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Five Steps to a Better Agency Bottom Line

By Jeff Yates, ACT Executive Director
Every day I hear about agencies that are gaining real benefits by implementing innovative workflows and technologies, along with policies that protect the continuity of their operations.  Each of these steps directly contribute to the agency’s bottom line in different ways. 
What is most exciting is to see the number of agencies which have made a strong commitment to continue to innovate, to stay abreast of the industry’s latest developments and then to implement the improvements when they are proven.  These agencies are eliminating paper wherever they can; they are able to answer more client questions on the spot; and they are eliminating backlog, mailroom time, and processing employees.  By taking these steps, these agencies are seen as highly professional and very attractive to clients, carriers, as well as to potential acquirers.
Here are five steps agencies should consider to enhance their bottom line and overall value.
Eliminate paper wherever possible.  This is a major trend we are seeing among agencies.  These agencies have made the agency management system the central source for information, so that there is consistent, current information at each desktop.  Implementing download in both personal and commercial lines, where it can be done accurately, is a critical step here.  There are significant efforts under way in the industry to make commercial lines download more effective for agencies, and it time for agencies to take another look at implementing it.  These agencies are also implementing automatic invoicing for direct billed policies, are “turning off” the agency copies of the policy paper, and are employing integrated faxing, both into and out of their systems.
One Texas agency with six branches and a seventh office for franchise business has been able to eliminate several processor positions by implementing commercial lines download and going paperless wherever possible.  The agency is currently downloading 5500 commercial policies from 8 carriers.  It also has implemented automatic invoicing for direct bill downloaded policies and has turned off the agency policy paper for all downloaded policies.  As a result of taking these steps, the agency has eliminated the backlog in its processing department, all of its information is current, the need for paper handling in the mailroom has been greatly reduced, and the agency has been able to reduce its processing and accounting staff by seven.  Taking the same steps in personal lines, where the agency is downloading with 10 carriers, has enabled it to go from three personal lines processors to one, and it estimates the accuracy of its download at 98%.
(Additional resources: “ACT Commercial Lines Download Report”; “Turning Off the Paper to Agents Phase Two Report”; “Best Practices Guide to Electronic Information Management”; and “Best Practices of Agency Business Processes and Workflows.” (All resources mentioned in this article have been developed by ACT and can be found at www.independentagent/act.)
Implement real-time inquiries and transactions through the agency management system.  Using real-time, agencies are able to answer more client questions while they are on the phone, on a once and done basis.  These agencies are increasingly finding real-time to be a critical service component; it differentiates the agency competitively and reflects importantly on the agency’s overall professionalism in a world where most other financial services entities now are able to provide immediate answers.  Real-time directly responds to the major agency frustration of having to deal with multiple carrier websites—whether you are talking about remembering a plethora of different passwords, having to enter the same information again and again on different sites to evaluate quotes, or having to train agency staff on the workflows for each carrier site.
The potential for real-time to save significant time for agencies is impressive.  For example, real-time billing inquiry alone, if implemented throughout the industry, could save six million agency employee hours annually (based upon the ASCnet study, extrapolated to the full agency force by ACT).  Consider the savings in time that could accrue from real-time rating through the agency management systems and comparative raters, given that it can take an agency as long as one to two hours to generate a personal lines quote to present to its client today from its carriers’ websites.  It is encouraging that real-time rating and policy issuance transactions are ramping up quickly, with some vendors reporting that over 25% of their current real-time volume involves these transactions.
The time savings from implementing real-time can add up to a significant dollar savings to the agency as well, when you consider that saving one hour a day for a $50,000 CSR translates to $6,000 annually.  Just as with “going paperless,” these agencies are greatly reducing the amount of time and money spent on processing and replacing it with more valued client advice and service contacts.
(Additional resources: which permits an agent to ascertain real-time capabilities by specific carrier and vendor system; “The Real Time Revolution: Redefining How We Work.”)
Use technology to enhance sales and marketing.  Incredibly, most of the industry’s focus to-date has been on using technology to improve agency servicing and processing functions.  Many agencies, however, are starting to do more with technology to prospect for leads, understand their prospects, promote their specialties, stay on course with sales campaigns, and manage their producers.
(Additional Resource: “Bolstering Agency Sales & Marketing with Technology.”)
Implement an effective security program.  It may seem counterintuitive at first to include this step, considering that an agency is likely to incur cost to implement such a program for audits, software, hardware, and ongoing monitoring, until one considers the much greater costs of dealing with the aftermath of a security breach—whether your desktops and servers must be restored, your database recreated because it has not been properly backed up, or your clients notified and assisted because their personal data has been stolen from your systems.  Every agency faces security risks that must be managed, and these risks continue to increase as we transition to an electronic world.  It is critical for each agency to focus on the risks it is facing, adopt the appropriate security policies, train its employees, install the necessary hardware and software, monitor for unusual systems activity, and audit employees for compliance with the agency’s policies.  This risk management process is an ongoing one and over the long run will add importantly to the agency’s value.
(Additional resource: “The Independent Agent’s Guide to Systems Security.”)
Put in place an agency continuity plan.  This step is also a defensive one and is designed to assure the agency’s recovery and survival should a natural or man-made disaster strike the agency.  Most important, the continuity plan is designed to facilitate the continued servicing of the agency’s clients at what may very well be their time of greatest need.  Just as in the security area, thinking ahead and putting the right strategies and policies in place can make a huge difference in the agency’s ability to weather the contingency.  The presence of such a plan is an indicator of the professionalism and quality of management of the agency—factors that will contribute to the agency’s overall value.
(Additional resource: “Key Considerations in Disaster Planning and Management.”)
There are a number of terrific opportunities available to agencies today to improve their operations.  My counsel is to tackle these in stages, picking the one or two today where you see the greatest opportunity or need and then concentrating on making them happen.  Fully involve your staff so that they will buy into the changes.  You and your staff will be buoyed by the successful implementations and the positive impact on your agency.  Then move on to the next area of opportunity, and so forth, to create a continuing process of incremental improvements to the agency.

Jeff Yates is Executive Director of the Agents Council for Technology (ACT) which is part of the Independent Insurance Agents & Brokers of America.  Jeff Yates can be reached here.  This article reflects the views of the author and should not be construed as an official statement by ACT.
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