More than 25 years ago, not long after I started out in my dad’s agency, I found my way to my first agency automation user group meeting. I went because, fresh out of college, my dad agreed that I probably knew more about computers than anyone else in the agency.
Back then, user groups served, for the most part, two types of agency employee – the sometimes unkempt caffeine-holics who knew how to run the wires and set up the systems, troubleshoot problems and keep the technology running; and “the girls” (not my term, but one used quite frequently at that time by agency principals) who processed the limited number transactions the systems could handle.
Accounting and database functionality were the key components of agency systems a quarter century ago, and agency principals were probably right to send service staff and geeks to user group meetings. But that was then. Today, agency systems touch virtually every facet of agency operations – and they do so quite well.
Not Your Father’s Automation
In our current business environment, nearly every employee, regardless of age, has a heightened level of comfort with technology. Young people joining our agencies are what you might call digital natives. Prevalence of computers at school and home, coupled with weekly mailings in the 1990s of AOL floppy disks and CDs made operating in the electronic world second nature – first, probably. Many principals have even become quite adept navigating a keyboard and mouse.
Still, a disconnect exists. Principals and producers too often think of agency automation as they did 20 or 25 years ago – as accounting and processing tools best suited for back-office processing staff. They couldn’t be more wrong. Agency management systems of today carry as much power in their middle name – management – as in either of the others.
Since the beginning of the year, I’ve been on the road, much like an itinerant evangelist, sharing this message at local user group chapter meetings. At every stop, I encounter surprised principals. The fact that I find principals at chapter meetings in the first place is a testament to an increased awareness of agency and broker technology value.
My chapter meeting presentation tracks our group’s vision that broader system use can increase agency value and profitability. We look at how applying automation and technology can affect the top agency value drivers identified in a recent study by The Academy of Producer Insurance Studies. By being aware, principals can learn how to leverage technology and achieve better results.
Retention and Margins
For instance, the top driver identified in the study is “account retention” – scoring 4.65 on a scale of one to five. Of course, the more business retained, the fewer new accounts need to be produced. In addition to helping understand and maintain client service standards, agency management systems can feed an automated renewal contact plan.
Information from one or more system-generated expiration reports – and there are multiple versions – can be combined with system-based form documents and activity categories to establish and implement the plan. More important, the system allows managers to monitor results and successes.
Similarly, today’s agency management systems can drive a mid-term client contact campaign. It’s easy to automate such programs based on system-generated welcome or renewal letters that are driven by agency-defined servicing schedules with associated activity events. Again, measurement and tracking completes the process.
Agency management systems provide a rich data on existing client coverages; search functionality can identify all clients meeting certain criteria and system-based form documents and conditional statements make focused targeting easier. All of these help with account rounding, and we know the more touch points that exist, the more likely the agency is to retain the client.
Profit margin is another top factor driving agency value, and it’s another area where agency management systems play an important role. Remember, the goal is to boost revenue and reduce expenses. Commercial lines download can reduce processing costs by up to 85 percent. Tapping document management functionality reduces paper handling and costs associated with it, and front-end scanning allows managers to know staff workloads.
Automatic transaction processing functionalities within the system – for instance, automated download invoicing and direct bill commission download – are other areas that can boost profit margins. Best of all, thorough and effective management system usage allows principals to know the cost to provide service. This paves the way for client grading, which helps capture profitability at the account level – something few agency leaders truly know.
People and More
Agency management systems also support the third-leading factor driving agency value: quality of personnel. By tracking performance at the desktop level, it’s easy to pull reports that identify things like account retention, annual growth and even profit margins by employee. By using employee file management functionality within the system, managers can track and manage reviews, and base reviews on actual metrics. Some systems even feature a dashboard that shows daily progress for all employees.
Public image, the fourth driver, can be boosted by management system client communication functionality, web integration of live chat and self-service tools, and system-based direct marketing. Number five, customer service quality, is enhanced by real-time functionality, as well as two-way client communication supported by the system.
These are a few examples of how today’s management systems can drive agency and broker value and profitability. Systems support other factors, as well. The point is, agency and broker management systems – and the networks of clients formed around them – aren’t just for service and technology staff. Of course, “just” is the operative word. Systems still hold value for nearly everyone in the operation – unkempt and kempt, girls and boys. Principals, producers, accounting pros, HR folks and, of course, systems administrators and customer service staff should all be part of the mix.
By recognizing the holistic nature of what systems offer and understanding how to make use of the automation, principals can drive better service, boost sales, manage staff and, in the end, increase agency value and profitability.