Eliminating Z-Codes Help Brokers Gain Better Insights

Monica Hanna, Business Solutions Delivery Lead, CSIO

You may have never thought about the importance of standardizing data in modern society, but it plays a major role in making our lives easier. Take the example of a supermarket: almost everything you buy comes with a barcode. Why is this important? Managed barcodes allow stakeholders throughout the supply chain to use the same ‘language’ when they’re talking about an item. This form of standardization enables systems to talk to each other about the same food item, with little or no human intervention required.

Everyone benefits from this. Customers have a seamless, hassle-free experience making their purchases. Manufacturers, distributors and store owners obtain valuable data insights regarding product inventory, customer purchasing behavior and marketing opportunities. Like the success of barcodes in the grocery sector, the insurance industry benefits in the same way by using CSIO’s EDI and XML standards.

Standards in Insurance

CSIO’s standards are the complete source for data elements that are used to exchange information for personal lines, commercial lines, and claims. Using the same data standards, brokers and insurers are able to exchange the correct information between their customer management systems. Data elements such as a policyholder’s name, for example, won’t be confused with the name of the broker. The standards are designed to handle business messages such as eDocs, auto, property, liability, crime, claims and billing.

Common Practices in Coverage Codes

Even though there is a complete source for standardized coverage codes, many insurers still use proprietary “Z-codes” to identify coverages on a policy. These codes fall outside recognized industry standards. While they are often used for temporary purposes or legacy system workarounds, Z-codes are not required, nor are they a quick and easy solution. In some cases, an insurer uses a Z-code even when a standard code exists, creating duplicate codes. Too many Z-codes represent coverages today, creating obstacles for brokers to process, run accurate reports and access an insured’s information.

A Broker Pain Point

Brokers need rich data about their customers. More data means clearer customer insights and the opportunity for brokers to drive business forward by identifying opportunities to upsell insurance.

The use of Z-codes, however, continues to be a barrier. For example, if brokers want to promote a complementary product to their customers who have flood insurance, they may have trouble searching their databases and generating an accurate report for people who have flood coverage. Why? Because some insurers could be using a custom Z-code for flood coverage instead of the standard industry code. As a result, the broker will have incomplete and inaccurate data, denying them an opportunity to identify new sales leads, affecting both the broker’s and the insurer’s book of business.

How Do Brokers Benefit from Standardized Coverage Codes?

Businesses need better ways to get value from their data and stay at the forefront of innovation. Insurance is no different: brokers must tailor their products to customers’ needs. By implementing standardized coverage codes, all stakeholder can realize the following benefits:

  • Accurate reporting
  • Targeted marketing
  • Improved customer experience
  • Operational efficiency
  • Seamless data exchange

“In today’s competitive and changing insurance marketplace, data-driven business insights are critical,” says Bob Armstrong, owner of WW Smith Insurance Ltd. “Leveraging clean data, meaning no Z-codes, makes it possible to analyze your book of business in a new way, allowing you to proactively create value for your customers.”

Agile Adoption of Standard Industry Codes

CSIO’s mandate is to deliver leading-edge digital standards and solutions to improve broker workflows and improve the customer’s ease of doing business. The National Standards Working Group meets monthly to review and approve submitted requests for new codes to reflect changing business requirements and emerging technologies. These meetings give members a frequent, agile process to create new industry-wide codes, rather than introducing a Z-code. As products evolve and business needs change, the data standards used to transmit insurance information between brokers and insurers must be continuously updated. Over the past year, a total of 556.5 million codes were sent on CSIOnet, 12 per cent of which (68.1 million) were Z-codes.  Since 2017, the working group has introduced close to 450 new codes to the standard and has seen a decrease of over 20 million Z-codes.

Downward Trend in Z-code Usage

CSIO works closely with insurers to analyze their Z-codes and help identify which ones can be replaced with standard codes going forward. All of this means brokers can expect to see a sustained decline in Z-codes that promises better customer data in their Broker Management Systems. To stay up to date on the progress of this and other technology initiatives, sign up for an account at CSIO.com. You’ll start receiving our monthly newsletter and have access to CSIO’s Digital Broker eLearning program, webinars and other resources. Membership to CSIO is a free benefit included as part of your IBABC membership.