CGNU’s UK unit, Norwich Union, is developing a new online project for its commercial brokers.
CGNU’s UK subsidiary, Norwich Union, has begun an online project to allow commercial brokers to conduct online transactions. The project, known internally as CMLP (commercial market leadership program), will eventually allow brokers to conduct online transactions, although the transaction side is unlikely to be ready until 2003.
The system will have several benefits. The frictional costs associated with policy issuing account for as much as 35% of premiums in the commercial market. Allowing brokers to enter clients’ data directly on their insurers systems could cut the estimated 50% error rate on policy documentation; removing the need to re-enter data would bring significant savings.
Speeding up the process and improving communication between the insurer and its brokers would also save money. The system may even provide brokers with a greater underwriting authority in the future.
The merger between CGU and Norwich Union in May 2000 left many brokers feeling excluded from the loop. Norwich Union admits it neglected this relationship, focusing on internal restructuring and cost cutting. The company also hit broker relations by effectively pricing itself out of certain markets, especially big-ticket business, and withdrawing from markets completely, including the London and Lloyd’s markets. However, this software should reaffirm its commitment to the broker market.
There are some drawbacks. Many brokers, especially the smaller, provincial brokers, are still without Internet access. On top of this, commercial insurance still requires much personal contact, and many brokers already feel the value chain is becoming too automated. They claim that automation is reducing the negotiation concerning premium rates and making underwriting less flexible.
Norwich Union’s project comes two months after it, alongside five other UK insurers, withdrew its financial backing from a similar industry-wide initiative. i2i-link was axed since its predicted ROI was too small. Other UK insurers may now follow Norwich’s lead, developing their own Internet propositions. This could be bad news for insurance eBusiness vendors such as Acturis, which will launch its Broker Platform during Q1 2002.
