Independent agencies, like every other business, are living in a data-driven world. The value of data — including how and when it’s used and for what purpose — continues to evolve. As the value of data to agencies continues to grow, so too is agents’ anxiety over the answer to a critical question: just who owns their agency’s data?
Of course, not all data is equal and not all data is good. There’s no denying that data in an agency is more valuable today than ever. So is the answer to the question of ownership.
There is a debate over the answer to that question and it can become messy, fast. For example:
“Who owns the data in an agency management system? It’s the insurance agency owner. Period,” according to Laird Rixford, CEO of Insurance Technologies Corp. (ITC).
“Actually, I think it’s the consumer’s data,” says insurance industry tech guru Steve Anderson, an insurance technology consultant and author of the book, The Bezos Letters: 14 Principles to Grow Your Business Like Amazon.
“What is the data that you need? Is it identifiable to the agency?” Anderson asked. “It’s an important discussion.”
In speaking with technology vendors, the answer often becomes more complicated and depends on what data is being discussed and what is being done with it.
Starts with Contract
Data ownership starts with contracts, according to Chris Burand, founder and owner of Burand & Associates in Pueblo, Colo. “Agencies have multiple contractual vendors involving data. Every single contract should address who owns what data,” he said.
The most common vendor contracts for agencies are their contracts with their carriers. “Almost, but not all by any means, stipulate the agency owns the expirations unless the agency violates the contract in very specific areas,” Burand said. However, many of these contracts do not stipulate who owns the data. “Agents think expirations and data are the same thing and they are not.”
But the carriers understand this, he added.
The next most common contract for agencies is the one with their agency management system vendors. “Those contracts should stipulate agencies own their data,” Burand said.
Defining the ownership of an agency’s data is critical. “However, a problem exists because owning data and controlling data are not synonymous,” according to Burand.
“Agencies lose the value of their data if they cannot control it, and in many cases, the agency can lose value because its data becomes unusable.”
Burand says agencies lose revenue and can incur huge expenses if their data becomes unusable.
Like Burand, consultant Anderson cautions agencies to review their technology vendor contracts carefully.
The answer to data rights becomes very important when agencies decide to make changes to their technology systems. Agencies may incur costs of many thousands of dollars just to switch technology platforms, Anderson said.
Anderson says there are two contractual provisions in particular that agents need to know. One is the time of required notice for cancellation. “A lot of times vendors require a 60- or 90-day notice of leaving. That’s one issue that I highlight for agencies all the time,” he said.
The second contractual agreement to pay attention to is data ownership. “Every contract basically says, ‘It’s your data, you can get it, but we will charge you.’ So now, how much time it takes to provide you with that data becomes an issue,” he said.
When an agency moves from one technology platform to another, time is critical. “The best scenario is I shut down the old system on Friday afternoon, and 8 o’clock Monday morning, I’m up and running with my data that’s been converted into the new system,” Anderson said.
That sounds great but vendors “drag their feet” often while charging $2,500 or $5,000, or more, to provide that data. “That becomes a problem for the agency and that is why some agencies actually feel locked in and can’t move.”
In today’s world, agencies should be able to get their data any time they want and fast, he said.
Both Sides Now
Ron Berg, executive director of the Agents Council for Technology/Independent Insurance Agents & Brokers of America, understands the frustration that agency owners like Seth Zaremba (see sidebar on page 62) and other agencies are experiencing.
“Agents feel the data is theirs and should not be penalized (i.e., charged) to convert it when changing management systems,” Berg said. “Further, they want more insights on the data they have, which is being addressed by a number of industry vendors, insurance companies, and emerging tech providers.”
But Berg also sees the other side of issue. “The AMS vendors themselves feel they are not only the trusted custodians of policyholder data, but also have a great deal invested in maintaining it and channeling it through interfaces and reporting,” he said.
“Also, the effort to convert from any one system to a totally separate provider is arduous and therefore the AMS vendors feel they need to charge for that conversion, whether the agent is moving to a totally different system provider or even on the same vendor’s other management systems.”
To add to the issue, Berg says carriers “feel caught in the middle” but also claim they are the proprietors of the policy data.
Frank Sentner of Sentwood Consulting has been a key figure in the insurance tech space for more than four decades. He says there is long history of vendors “holding the agent’s data hostage.”
Now, he adds, everybody in the technology space has woken up to the value of data. “It’s the new currency,” he says.
He believes that agents should make sure they “own” their data even while they work to do a better job of entering their data and storing their data to reap the benefits downstream.
“Most agencies don’t have the technology capabilities to actually leverage data, except for the very largest agents,” Sentner said. “When they signed those contracts with vendors, and this has been happening for the last 20 years, they gave the right to do derivative works using their data as long as it was anonymous and aggregated. They basically ceded the most valuable commodity they have to their agency management system vendors.”
Sentner says that is not the case for most of the newer, smaller agency management systems vendors. But it is true for a majority of agencies.
“That’s a big stumbling block,” he said. “We have a real constraint on the access to the data, both contractually and by practice, which I consider to be a restraint of trade.”
As new insurtech solutions emerge, Sentner says it’s imperative that independent agencies have access to their customer data to compete.
“I’m working with a lot of start-up insurtechs, many of whom, if not all, need data integration with the agency management systems,” he said. That’s not always available, or if it is, it is very costly for the agencies.
“The power of data is almost limitless — it’s only limited by our imagination,” Sentner said. “Unfortunately, in the American Agency System, it’s limited by your agency management system vendors, your contract with them, and their refusal to allow open API integration to the data that the agents own.”
There appears to be increasing recognition that there are many technology platforms and vendors pushing for additional integration through open APIs and some movement toward better integration among platforms.
Agency vendor Vertafore uses its Orange Partner Program to allow data access and integration with other insurtech platforms. The program provides a forum for Vertafore customers to integrate with Vertafore products using available APIs.
Chad Hawkinson, chief product and data officer at Vertafore, says the Orange Partner Program was started 18 months ago as a “way to help our customers choose which partners are the best fits for their business and then to enable those integrations” at a time when there are new insurtech solutions emerging for agencies on a regular basis.
“Some are really good solutions for customers, and some are not so good,” he said. “So we try to provide some help to our agencies to help them choose.”
For example, Hawkinson says insurtechs must apply for Orange Partner membership. Then Vertafore runs security reviews on each. “If we find out that it’s not a very secure system, then there’s no way we should have our customers integrate until they fix a few things,” he said.
Hawkinson says that the Orange Partner Program is there for customers. “It’s who our customers want. It’s not a profit center for us in any way.”
Applied Systems says it, too, values working with agencies so they can get the best use of their data.
“We look at the data as being the agency’s,” said Brian Wood, vice president of Applied System’s data products group.
But he believes it’s also Applied’s job to support the functions of that agency to make sure that they can achieve the best results possible. “So, we’re constantly innovating and providing new insights for our customers with products such as Applied Analytics,” Wood says.
“Technology that operates as a closed garden, meaning technology that doesn’t integrate with other platforms but their own, does a disservice to the independent agent channel,” said ITC’s Rixford. “Agency owners need to be able to access and control their data so they can make data-based decisions.”
It’s time for agents to add their voice to the call for open APIs and more integration between platforms, Rixford added.
But Applied’s Wood says that the call for more open APIs depends on a few things. “I think a lot of times it’s used as kind of a banner that sounds good, but what does that actually mean?” he asked.
“From an open API perspective, what we’re saying is that as an agency, my system should have APIs that make it accessible to get data to incorporate other third-party systems into my core workflow. Yes, absolutely. And if you look at a lot of what Applied is doing, you see that coming to fruition.”
But Wood also says there’s some “gray area” where some “folks are playing to the emotions in the industry” when it comes to using open APIs.
“If you were to say, ‘well, do you mean that a customer’s data is readily accessible to anybody? No, of course not. Data privacy rights are more important than they’ve ever been,” Wood said.
In his view, some players are trying to make gains in the industry by making open API their talking point.
“And I get it because it’s one of the things as an industry we have been behind on, really having open architectures,” he said.
But Wood thinks that is changing.
“From my perspective, what I’m seeing is the industry is rapidly evolving towards that and a lot of the adoption of new technologies is making that readily available. I see that being adopted, within the next decade, fairly readily.”
Agent on a Mission
One agent has set out to address the data dilemma. Seth Zaremba, owner of Zinc Insurance in Broadview Heights, Ohio, and creator of Neon, Zinc’s custom-made technology platform, believes most agency tech doesn’t work well for the agency.
“I feel like I’m on a mission,” Zaremba said. That mission is to inform agencies on the value of their data and how they can use it better.
“Neon isn’t just about making Zinc better; Neon is about redefining the way independent insurance agencies operate,” Neon’s website proclaims.
In Zaremba’s view, agency tech doesn’t do everything that needs to be done — it might not integrate with other technologies, it is often difficult to connect with carriers, and in many ways it doesn’t allow agencies to utilize agency data in the way some owners want and need it to be used.
Neon tackles these problems.
“I began to realize the value of what we did as agents, the ability to find business, find relationships, bring them in and turn those into long-lasting policies and coverages and relationships,” Zaremba said. “That data trail is extremely valuable to the industry and agents are giving it away and signing away their rights.”
According to Zaremba, agencies are being “milled” by some vendors that are extracting agency data and selling it for a considerable profit.
“All of that data is extremely valuable to understanding the consumer — and agents — the only people who have relationships with the consumer — are giving that away to our vendors so that they can turn it into revenue,” Zaremba said. “Agents are being farmed by many of these monolithic giants in the industry that now lock us into long contracts and then farm us for our data.”
He said agents pay the vendors to “farm” the data and then they pay them to turn it into a product and then the vendors sell the data back to agents in additional products.
“When we say enough is enough, because the margins aren’t there within the channel for us to keep paying for all of this, they say, ‘Well, too bad, you signed a six-year contract, you’re locked in.’”