Insurance Industry
Data Exchange
Don Anderson was on the front line when banking history was being made. He was project manager for development of the first debit card in the world in the early eighties, and was project manager when the card was tested in Swift Current, Saskatchewan, from 1983 to 1985. The creation and evolution of INTERAC represents nothing less than the transformation of an entire industry.
Instead of being forced to use identical systems to facilitate information exchange, banks and credit unions were able to keep their own systems and communicate freely with each other. A common language allowed them to share information. Based on this experience, Don Anderson is a strong advocate for business networks underpinned by standards that enable information exchange. He now sees opportunities in other domains, including geospatial data exchange; integrated policing and justice, and insurance.
Instead of being forced to use identical systems to facilitate information exchange, banks and credit unions were able to keep their own systems and communicate freely with each other. A common language allowed them to share information. Based on this experience, Don Anderson is a strong advocate for business networks underpinned by standards that enable information exchange. He now sees opportunities in other domains, including geospatial data exchange; integrated policing and justice, and insurance.
Applying this Model to the Insurance Industry
Anderson says the insurance industry is currently facing a number of challenges. Thousands of independent brokers use disparate management systems, and insurers are at different stages in modernizing their technology platforms. Technology platform vendors are working on proprietary solutions in isolation, rather than tackling industry needs collectively. The industry is a complex ecosystem of managing general agents, wholesalers, claims adjusting firms, and more, who require access to information through the full life cycle of insurance transactions. Yet there is very little consensus on the urgency of digitization.
The industry is ripe for disruption, Anderson believes. The cost of selling commercial insurance through the Canadian distribution channel is too high. Expense overheads average about 32%, split between broker commissions and the cost of running an insurance company operation. Making transactions more efficient will produce cost savings while at the same time improving service to the customer.
Unfortunately, until now, brokers and insurers have been investing independently in new technology. These new systems lack the ability to exchange information, except where special arrangements have been made between counterparties. There is no standard industry information exchange capability. That may now change. The industry seems finally to be realizing that it makes sense to work collaboratively on this problem so the solution and investment cost is shared.
The benefits are significant. Carriers will benefit from expanding the number of broker firms accessing and selling their products online. Brokers will be able to maintain their position as a key contact point for their clients, with wide access to comparative information on different product and policy offerings. Customers will benefit from increased ease of doing business, broader selection, a better deal, and a broker’s local knowledge. The industry will benefit from clear lines of responsibility and authority for transactions, transparent customer support irrespective of location or product line, and cost minimization through centrally supported standards.
The industry is now actively exploring options. Don Anderson's latest adventure involves a real-time data integration between brokers, carriers, and third-parties based on standards established by the Centre for Study of Insurance Operations (CSIO).
The industry is ripe for disruption, Anderson believes. The cost of selling commercial insurance through the Canadian distribution channel is too high. Expense overheads average about 32%, split between broker commissions and the cost of running an insurance company operation. Making transactions more efficient will produce cost savings while at the same time improving service to the customer.
Unfortunately, until now, brokers and insurers have been investing independently in new technology. These new systems lack the ability to exchange information, except where special arrangements have been made between counterparties. There is no standard industry information exchange capability. That may now change. The industry seems finally to be realizing that it makes sense to work collaboratively on this problem so the solution and investment cost is shared.
The benefits are significant. Carriers will benefit from expanding the number of broker firms accessing and selling their products online. Brokers will be able to maintain their position as a key contact point for their clients, with wide access to comparative information on different product and policy offerings. Customers will benefit from increased ease of doing business, broader selection, a better deal, and a broker’s local knowledge. The industry will benefit from clear lines of responsibility and authority for transactions, transparent customer support irrespective of location or product line, and cost minimization through centrally supported standards.
The industry is now actively exploring options. Don Anderson's latest adventure involves a real-time data integration between brokers, carriers, and third-parties based on standards established by the Centre for Study of Insurance Operations (CSIO).