The security and integrity of an insurance company’s policy administration system is a key factor in developing real-time solutions for brokers to make policy requests to their insurers – an element brokers might overlook in their wish to see better connectivity with carriers.
Representatives of iter8, a software solutions provider to the insurance industry, made the point while talking to Insurance Business about the company’s new solution for real-time policy change for personal property.
Paul Reed, chief technology officer at iter8, noted that brokers emphasize simplicity, speed and efficiency when they think about communications between their broker management systems (BMS) and insurers’ systems.
But insurers’ systems require a great deal of complexity involving underwriting rules and this can be a complicating factor when trying to implement real-time policy change solutions.
“There’s a lot of underwriting that has to happen [in the carrier’s policy administration system] that isn’t enforced in the broker management system,” Reed noted.
For example, if a broker makes a request to delete a vehicle from a two-vehicle policy, the insurance company’s policy administration system has to make sure any multi-vehicle discount is removed from the first vehicle. Or if the driver on the vehicle deleted is under-aged, the carrier’s system must transfer the under-aged driver as an occasional driver on the second vehicle.
“This is something that a broker system does not enforce,” Reed noted.
Also, a policy change request from the broker transfers only partial policy data to an insurer.
“We’re not just taking blindly what the broker sends over [to the insurer] and try to turn that into an entire policy image because there is going to be data loss there,” Reed said. “There will be certain pieces of data in the [insurer’s] policy system that the broker doesn’t transfer.
“Doing a wholesale transfer is what you do for new business, but that doesn’t work for policy change. You need to work out exactly what the broker did and apply that correctly to the policy system.”
This is done by “comparing” policy documents, Reed says, using a metaphor of what broker and insurance company systems do instantaneously.
In order to make a real-time policy change transaction “safe,” the insurance company needs to be able to compare the policy image before a broker requested a change to the current image in the policy admin system, Reed said. This allows the carrier to determine the broker’s intention.
“If [as a carrier] you just get the image of a policy after the [broker’s requested] change, there’s no way you can know if what the broker intended to change is properly applied in the policy admin system,” Reed said. “Unless you get the before and the after images, the transaction is not safe and most carriers will not allow that to happen.”
