Technology will win the race for business

During the six months since the Insurance Times SME conference, the industry's mood has been upbeat regarding the potential offered by the SME market.

Brokers are still the dominant players when it comes to expertise in this market. They have the local knowledge and years of experience to deliver the personal service and trust that SME clients demand.

But the insurance market is on the verge of a significant change in the way SME business is traded. Improving consistency, accuracy and speed is fundamental to delivering a service and price that is acceptable to the customer with a margin acceptable to broker and insurer.

Technology gives brokers more time to focus on service and winning additional business as well as providing a level of protection against the threat of direct writers. Technology development by insurers, software houses and imarket is laying the foundation for that improvement.

Insurer extranets have come a long way and will continue to have an important role to play. However, they can be time-consuming for brokers - it is frustrating that a product '

' for, say, shops or offices, can be traded in volume yet there are so many inefficient processes associated with it. There is no reason why it cannot be much more like personal lines.

Misys brokers are already used to sending standardised risk information to insurers by email and so on using our OASys Commercial software and insurers are getting closer to integration with imarket.

OASys Commercial currently supports a range of business lines including shops, offices and surgeries, contractors, property owners and a number of specialist household products.

Head start
The more brokers that use the software in its current format, the more pressure there is for insurers to integrate. But, more importantly, the brokers that are using the software now will have a head start in that they will be capturing and storing information within their systems and beginning to trade electronically.

Brokers will benefit most from being able to transact directly from their own system.

To enable this to happen Zurich, along with six other insurers and major software houses including Misys, have committed significant, long-term investment and effort into integrating their systems to imarket.

A standard approach is required for both the development of the technology and the handling of risk and cover data, the latter being much more time-consuming than perhaps anyone had envisaged.

With seven software houses and the seven insurers involved in the process, each with different requirements, maybe it isn't surprising that there have been difficulties in agreeing standards.

However, significant progress continues to be made. Work on the process model for new business is complete and discussions are well under way on the definitions for minded to authorise letters and renewals.

A growing number of business lines are now available for software house integration including shops, offices and commercial combined.

Andy Ford, head of customer propositions at Zurich UK Commercial, says: "It is understandable that some people are disappointed at the time [imarket implementation] is taking, but doing this right is costly and complex for any one insurer or software house let alone seven of each.

"It is going to take time to get multiple products from multiple insurers available to multiple software houses. If it's a race it's a marathon, and we only have the first few miles under our belt."

Enhancing product range
Zurich expects to have its shop product available for synchronous quotation via imarket before the end of the year with office following soon afterwards.

The insurer is also talking to a number of software houses, including Misys, about enhancing its imarket product range and expects availability to increase during 2006.

Misys is committed to imarket integration and has participated wholeheartedly in the development of standards.

Misys is currently progressing the development of commercial combined as a priority with a number of insurers including Norwich Union. Feedback from brokers suggests that this will provide them with the greatest benefit as commercial combined is the most time-consuming and costly business line to trade.

It is Misys' intention to implement further business lines as standards are agreed and there is sufficient support from insurers and demand from brokers.

Level playing field
Insurers are without doubt increasingly viewing SME business as a commodity and therefore wish to trade it in volume. Technology facilitates the process, allowing brokers to focus their efforts on their customers. From a service perspective, it creates a level playing field for all brokers irrespective of their size.

Those that make the best use of the technology now available to them are the ones most likely to win the race for SME business as they will have already begun to realise the benefits of trading electronically.

Some may say that the progress towards commercial lines electronic trading and imarket integration has been slower than expected in part due to the number of parties involved.

However, Misys is striving to make this a successful commercial reality as soon as possible.

If you look at personal lines, brokers can't trade without quotation engines and electronic connectivity. This could well be the norm for SME business as early as 2006.

' Stephen James is product management director at Misys