The data insurance agencies and brokerages possess is ever-growing. Thus, agency managers need to be able to answer how, why, and where they can successfully analyze and use all of this data.
The answer to the “why” is simple: To grow a profitable agency book of business.
But the answers to how and where to use certain data sets isn’t so simple.
In deciding how and where to focus on data analytics, Andy Niver advises agencies to begin by focusing on small data first; that is, the data their own agencies have.
“Forget about big data,” said Niver, who is vice president of innovation and analytics at ReSource Pro, a provider of operations efficiency and business process solutions for the insurance industry. “Small data is your data, and there’s value there already that you don’t generate right now.”
Whether dealing with big data or small data, analytics begins at the top with a decision.
“Any analytic data starts from top down,” Niver said. “What decision are you trying to make? Are you trying to grow? Optimize employee performance? Retain business?”
It’s important for leaders to narrow the scope of the decision. Then, the agency can learn what metrics and data are needed to measure those things and start to gather data on those particular areas.
“Don’t try to tackle the entire ocean of data. You can’t. You will get paralysis on where to start, so narrow your focus on what decision you want to make. That’s ultimately the starting point,” Niver said.
Independent agencies already have all of the data they need to help in marketing, sales, agency growth, employee performance and more, believes Laird Rixford, CEO of Carrollton, Texas-based Insurance Technologies Corp. (ITC), a provider of software and services to independent agents and insurance carriers.
“The amount of data that an agency holds is really everything that they need,” Rixford said. “All that information is in their systems, from a comparative rater, to an agency management system, to an automated marketing system. It’s all there for them to use.”
However, if the right type of data isn’t collected by the agency, it won’t help. Rixford urges agencies to be sure they are collecting sufficient information from clients to help in marketing.
“Marketing information can be anything from an email address to a phone number to how many cars an insured has. Or whether they own their house,” he said.
Rixford advises agency owners to continuously track and measure data to see how well they’re collecting customer data and better understand the demographics of their market. Agents should ask for details about their house or how many kids they have. Mostly, they should not be afraid to ask for information.
“We’ve seen agencies that say the majority of their customers don’t have email addresses but maybe they are too afraid to ask,” Rixford said. “All of these are marketing questions that you can [use to] come up with data. Then, that will create opportunities, not only with prospects, but also with existing customers.”
Agencies can supplement that data with data from third parties, Rixford said. This can be as simple as visiting a tax assessor’s office to look up whether an insured has a home, a swimming pool, the home’s condition, a new fence, etc.
“All of these things can be used to better understand clients and how agencies can be using the data to help on marketing,” he said.
Big Picture View
Agencies can use their own data to paint a simple “big picture view” of what’s happening in the agency, according to Joshua Peterson, vice president of product management for Applied System’s Data Products Group. However, he warns, “Agencies can easily get lost in the weeds” in this process.
According to Peterson, current and more urgent concerns tend to come first in the agency world, but bigger picture views are what help agency management steer the ship in the right direction toward growth.
The amount of data at agents’ fingertips today and various ways in which it can be segmented can give owners a clearer picture of what’s going on with an agency’s book of business and overall employee performance, he said.
“All of the agents’ activities and work, and all the interactions that they are having with their clients, all the interactions that they’re having with their insureds, and just the overall transactions that are taking place — all of that information is what is critical to paint the picture of how things are doing,” Peterson said.
Peterson advises owners to ask two questions:
First is, “Am I growing? Let me look at my new business. Am I generating a lot of new business and growing both on the account level and on the individual policy and cross-sell level?”
Next, examine retention health. “How is my business looking in terms of retention? It may be great that I’m generating all these new clients and my sales staff is doing really, really well, but if at the end of the day, I’m churning through all of those and losing them on retention and servicing, that’s a huge drag.”
He said data analytics can help provide a picture of how the agency is performing in selling and retaining, and how the overall book is performing as a business.
“This is probably the key area agencies should focus on when it comes to data,” Peterson said.
Applied Systems recently released a white paper titled, “Data Analytics: Turning Information into Insights” that explains the difference between traditional business reporting and data analytics.Traditional reporting provides historical business insights at an aggregate level by summarizing raw data to determine what happened at a specific time in the past. It is usually performed manually, with the resulting output in Excel spreadsheets.
“While the data is static and can be viewed alongside other data elements, what’s missing from reporting is the ability to understand why something happened,” the paper says. Data analytics, on the other hand, gets down to the root cause. “Data analytics answers more complex business questions such as the ‘why’ and explains business results and what might happen in the future versus simply giving a description.”
In today’s landscape, Peterson believes agencies should rely on business intelligence and analytics to give a quicker and clearer picture of what’s going on at their agency.
“Benchmarking tools and industry level information are going to give them additional perspective on all of their own internal data,” he said.
For instance, he noted IVANS publishes a monthly index report so agents — and in fact, carriers and underwriters — can understand on a year-over-year basis whether commercial lines of business are increasing or decreasing. These tools provide agencies with a level set beyond their own agency data.
Employee Performance and Health
Some agencies use data analytics to measure employee performance and health. Peterson knows of agencies looking at producers to see “how they’re performing on a time series or month-over-month” or looking at “where the business is coming from.”
Sales is not the only area where analytics can help. Agency managers can look at analytics for evaluating servicing performance as well. Bottlenecks in servicing are one of the first issues worth identifying. “Do I have retention issues around areas where my staff is spending too much time and might be overloaded?” Peterson said. “Or do I have particular clients that are extremely demanding and I need to balance out the service load based on those clients?”
Agency managers can take that information directly from their agency management system and quickly interact with the data to resolve those issues, he said. Niver says his firm, ReSource Pro, offers a data analytics tool for agencies that helps with policy checking, which is a common and necessary practice in all agencies.
“We are measuring the errors we find in the policies, and agencies can use that data for a number of things, but a main purpose is mitigating where the error’s coming from and how to stop that,” he said.
Niver says agencies use that data as a performance management tool for employees. The data analysis allows agencies to review where the error came from and by what employee or employees in the business process.
That discovery allows managers to ask the questions: Are there people that need better training? Are there opportunities to improve the process?
“Every time you touch an error, that’s cost,” Niver said.
Another area where data is improving employee performance is in basic staffing ratios, he said.
“The common refrain in any agency is, ‘Wow, I need another account manager, or I need more staff,'” Niver said. But that may not always be the solution to a workload concern.
ReSource Pro helped one client create a model to predict staffing and whether they need a new person.
The model helps agencies in what Niver says is “capacity planning” to better understand if an agency department is productive and track data to a benchmark on what their performance level should be within their team.
“That ties into capacity, but it also ties into performance metrics,” he said.
Agency management systems are an important source of data, but not the only source. Some agencies are moving beyond data in agency management systems to measure employee performance and well-being.
“When I came to this company about six years ago, this organization did not have any type of platform for recruitment or for gathering any kind of data. It was all done pretty much with Excel spreadsheets and so on,” Marty Guastella, senior vice president and chief human resources officer at Oswald Companies based in Cleveland, Ohio, told Insurance Journal.
Guastella began creating a plan that included fully implementing a human resources information system that would lead to tracking and analysis data for employees’ goals, achievements and well-being. The firm is now in its fourth year of using the system.
As the years progress and more data is entered, the agency believes it will become an even better performance management tool.
“It’s based on a completely different approach where the individual candidate identifies goals of achievement and then tracks their progress against that target over a 12-month period,” Guastella said. “So we can evaluate, for example, that 95 percent of our employees at month six or month seven have achieved 50 percent of their goals. So, maybe the goal takes all year to get done, but they’re at 50 percent.”
ReSource Pro’s Niver stressed it all begins at the top. Guastella said that’s how it is at Oswald.
“The executive leadership team will say: ‘This is what we think as a company we need to achieve this year in total goals. We need to grow by X percent, or X million. We need to improve communication by X percent’ — whatever it is, soft and hard data,” Guastella said. “Then we communicate those goals to the next layer in management.”
That next layer manager sets goals and communicates for their division down to their next level manager, who eventually sets goals and communicates it all the way down to their employees, Guastella explained. All managers and employees set professional objectives and weigh them to determine a percentage to goal, he said.
“So, the idea is that the manager becomes sort of a conductor of the orchestra, while each person plays their instrument to the best of their own abilities because they set their own objectives,” he said.
Executive leadership can then run reports to reveal how many goals have been set, what percentage have completed their goals, and what percentage are behind in their goals.
“It’s a very employee-driven performance system as opposed to the typical ‘rate this person on a scale of one to 10,'” he said.
Guastella says the human resources information system is also used to track and analyze wellness data that could have a bad effect on employee performance.
“For example, if we can look at the entire prescription [drug] usage [of employees], we can find out that 10 percent of the population are using medication for stress,” he said. “Well, if that’s the case — and I’m just hypothetically [speaking] — then I might provide for the course of a month or two chair massages for employees.”
Guastella and managers would do the same for an employee performance metric.
“We use the analytics to say, ‘OK, we’re at mid-year. What percentage of our population has completed their goals and what percentage is behind and why?'” he said, adding that doesn’t mean “you throw the baby out with the bath water.”
Often, there are good reasons employees may not be meeting their goals.
“I’m a very, very strong believer in sitting down and talking to the individual people involved and determining those reasons,” he said.
The same consideration is taken even when employees meet their goals too easily. Perhaps they took on goals that were too low, he explained.
Despite its useful place, performance management tools like this are not the sole answer, Guastella admits.
“There’s definitely a place for it, like any other tool but it’s not the end all,” he said.
Workflow and Process
Agencies are turning to data analytics to help manage automated workflows and business processes, according to Steven Finch, vice president of strategic solutions at Vertafore.
While agency managers have been dealing with automated workflow and business for years, there is a new emphasis now.
“First, it was the initial race to paperless, and then it was more electronic communication with carriers as well as different ways policy owners expect to interact with their carriers,” he noted. “Now, everybody has really started to address it because there hasn’t been much change in agency workflow over the last 20 years.”
Finch sees agencies starting to change. Typically, agencies used the agency management system to manage data measuring how many transactions or client interactions occurred.
“Go create an activity that subsequently we can report on and manage based on that information. So, agencies created work flows like that,” Finch said.
Today, agencies are using modern visualization tools now available from Vertafore and others to readdress traditional work flows.
Vertafore’s recently released tool, Business Process Analytics, allows users to visualize agency workflow trends to reduce task cycle items and free up workflow capacity.
“It takes all of the data, all of the work that’s moving through the organization as part of the automated workflow, and extracts that [data] and visualizes those trends for agencies dynamically,” Finch said.
The visuals are “dynamic views” delivered on a dashboard showing users where they either have a bottleneck or capacity for added workload.
The tool accounts for seasonality of workload as well, such as renewal season or a regionally busy time of year. Agencies can identify when and why they might need to make a decision on workload long before an issue arises, he said.
Agencies should be aware of these new data analytic tools and be looking for vertical solutions in the marketplace, he said. “They need to move beyond just reporting and start to discover and explore their own data using these tools,” Finch believes.
The basic premise behind changes to agency workflow and business process is efficiency.
“The number one aspiration is always to have licensed employees doing customer-facing activities. We don’t want them to be doing processing tasks, for example,” Fitch said. “We don’t want them to do cancellations. We don’t want them to do policy checking and things like that.”
Changes to workflow and processes will help agencies find “bottlenecks” and remove reasons for work not getting to the right person, he explained.
“It gives you the information that you can act on,” he said. “While revenue per employees is a very important measurement, and tracking it is important, it doesn’t tell you why or how you can raise or lower that number,” Fitch said. “Analytics provides you with the why and how to raise that number, which is still a very important measurement, but just the definition of that value doesn’t really do anything for you.”
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