with your prospects.”

Also, make the move to a paperless and VOIP phone systems if you haven’t done so already, Mulchay added. Both are solid risk management tools for documentation when it comes to agency E&O exposures.

But at the end of the day, Mulcahy stressed, technology is not the goal.

“Technology helps you to achieve a business goal,” he said. Any management system will help in terms of efficiency. “It just comes down to understanding the system and implementing the right processes.”