Grange Eliminates "Middleman" Download Fees

Most carriers pay considerable fees to download policy and commission information to their agents through a value-added network. But Grange Insurance Cos. found a way to do it fee-free. By Therese Rutkowski, Managing Editor - Insurance Networking News October 1, 2004 - Regional insurer Grange Insurance Cos. hit the $1 billion revenue mark at the end of last year. Chairman of the Board Edwin Billman attributes the feat to the company's commitment to "ease of doing business." "That's what Grange is all about," says Sherri Rarey, assistant vice president, agency interface, at the Columbus, Ohio-based insurance company. "We are all about making it easier for agents to do business with us. We even trademarked the expression." EODB-as the company calls it-is the force behind Grange's numerous agency automation initiatives over the past several years, including electronic download to its agents. "We have a huge effort underway to turn off paper to agents," Rarey says. "And that means our download capabilities have to be good." As a result, the company is improving the type of information and the amount of information it downloads to agents, as well as adding more lines of business as they become available on the various agency management systems. Currently, Grange is downloading all personal lines policy information, direct-bill commission information, and commercial lines information for those agency systems that support it. Of the 75% of Grange agents who use an agency management system, 97% are now receiving downloads from the carrier-up from 52% in 1999. Basically free Because of the growth in agent downloads, Grange's costs of have grown tremendously over these years. Although the value-added network the company was using to transmit files was reliable, the telecommunication fees, byte fees, and mailbox fees kept increasing as the business grew. By 2003, Grange was paying more than $1 million in download fees per year, according to Rarey. "We had to start thinking about ways to keep our expenses down-because we have huge plans for growth," she says. After considering the possibility of building a download solution internally, the company decided last November to implement Internet-based software from Houston-based Connective Technologies Inc. In January, Grange began rolling out the software, called TEAM-UP Download, to its agents who had the most download activity. This way, the insurer's fees could be reduced as quickly as possible. And they were. By May, Grange's download costs were reduced 81%-with 62% of that decrease directly attributable to the new software and 19% due to compressing data and eliminating unnecessary information the company had been sending to agents previously. "We purchased a six-year agreement with Connective, and we expect to have our return on investment by the end of (this month)," Rarey says. "After that, download to agents will pretty much be free." Agents have control What's more, because the system is browser-based, it expands services to agents as well. They can set up downloads to occur daily at a specified time or they can log on to a Grange agency extranet site and manage their downloads interactively. Agents also can browse archive files on the site and re-download information-even if it's for only one policy. "They have full control over that now," says Rarey. "Before, they had to call us and ask us to resend policy information. So the new system has freed our agency interface staff to do things other than resend policies." Connective's software also requires minimal disruption to a carrier's existing download process, according to Brendon Hilton, vice president of development and chief technology officer at Connective. For example, carriers do not have to be recertified by the agency management system vendors they work with because the files they build from their policy data are not altered. The only difference is the files are transmitted via the Internet through a secure server rather than through the value-added network. Likewise, the agents' import workflow remains the same, he says. Security isn't compromised either, Rarey says. "We have the same level of security that we had with the value-added network," she says. Connective's software uses Secure Socket Layer (SSL) encryption-the same technique online retailers use to secure Internet purchases. And the solution doesn't alter the authentication technique a carrier is using, says Hilton. "If a carrier uses LDAP (Lightweight Directory Access Protocol) for authentication, we can hit the company's LDAP server to perform the same authentication. We don't lower any security a carrier already has in place," he says. Plans to expand Perhaps the most compelling feature of the new system, however, is the elimination of telecommunications, mailbox and byte fees. Grange can add as many agents as it wants-as well as new lines of business as they become available for download on the agency management systems-without increasing costs. "When a carrier adds a few lines of business using a value-added network, its download fees double," notes Hilton. "With our product, carriers can add as many lines of business as they want, and they can add one agent or 10,000 agents-it doesn't cost them an extra nickel." And Grange plans to grow, says Rarey. "We plan to grow through more affiliations or through state expansion," she says. The company affiliated with Integrity Mutual, Appleton, Wis., in 2002, which expanded Grange's reach into Iowa, Wisconsin and Minnesota. The affiliation also added 500 more independent agents to Grange's 1,200. At press time, the company was preparing to extend its processing hours for agents as well. "Right now, many of our Web-based services are available 24 hours a day, seven days a week, but our processing features are available from 7 a.m. to 7:30 p.m. daily," says Rarey. The company is extending its processing hours for new business and policy change transactions to 20 hours a day, seven days a week. "Whenever we have the opportunity to improve service and the information we send to agents, we jump on it," Rarey says. "We were one of the first carriers to support direct-bill commission download for Applied Systems' agency management system. And now we support direct bill for every agency system that supports it," she says. In addition to Grange's agent Web site, which provides full transactional capabilities, including new business entry, policy changes, quoting, claims entry, payment, and loss runs-the company offers real-time transactions through AMS' afW and Prime systems. The carrier also is deploying real-time transactions via IVANS Transformation Station for agents using Applied, Doris, InStar, and NASA systems. Grange supports the SEMCI partner system from Strategic Insurance Software Inc., and it provides bridging through MI-Assistant and Agency Computer Systems Inc.'s comparative rating products. "We're bringing the best of both worlds together-agency systems and carrier Web systems," says Rarey. "Agents have been hollering for SEMCI (single-entry, multiple-carrier interface) for years, and this is as close as we've come to giving them SEMCI."