Despite concerted efforts to improve the sharing and flow of electronic data (eData) between insurance carriers and distributors, there’s much concern that the initiative will not succeed because the Toronto-based Canadian Life Insurance Standards Association (CLIEDIS), the organization in charge of proposing these improvements, lacks the teeth to enforce adherence to them. In turn, this could hurt financial advisors looking to grow their sales of insurance products.
“CLIEDIS is developing common standards in a superlative fashion,” says Tim Fitzpatrick, president of Calgary-based VirtGroup Inc., which produces VirtGate, a distribution management system that helps automate the process of insurance agencies. “The issue [now] is that there is no Canadian organization that has been effective at lobbying for implementation of electronic data exchange.”
Since early 2012, CLIEDIS has been working on a multi-pronged eData initiative in order to help standardize the sharing of information in the insurance sector.
In October 2012, CLIEDIS issued a detailed report on how to improve pending case feeds between carriers and distributors. The association is currently in the final stages of preparing its second study by offering recommendations on how to simplify the paramedical process. And according to CLIEDIS’s eData roadmap – as well as its executive director, Julie Parrott, and eData project manager, Tana Sabatino – the association will also be examining standards around in-force data as well as commissions.
A vacuum of leadership
Although many within the insurance sector salute CLIEDIS for its work, some, such as Fitzpatrick, are frustrated that there’s a vacuum of leadership in the sector to compel companies to put these recommendations into practice.
As a result, he’s calling for greater co-operation within the insurance sector – and for groups, such as the Toronto-based Canadian Association of Independent Life Brokerage Agencies (CAILBA) to put pressure on manufacturers to comply with the eData standards that CLIEDIS sets out.
Currently, one of the challenges the process is facing is to get the right members of each firm to sit at the same table at the same time, he says, because each group represents a different set of experts within a firm.
“At CLIEDIS, you end up with [information technology] people, generally, and that doesn’t filter out to the top executives [who make the decisions],” Fitzpatrick says. “But at CAILBA, you have all the top executives there to talk. It’s a totally different audience and they could get [standards adopted] if they chose to.”
Charting that course could be difficult for two reasons, says Byren Innes, managing director of Toronto-based insurance consultancy NewLink Group Inc.: First, it would force many firms to abandon long-entrenched resentment toward each other. Second, on a more practical level, it’s difficult for many firms to justify the business case of standardizing data transmission.
“The issue is one of priorities and expenses vs return,” Innes says. “If a firm can only do five major projects this year, and on budget, would they spend it on a generic solution for the industry or spend it on something that will give their company a competitive advantage?”
Although that may be the case, Fitzpatrick says the insurance sector should take a much broader view of the topic because implementation of such standards would allow for a faster flow of data between distributors and carriers, which, in turn could expedite the process of underwriting sales and reconciliation .
“Electronic data communication is the cost of doing business. It might be altruistic but […] it’s an inherently better approach than the status quo of paper, even though it cannot immediately be justified in the short term. CAILBA could help make a difference.”
Cailba to drive the bus?
Simon Tomlinson, CEO of Toronto-based software provider BlueSun, which develops the agency management software WealthServ, says that while he sees some firms slowly awakening to the benefit of standardized data sharing, he doesn’t believe CLIEDIS is in a good position to push for policy implementation.
“There’s diplomatic and careful lobbying that goes on [at CLIEDIS],” he says. “But it’s difficult for it to generate an impetus for change because [CLIEDIS] is very much around the technicalities of data exchange. So trying to [make the] transition to being a lobbying group could be hard.”
As a result, Tomlinson says he believes a more “partisan” group, such as CAILBA, could assume a valuable role to help “catalyze the process” for change.
But CAILBA, says its president, Michael Williams, “is going to drive the bus for what we ask for. We’re meeting with the Canadian Life and Health Insurance Association [Inc.] on a quarterly basis to discuss important initiatives, one of which includes electronic applications.”
By compelling insurance carriers to develop their own proprietary electronic applications, it will help managing general agencies the most and also have the “trickle down” effect of helping CLIEDIS promote its eData standards, Williams says.
It’s worth noting that the creation of a universal “e-app” was an issue CLIEDIS considered in the past, but that idea has since been abandoned.
But while the organizational tour-de-force over eData standards implementation could be reaching an impasse, Tomlinson says it’s advisors who will, inevitably, come up with the short end of the stick.
“[Advisors] getting their hands on in-force data, for example, can help them drive sales,” he says. “But they’re information starved. The data is the oxygen that can help them get renewals, upsell or cross sell. They would [be able to] start running practice management programs and get a whole better view of what is going on with their clients. [But without standards] the average advisors buying a [customer relationship management] tool to move their practices forward today are going to have a terrible experience as they try to get that data to load.
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