Underwriting Agencies of Australia

www.uaa.com.au

Executive Summary

Established in 1988, Underwriting Agencies of Australia Pty Ltd (UAA) specialise in providing insurance broking and underwriting services for mobile plant and equipment worldwide. Based in Newcastle, New South Wales, UAA employs 30 full time staff.

Managing Director, Phil Duncan introduced e-commerce five years ago with a company website designed originally for information dissemination.  Believing e-commerce was the way of the future, Phil initiated the move to an online system with the aim of reducing costs and developing a competitive advantage over rival firms.

UAA has implemented a Virtual Private Network (VPN) to coordinate activities between national and international offices. The VPN is used for Electronic Data Interchange (EDI) between offices situated in Sydney, Melbourne, Brisbane, Perth, Newcastle, Auckland and London. This allows UAA to send internal documentation electronically saving time, printing costs and administrative errors.

UAA originally invested $438,730 into establishing the e-commerce system.

The online initiative produced $4,800,000 in additional revenue in 2001, contributing $720,000 to gross profit. Cost savings generated as a result of improved staff efficiency and marketing practices totalled $379,600. 

Currently, UAA is in its second stage of developing customised software to allow broker clients to renew policies and send information online. UAA intends to further develop the website to include an online resource section for staff to access a procedures manual and a directory of staff, clients and suppliers.

The Business

Underwriting Agencies of Australia Pty Ltd (UAA) is a leading Asia Pacific underwriting agency specialising in providing insurance broking and underwriting services for mobile plant and equipment worldwide. UAA has been in operation for 14 years targeting major industrial plant operators and insurance brokers.

Based in Newcastle, New South Wales, UAA employs 30 full time staff.

Getting Started

Managing Director Phil Duncan introduced e-commerce into the organisation five years ago with a company website.  Believing e-commerce to be the way of the future, Phil initiated e-commerce with the aim of reducing costs and developing a competitive advantage over rival firms.

The e-commerce strategy was deployed incrementally to ensure each stage of the implementation matched the needs of the company.  With a focus on customer requirements and demands, the solution allowed clients to view and download forms and policies online. This decreased the costs associated with document production and improved the efficiency of the information distribution process.

Senior Underwriter Colin Gillies was responsible for the development of e-commerce strategies within the business, with external IT consultants commissioned to implement the solutions.

Virtual Private Network

UAA has implemented a Virtual Private Network (VPN) to co-ordinate activities between national and international offices. Utilising the public telecommunication infrastructure, a private data network is established using specific protocols to maintain privacy and security.

At UAA, the VPN is used for Electronic Data Interchange (EDI) between offices situated in Sydney, Melbourne, Brisbane, Perth, Newcastle, Auckland and London. This allows staff to send claims, returns, referrals, reports and financials electronically. 

Current e-commerce strategy

The website is used primarily for marketing and information dissemination, for example, current and archived company news and new product information is displayed in the 'News' section of the site.

Insurance form distribution is enabled via the website, with proposal documents, claim forms, policy documentation and the company's privacy statement available in electronic format. Current and prospective clients can research the company's products and download the relevant documentation at their convenience. Forms are currently required to be printed and submitted via post, however there is scope in the future to facilitate online completion and transmission.

UAA staff use the Internet extensively for research purposes. Besides market research, the Internet is also used for sourcing information to assist in processing claims and applications for insurance. This includes finding suppliers, equipment prices, and benchmarking data to carry out equipment valuations.  In addition, an online directory of insurance brokers is updated and utilised for business development mail-outs.

Many administrative functions have also been web-enabled.  These include banking, insurance payments, and payroll. Through electronic banking, the company receives payments, pays claims and staff wages, reducing the amount of paper handling and staff time required to process transactions.

UAA has installed several security mechanisms such as physical security, firewall technology, data encryption, and password protection to protect information from unauthorised access. Daily updates to anti-virus software and security patches also limit the possibility of external attacks. The company's website itself is hosted on a separate web server to further protect the internal network.  Daily tape backups are stored offsite.

Revenue and Costs

* Note: Capital Expenditure was amortised over a four-year period

Financial Analysis

In 2001, UAA's e-commerce initiative generated $4,800,000 in additional revenue, contributing $720,000 to gross profit.  This was the result of new business gained from customers having found the company through its website.

Increased business process efficiencies produced total cost savings of $379,600.  Staff spent less time processing claims saving the company $120,000. A further $70,000 reduction in communication time and a $10,000 reduction in international telecommunications expenditure was attributed to the use of email. Improved marketing procedures saved time and travel expenses valued at $100,000 and $20,000 respectively.

The online system has produced simplified administration procedures and effectively increased staff productivity.  Use of electronic banking has resulted in a $25,000 saving in staff time and $2,600 decrease in bank charges.  A reduction in administration errors saved staff time spent in corrections ($10,000) whilst electronic communications reduced stationery ($4,000), printing ($4,000) and photocopying expenditure ($2,000).

UAA invested $438,730 in establishing the e-commerce system. System design ($250,000) and insurance industry specific software ($100,000) represented the majority of the initial outlay.  A significant investment in time was required from both internal staff and IT consultants in developing the website ($20,000) and designing the system ($100,000). Hardware expenses consisted of $50,000 for the purchase of servers and backup equipment while $18,000 was spent in upgrading existing computers.

Ongoing costs in 2001 amounted to $168,249.  Costs associated with supporting the online infrastructure include electronic payment system fees ($1,080), Application Service Provider (ASP) hosting services ($3,000), Internet Service Provider (ISP) fees ($3,000) and software licence fees ($30,000).  Internal staff and IT consultant time was also allocated to system maintenance ($1,000), training ($1,000) and troubleshooting ($10,000).  In addition, $109,683 was allocated to the amortisation of capital expenditure over a four-year period.

Non-financial Benefits

Staff efficiency and productivity has improved significantly through electronic communications and data interchange. This has shortened the claim processing cycle, increasing customer satisfaction and the company's reputation for efficient service delivery.

Another major benefit of e-commerce is the availability of online resources. The company is reliant on the quality of information obtained when researching claims and replacement values. This process has been further enhanced through the use of digital pictures to assist in electronic claim inspection.

Challenges

Currently, UAA is in the process of designing customised software to enable staff to process insurance forms (claims, new business etc.), obtain statistics and forward financials to the appropriate people.

Although other e-commerce initiatives have gone ahead as planned the software development process has not been smooth. The software that was originally developed was unable to serve the purpose for which it had been designed and consequently its implementation was terminated. New consultants have now been recruited.

Future

UAA hope to implement an online resource section on the website for staff to access a procedures manual and a directory of staff, clients, and suppliers. The company is persevering with the implementation of custom-built software that will enable client brokers to logon via the Internet to renew policies and send information electronically.

Phil is currently investigating an Asymmetric Digital Subscribe Line (ADSL) broadband Internet connection after the previous Integrated Services Digital Network (ISDN) facilities proved to be inadequate due to delays in connectivity and transmission speed.