New York, Jan. 23, 1998 — Electronic commerce is revolutionizing the way business is conducted, and now is the time for insurers to take full advantage of integrating business processes and emerging technologies, according to a new study by Insurance Services Office, Inc. (ISO).
"Today, making intelligent use of electronic commerce is enabling insurers, agents, brokers and service providers to gain a strategic advantage over their competitors," says John J. Kollar, ISO vice president of Actuarial Services & Research. "But, tomorrow, use of these technologies will be a matter of survival in a marketplace where customers expect 24-hour-a-day, seven-day-a-week service."
The latest study in ISO's Insurance Issues Series, Electronic Commerce in Property/Casualty Insurance:Strategic Advantage or Economic Imperative? examines technologies that facilitate both inter- and intra-company workflows, as well as communication with customers.
These electronic-commerce technologies include electronic data interchange, the Internet and World Wide Web, imaging, e-mail, electronic fax, electronic funds transfers and smart cards.
The report details current applications of electronic commerce by insurers, agents, brokers, service providers and others. The study includes case studies based on the American States Group, the Norfolk & Dedham Group, J&H Marsh & McLennan Inc. and the Sedgwick Group, and shows how a number of other insurers and industry organizations are using new technologies to improve efficiency and service.
The ability of insurers and others to electronically exchange information in a structured format using electronic data interchange (EDI) standards has introduced real efficiencies in day-to-day business processing. "There is an enormous potential for insurers to save time and money by using EDI technology to upload policy-application information from agents and to download policies and related information to them," says Kollar.
The ISO study points out that insurers can use EDI to feed policy-application information uploaded from agents directly into expert systems that make underwriting decisions. Those expert systems, in turn, can use EDI to automatically order and receive reports from state motor vehicle departments, credit bureaus and other information providers, including ISO.
EDI enables companies to make and receive payments through the use of electronic funds transfer. EDI also facilitates outsourcing functions such as customer service to third-party providers.
Integrating EDI and e-mail with other technologies, such as imaging, can further increase productivity, according to the study. Paper documents can be scanned into imaging systems, making it possible to store all of the information electronically and eliminating the need for paper files, Kollar explains. And, using imaging systems, multiple users can access the same information simultaneously, 24 hours a day, even from remote locations.
The Internet is likely to increase the use of electronic data interchange and is also a promising marketing tool, the ISO study concludes.
"The Internet is a low-cost, flexible delivery mechanism for the vast amounts of data that must be shared, and the Internet lets companies with different computers work with one another," adds Kollar. "While Internet sales of insurance are not yet significant, more and more goods and services are being marketed and sold over the Net each day. Web sites can be accessed by millions of people around the world, and every day more people log on. The potential is tremendous."
A number of insurers have established Web sites that provide an array of services, including rate quotes, assistance in locating agents and the ability to report claims. Some Web sites make certificates of insurance available to third parties. In addition, "cyber-malls" are springing up. These malls enable consumers to obtain quotes for auto, home and life insurance from multiple insurers simultaneously.
ISO, itself, has made increasing use of electronic commerce in recent years. Many of ISO's products and services lend themselves to delivery in an electronic format. For example, ISO uses electronic data interchange to deliver its Circulars to customers and to streamline insurers' submission of statistical information to ISO. And ISO will soon use its Web site to provide customers with access to circulars, forms and information from the Commercial Lines Manual. ISO plans to introduce a production-ready Internet delivery application in the first half of 1998.
"Harnessing the full power of electronic commerce requires businesses to revamp and even reinvent the way they do business," says Kollar. "Yet there is no question, based on our research, that insurers, agents, brokers and other players in the insurance market who make astute use of such technology will be the winners of tomorrow."
Copies of the new ISO study can be obtained by calling ISO's Customer Service at (800) 888-4476.