Uneven development means full-cycle EDI has not had the anticipated impact on the broker market. Brian Binnegar finds out who is using it.

The biggest disappointment (scandal, some might say) suffered by the broker market has to be the non-appearance of widespread full-cycle EDI by 2000. Who could have predicted that more than ten years after insurers first gathered under the Brokernet banner, the dream would remain unfulfilled, despite the millions spent on the project and on Polaris? Manual communication still rules, and insurers who cannot carry out large volume full-cycle EDI far outnumber the few who can. So who are the winners and who the laggards?

There is no straightforward answer. It depends on which brokers you speak to and is intertwined with progress in the software houses. An insurer conducting full-cycle communication with the users of one software provider could be at square one with another. The software houses in their turn may be up to speed with some insurers but not with others. The historical reason for this uneven development has nothing to do with technology. It rests on relationships between individual insurers and software houses. Those associations often depend on factors such as fees, transaction charges, development levies and the number of users, or the clout that any large intermediary may have brought to bear on the insurer.

Brokers' ability to use full-cycle EDI similarly depends on their choice of software provider, a selection often made many years before in a totally different trading environment. Luck plays a part as to whether a broker's preferred-insurer list matches that of the software house, a fact confirmed by David Cubbin of Ryan Insurance Group. He says: "On our Cheshire Data System we now handle 90% of our new motor business by EDI, but there are only five insurers with whom we can operate full cycle." These are Bishopsgate, Broker Direct, NIG Skandia, Provident, and Sabre.

Tony Chuter of Academy Insurance confirms the firm has full cycle with Bishopsgate and Broker Direct on its Penta system. Simon Bolam of E H Ranson uses CSC Ultra, which he says is ideal for telesales capability and also contains a useful statistics extraction and back-office facility. Current full cycle only takes place with Link and Provident, although this does not include renewals as yet.

"We derive enormous benefits from having these facilities and it is unfortunate that so few other insurers are ready to transact full cycle," says Bolam.

Nigel Richardson of Woolwich Insurance Services is also concerned that so many insurers are still unable to accept full cycle for one reason or another. "Until they do, the market cannot achieve the cost savings that were originally promised," he says. The delay has been made longer, he believes, because each insurer wants to do things slightly differently.

Adding additional questions, such as lifestyle, has inhibited progress. "In many cases these additional questions are being asked after the quote has been given, being inserted merely to allow the insurer to build up its data. In the future, insurers may have to obtain this information by alternative means," Richardson says.

Graham Heathfield of Gladiator Insurance Services also expresses disappointment. "Not only is full cycle not firmly established, but there are still insurers out there with whom we can't even transact new business EDI," he says. "Our worry is that many insurers seem to treat full-cycle EDI as some kind of 'optional extra', when what is needed is total commitment."

Gladiator switched from Penta to Cheshire and handles full cycle with Bishopsgate. Others that are close, except for temporary changes and renewals, include Axa, Drake, Gan, Link, NIG Skandia, Provident and Sabre. "Norwich Union accepts full cycle, but only for very straightforward risks. Anything out of the ordinary has to be dealt with manually," explains Heathfield.

Martin Wood, managing director of KGJ Insurance Brokers, agrees the larger insurers seem to have other things on their agendas so, although they can receive some EDI, there is often a manual intervention along the way, which may even involving re-keying of data.

KGJ transacts via Misys with Broker Direct and Bishopsgate, following the Northern Star integration. "Others are very slow to take up full cycle, which is a pity because the elimination of all manual tasks is the way forward," says Wood. "It amazes us that some insurers, even some of the larger companies, still produce new products that involve manual intervention. We find such products difficult to take on board since the long-term answer is for automation along the lines already operated by a few insurers. We need more insurers to take up full cycle."

Richard Hartley of Insurance Solutions uses Penta, with full cycle currently available with Bishopsgate. This agency came about following the integration of Northern Star and Hartley notes that, although it is good news to be dealing with one of the few insurers that can handle full cycle with Penta, one problem is that the product cannot accommodate direct debit instalment schemes. "While the Gan [now Groupama] EDI facility does not operate full cycle, it works well for new business with minimum hold-ups," Hartley says. "We previously used Folgate and Commercial Union. The CU motor product was competitive but unfortunately the GA products dominated following the merger and we lost a useful contract."

Time moves on and EDI itself may be eclipsed by more efficient methods of delivery. Large intermediaries such as Woolwich favour delegated authority, whereby EDI can still be used as a means of transferring data but does not interfere with the interface with the customer.

Richardson says: "In our case, the key is a branded Woolwich policy, underwritten by a panel of insurers. Customer contact is therefore unaffected by any delays or misunderstandings between intermediary and insurer. The ultimate future lies with the internet and digital TV; customers will largely input data themselves. That will then release human resources that can be creatively concentrated on customers' needs."

According to Wood: "The future use of technology at KGJ hinges on what our customers will expect from us. If they want to use the internet, they can do so. If they want to come and see us face-to-face, they can do that too. People will inevitably start to do more things themselves and we can help them in that process. We will use the technologies as tools to provide that help, but for the present full-cycle EDI is capable of much more than is already being achieved."

David Cubbin has no doubt about the virtues of full-cycle EDI. EDI business took off in 1997 and it quickly provided Ryan's with advantages such as point-of-sale benefits, better accuracy and more productive workloads. "Whereas our staff once had to chase administration, this has largely been eliminated so they can now concentrate on more productive issues," Cubbin says. "It is disappointing that progress on full cycle is slower, but the business we are already transacting in this way proves what can be achieved."

Terry Stanley of Broker Direct confirms that if it is to be effective, electronic communication must include everything, especially renewals. "We have stretched the software houses and brokers simply because we had to," Stanley says. "It was hard work, but worth it. Our brokers now enjoy the benefits and, since we are a pioneer, we have also helped the rest of the market."