Over the past few weeks, a squabble has broken out on the letters pages of Insurance Times. The row started when John Gray, managing director of brokerage GTI, claimed that Polaris was hampering brokers' ability to be competitive.
It seemed a minor gripe, but the issue Gray raised leads right to the heart of insurance distribution in the UK, and its evolution in the coming years.
Polaris was set up to standardise the terms of insurance products so that they were easier to create and bring to market for insurers. The company has two key products: Productwriter, a product definition tool, and Run Time Environment, a product-hosting and rating tool.
Gray had the temerity to claim that the technology was forcing brokers to ask more questions than ever before, slowing them down and playing into the hands of slick new internet intermediaries and direct writers.
A week later, Polaris managing director Martin McLachlan wrote back, claiming Gray's comments were "rubbish". The Polaris boss claims insurers and software houses are largely to blame for a question-set that is too broad.
But the Polaris reaction to Gray's comments was harsh. Technically speaking, Polaris can be set up to allow brokers and intermediaries to quote after asking just a few questions.
But the truth is that this is not happening as widely as it should be. But the blame, as McLachlan attributed it, cannot be placed 100% at the door of insurers and software houses.
CSC marketing director Tony Barker says: "Technically, Martin [McLachlan] is perfectly correct in what he says but he is also wrong. Every software house provides comparative systems and to provide comparative quotes we have to make sure each insurer has the information it needs to quote."
The pertinent point, Barker says, is that a broker is the agent of the insured. He is duty-bound to provide full information to all his panel insurers so that they can quote on a piece of business.
That means, if one insurer tried to be slicker and ask fewer questions, it could prove a pointless task, because a diligent broker is duty bound to ask more questions on behalf of the rest of his panel. This means, for CSC brokers at least, that they are forced to ask a default question set which is too long (about 40 questions).
Slick tricks
If brokers want to be more slick than they are now, if they want to be able to offer quotes from a range of insurers after just a few questions, then they must have more pre-populated fields in their systems.
That means that as soon as they key in a car registration number for example, information from the Claims Underwriting Exchange and the DVLA addressing services is immediately downloaded into the broker's system.
Similarly, for household products, brokers' systems must be pre-populated with perils data. But so far the software houses are stalling.
Philip Nunn, electronic trading manager at Norwich Union, says: "It is a frustration for brokers but it is not the result of a fault with Polaris. It is a problem for the insurance industry as a whole."
The problem is that accessing third-party data from Experian, the Claims Underwriting Exchange and various other sources and integrating it with software-house systems costs more than the software houses – and insurers behind them – are generally willing to pay.
It is also a proving a headache trying to find charging mechanisms to enable such data sources to be incorporated.
"Third-party providers charge on a transaction basis," says Barker. "With insurance, you can get a quote from a dozen people, but you only take out insurance with one of them. There is an issue where we will be paying twelve times for one piece of data. Of course it wouldn't work out like that, but the question is: who pays when third party data is accessed?"
Many believe it is time the general insurance industry moved onto a simpler – but at the same time more sophisticated – distribution model.
Speaking at the company's inaugural roadshow in Bristol, Norwich Union's top team outlined the way they wished for insurance to be distributed.
Their vision is for the insurers to create a portal. This portal will allow insurers to write, alter and rate products far more quickly than is currently the case. Software houses will be responsible only for back-office maintenance and development.
NU is widely recognised as one of the leaders in adopting Polaris technology and, as Britain's biggest insurer, is likely to want any new portal to interface with Polaris.
When and if this portal is up and running, insurers will pressurise software to plug into it. Polaris technology will finally have achieved its desired, dominant position.
Allianz Cornhill ecommerce manager Jeff Turton says several insurers share this vision and believe the XML messaging that Polaris is developing will enable the vision to be realised.
Some readers may wonder in what way Polaris can be linked to the problems brokers have with their long question-sets.
Privately, some software houses believe that if Polaris offered better products than it does, then it would already be more widely used by insurers – and some nervous software houses. If they are correct, then that would mean the next step – implementation of a portal concept – would be closer to happening than it is at the moment.
And, John Gray might be able to ask his clients six questions. Collectively, what is needed now is leadership.
As Nunn says: "I did a ready reckoner and found that there were probably more than a billion quotes a year being offered by high street brokers. There has to be economies of scale if you can pull them together to access third party databases."
Martin McLachlan is right. It is not Polaris' fault that brokers have to ask too many questions. But the problem seems to be that nobody will take the blame.
