Author: ACT News Staff
Ahh. The imagination of a little boy. Flying to the moon. Finding a colony of dinosaurs that survived. Building a lifetime career in insurance technology.
Wait. What?
Doug Johnston, Applied’s well-known VP of Partnerships and Industry Relations and an ACT member, was this little boy. On one ‘Take Your Kid to Work Day’, his dad took him on a short tour of the Chubb Minneapolis branch office that was in the same building as his father’s independent insurance agency. That tour included Chubb’s computer room. Well, it wasn’t exactly a room; the paper tape readers alone took up one floor of the building.
“I was fascinated by the technology,” Doug says. “I went on to do little jobs for my dad when I was 12 or 13 and got familiar with the agency’s order of business. In college, I took classes in computers and accounting and followed that with work at my dad’s agency and other agencies to add computers to their offices—mostly accounting stuff at that point.
“The last 20 years have been a wild ride, the last five being the most challenging, I’d say.”
Part of what is challenging to Doug and many others in the industry is the faulty perception of the impact of technology. Over the past five years, indeed, pundits and naysayers have been ringing the death knell for traditional insurers and agents, predicting that insurance- and financial-services technologies would disrupt—and by that they mean destroy—the independent agency channel.
“I’ve been hearing about the death of the independent agency channel my whole life,” Doug says. “‘We are completely inefficient. We are broken. They will light our whole world up.’ This mindset has been around forever. Today, it seems like there is discussion around a new distribution model emerging weekly to displace the independent agency channel. But those who say these things misunderstand our complexity and the efficiencies of our distribution model. The independent agency channel has actually grown into an even more important channel for carriers to manage business, and new entrants into the sector are bringing in innovation that challenges the channel to adopt new technologies and service models to drive even greater business success,” he says.
“We have an opportunity to improve by evolution; we don’t need a revolution. Love and embrace, not rip and replace,” he says, noting—using Applied as an example—that much of what people are clamoring for already exists; we just need to help them leverage what they already have.
“In about 1985, I first read the user manual for Applied’s software ‘The Agency Manager,’ now referred to as Applied TAM. I was impressed by how much they knew about sales and marketing at the agency level,” he says. “I sent a letter to the owner of Applied—a small company at the time—and got hired a few weeks later. There were about 35 employees at that point. It was growing as fast as it could grow.
“This industry is well over 100 years old in this country. From the outside, it looks inefficient, but for what it does, it has evolved very appropriately. What does concern me is that, over time, the knowledge of the capabilities of the agency management system has diminished. I often hear at conferences people saying they wish they had this function or that. Today’s agents want their agency systems to manage agency functions such as sales automation, prospecting and pipeline management, customer self-service, mobile tools for employees and customers, agency business intelligence and analytics insights, CRM, and market access selections. All of those modern technologies are already available in our systems—ready to be put into action.”
Some of the technology that has evolved through the years has been incredibly valuable, Doug says, noting that there’s been about an 8% to 10% overall industry expense reduction since download and automated direct bill commission processing have been adopted. He adds that 68% of Applied’s customers have moved their agency technology into the cloud and Applied manages that for them, offering further savings and efficiencies.
Speaking of numbers, Doug is a strong believer in measurements to determine your success. Measure your retention, organic growth, profits, revenue and other account metrics and see if your agency improves as you integrate new workflow practices, he says.
By tapping into the full power of the agency management system, agencies can eliminate inefficient processing for their employees and customers. “Get rid of paper!” he says as an example. “Use e-signatures instead of ink, online policy access instead of mail, online invoicing and bill pay. Download has scratched the surface, but we’re still managing reports as if they are paper. Over the next five years, we need to change the workflow to use the automation available to us. We can’t just plug electronic services into a paper workflow. The workflow itself needs to be upgraded. There are multiple ways to do this, and that is perfectly fine based on your local clientele and how they want to interact with you. Customizing to customers’ needs is a beautiful thing. People don’t really want constant contact with their agent or insurer; they want competent care when it is necessary. Each agency’s got to figure out that interaction on their own and customize their technology use to their own needs.”
After all, isn’t relationship what we’re all about in insurance? Security and relationships? That’s a primary aspect of Doug’s career passion. It’s not just the technology that tickled his fancy as a youth; it’s how to ply that technology so it improves security and relationships.
“I wake up thinking of connection points in the industry—agencies, carriers, customers, solution providers and emerging technologies,” he says. “I also look at the 145,000 people firing up Applied’s core management systems. What do they need? What is in their mix of solutions, from Applied and others, and can it be better?”
And don’t forget education. This is one of Doug’s life themes. Part of that education is working with the next generation of insurance professionals.
“We work very closely with InVEST and have been huge supporters of its efforts for many years. As an example, over the past year, Applied created an agency automation curriculum for InVEST classrooms, adding agency automation education to their existing insurance education. We realized that it is critical for the next generation of agency employees to come into the industry as versed in technology as they are in insurance,” Doug says.
When asked about his personal mission for getting the industry and independent agency channel closer to their desired destination, Doug sums it up in one word: Education.