Data, information and knowledge are the heart of the insurance business. Each policy is composed of a set of data that can vary substantially. Risk management is a complex process that implies the availability of rich and accurate information and knowledge. In our fast moving world, connectivity and articulation between insurance industry players is therefore mandatory. Information and communication systems and technology (ICST) can provide this connectivity, allowing insurance partners to become closer and able to reach better negotiation, reducing response time and costs and probably creating new business opportunities (Strazewski, 2001). Insurance intermediaries (brokers and agents) are important players in this scenario. They act as consultants operating independently from insurance companies, being specialists in providing services to their clients, gathering the best solutions thanks to their vast knowledge of insurance companies’ products. Consequently, they achieve the best insurance contracts at the least cost (APROSE, 2005a, 2005b). Being a great value-adding activity, insurance mediation is also very complex. To operate in an effective and efficient way, intermediaries need to establish a good connection with all entities in the industry and electronic business can help insurance intermediaries’ business model in both business- to-business (B2B) and business-to-consumer (B2C) dimensions. In B2B, intermediaries establish relations with insurance companies, agents, banks and official entities. In B2C, intermediaries establish relations with their clients, giving them all the necessary assistance in a customized and fast way, since the first contact and during the policy’s whole life cycle, offering the best solutions according to their needs. However, in spite of all the apparent and potential benefits, intermediaries are not grasping all the advantages that electronic business can provide. This definitely relates to a very important issue, the integration level between the different players’ information systems. Analysing the situation from the intermediary perspective, this article exposes the problems faced by intermediaries and insurance companies all over the world when trying to integrate their business electronically and how these can be overcome so that partners can fully benefit from the opportunities here identified. The methodology used includes a deep case study involving a Portuguese intermediary having a significant level of integration with an insurance company. Results are compared with situations reported in other countries, leading to the conclusion that most of the problems and barriers here identified are being experienced worldwide. Conclusions bring significant implications for information science and technology (IS&T) and add important contribution and knowledge to research in this area.
This case study involves three entities: an insurance intermediary, an insurance company and a software house specialized in the development of technological solutions for the insurance industry.
A deep study of the software house clients highlighted the case of an insurance intermediary having a significant level of integration with an insurance company. Interviews with representatives from the different companies have shown that in spite of strong and continued technological and financial efforts the parties were still far from having reached a satisfactory solution. Legal, technical and organizational issues seem to be burdening the integration process, maintaining an inefficient status quo and preventing the parties from grasping the desired benefits. It was then decided to deepen the analysis in order to foster knowledge in the area and assist in the development of proper solutions.
The intermediary in our case study uses GIS® Agents & Brokers (developed by I2S Informática-Sistemas e Serviços SA: www.i2s.pt) for managing its own business, but also to transfer data to/from the insurance company Web site. Any break in the electronic data flow, internally or between parties, adds additional costs at several levels. Information systems must support the integration of processes across the extended value chain.
Key Terms in this Chapter
Single-Entry Multiple Company Interface (SEMCI): Single Entry Multiple Company Interface (SEMCI) is a computer system based on service-oriented architecture (SOA). SEMCI acts as an interface which connects the agent information system to the information systems of multiple insurance companies.
Extensible Markup Language (XML): XML is a set of standards that specify how to structure a text-based document for communication between two computers for any number of purposes. It allows incorporating metadata in the message to be exchanged, so the data may be transmitted and understood by the receiving party.
Service-Oriented Architecture (SOA): The Service-oriented Architecture (SOA) is an approach to Enterprise Architecture where each major element is presented as a “service.” A SOA solution materializes in a distributed computer environment with a high level of interoperability between the existing systems and eased integration of new functionalities. It allows combining and recombining software components, which is expected to reflect on business processes’ flexibility.
Electronic Business: The electronic business concept is used to describe business conducted by electronic means, often over the Internet. It may be understood as a combination of business strategies and distributed processes that use technology to manage the electronic transfer of data and information between business partners. It may concern the exchange of structured and unstructured data and information.
Association for Cooperative Operations Research and Development (ACORD): ACORD (Association for Cooperative Operations Research and Development) is a global, nonprofit insurance association whose mission is to facilitate the development and use of standards for the insurance, reinsurance and related financial services industries.
Insurance E-Business Expert Group (EG7): eEG7 is the European forum for the development of e-business standards for electronic communication in the insurance sector. It is one of the e-business Board for European Standardization (eBES) groups. eEG7 aims at facilitating the transfer of information between policyholders, professional intermediaries (agents, brokers), insurers and other involved parties. Its standards support the placing and administration of insurance contracts, claims handling and accounting.
Insurance Intermediary or Insurance Broker: Insurance brokerage is a remunerated activity whose main goals are to facilitate the settling of insurance contracts and assist them over their lifecycles. An insurance intermediary or insurance broker is a consultant operating in the insurance sector, independently from any insurance company. He specialises in providing services to their clients, and gathering the best solutions thanks to their vast knowledge of insurance companies’ products.