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Positioning Your Agency to Prosper in a Tough Market

by Jeff Yates, ACT Executive Director
Independent agents certainly have a lot of challenges right now. We are dealing with a property-casualty market that is not growing. Many of our commercial lines clients have had to scale back or have closed their doors permanently. Our investments have taken a severe hit. We are understandably concerned about whether independent agents will continue to have a role in the health insurance market as national health care proposals are being developed.
Before you get too depressed, keep in mind that we already are seeing signs of some recovery in the economy and with investments. The property-casualty CEOs at the recent IIABA convention believe we have weathered the worst in terms of the downturn in the economy and are worried most about the onslaught of inflation. Inflation will mean higher property-casualty premiums, but will also bring its own set of problems such as heightened regulatory scrutiny. We are also hopeful that the 1200 independent agents who recently descended on Capitol Hill at the IIABA Legislative Conference will have a positive impact on the health care proposals currently being shaped, so that businesses and consumers can continue to benefit from the advice and choices independent agents provide them today.
Focusing on the Opportunities
During this time of challenge, it is easy to become fixated upon the problems and to overlook the huge opportunities that are staring us in the face. As I have gone around the country talking with agents, what has impressed me is the number of agencies who are continuing to grow even in this tough market. I run into agencies which have been able to double their premium volume with the same number of employees. How are these agencies doing it?
A common thread I have seen among these agencies is a determined focus to take advantage of the new technologies available to enhance their productivity. This focus is driven by the agency principals, and they are using the time and cost savings they achieve to build their sales power. These agency leaders understand that technology has finally improved to the point that it can deliver significant benefits to them far outweighing the costs, provided they fully use the technology’s capabilities. Carrier reps have told me that they are finding the technology savvy agencies running disciplined shops to be their best business partners and performers.
Technology-driven Transformation
Consider this quote from Daniel Burrus, the author of Technotrends, who is known for his forward thinking and ability to identify significant trends and opportunities:
“We are now at the dawn of a profound technology-driven transformation that will make the changes we have experienced over the past 25 years seem small and slow…We are about to transform how we sell, market, communicate, collaborate, innovate, watch TV, learn and as you might guess, much more…This is a once-in- a lifetime opportunity for you personally, and for your organization. Don’t miss it!” (January 2009 Technotrends Newsletter)
So how are these agencies using technology to enhance their productivity and how is it benefiting them? These agencies are moving to an electronic model as completely as they can, eliminating paper wherever possible. Their agency management systems provide the hub for their information, and their other systems, if needed, integrate with their management system as much as possible. These agencies are active in their user groups, taking advantage of the excellent classes and online services provided by these groups to help them get maximum benefit out of their systems. They also drive continued improvements in their software from their vendors through these user groups.
Productivity minded agencies provide their servicing and processing employees with at least two monitors, and sometimes three. The additional monitors pay for themselves in added productivity in well under one year. The capability of their systems to generate automated letters to clients is used to the maximum extent possible. The objective is to automate processing wherever possible, so that employees can concentrate on more productive servicing and sales activities. Employees are trained on written procedures and workflows that are implemented consistently throughout the agency and compliance with the procedures are consistently monitored. E&O exposures are reduced as a result.
Real Time—a Given
These best practices agencies have implemented Real Time inquiries (billing, policy view, claims), endorsements, and quoting through their agency management systems and comparative raters. Real Time enables agents to work with multiple carriers in a consistent way through their own systems; it handles logons and passwords to carrier systems and Web sites automatically; and it eliminates having to re-enter data that is already in the agency management system. It is a “no brainer” for these agencies to turn on their Real Time capability because it is usually provided by their agency management system at no cost.
In the 2008 IIABA Future One Agency Universe Survey, agencies ranked Real Time billing, claims, and policy inquiry as the technology having the greatest impact on their productivity. And it is no wonder. In the January, 2009 Real Time Campaign Agency Survey, the agents using Real Time (inquiries, endorsements, and/or quoting) reported saving ten hours a month per employee on average.
Real Time is fast becoming the predominant workflow used by agents to perform transactions with carriers, supplanting carrier proprietary Web sites. That same 2009 Real Time Campaign Survey indicated that 54% of the agencies with agency management systems are doing Real Time inquiries and endorsements. 43% of agents are using personal lines real-time rating through the agency management system or comparative rater and 18% are performing commercial lines real-time rating. I expect the amount of real-time quoting in both personal and commercial lines to grow significantly in 2009 because of the tremendous time savings agent users of this functionality are deriving. Another very positive sign is that 180 carriers and carrier groups are now offering at least some real-time functionality. That’s a 58% increase in two years!
Download—More Critical Today
Download has become even more important in the world of the electronic agent, because the agency depends on having accurate data in its system to advise clients, create certificates, auto id cards and other client documents, generate reports and marketing campaigns, and transmit data back to carriers in subsequent real-time transactions. Best practices agents have not only implemented personal lines download; they have implemented commercial lines download particularly for their small commercial business. The carriers, vendors, and user groups have done a lot of work to improve the quality of commercial lines downloads in recent years and continued refinements are ongoing today. Carriers will work with agents to start with a few commercial policies to see how the download impacts their data. To be successful with commercial lines download, it is critical that the agency’s employees take a disciplined approach to place data only in the field for which it was intended so that important data is not over-written.
Agencies report saving significant processing staff time by automating the entry of commission statement information into their systems using Direct Bill Commission Download. Agents are also taking advantage of Claims Download where available to get back into the claims loop and to automate the entry of claims data into their systems.
Going “Paperless” Rocks
I am also seeing agents derive great benefit from going “paperless.” Agencies typically implement back-end scanning first where the CSRs scan the important documents they want to keep. Moving to electronic files allows those files to be more easily shared among employees and offices, reduces the number of searches for misplaced files, and protects that information should there be a disaster, provided the electronic information has been properly backed up.
More and more agencies are now taking the next step to front-end scanning where documents are scanned as they come into the agency and are tracked continuously as they make their way through the agency, so that processing time can be monitored and employee workloads managed.
The Social Web is Transforming Marketing
Savvy agents are also starting to enhance their Internet presence by using social networking tools. These agents understand that the Web is in the midst of a profound transformation from one where static information is presented (Web 1.0) to one where the participants are actively engaged in contributing comment and spreading messages (Web 2.0). Web 2.0 is creating exciting new opportunities in marketing where agents can participate in online communities and expand their reach considerably, just as previous generations have done participating in civic and other community organizations.
Even more exciting, the Social Web is putting the person back into the Internet, rather than having it dominated by big companies. This bodes very well for independent agents who excel in building personal relationships based upon trust.
By developing their personal and agency brands in these online communities, agents are developing “fans” who want to learn more about them and their agencies and visit the agent’s Web site. These fans often help extend the agent’s reach even further by spreading the agent’s message to all of their own contacts in a viral fashion. Agents are finding that by participating in a combination of social media—blogs, Facebook, Twitter, and LinkedIn being the most commonly used—they are increasing the traffic to their Web site, improving their Web site’s position on search engines, developing new prospects, and establishing their credentials as an insurance expert to a wider audience.
Importance of Continued Investment and Innovation
Successful businesses continue to invest and innovate in tough markets permitting them to emerge as even more dominant players when the clouds clear away and the sun returns. It is wonderful to see so many independent agencies taking advantage of this period of unprecedented opportunity to employ productive technologies, implement new marketing strategies, and transform their staffs’ focus from processing to more proactive service and sales. These agents realize that this is absolutely the best time to be an independent agent, because of their unique ability to provide their customers with choices; their ability to engender trust; and their agility to make changes to adjust to new market conditions and take advantage of new opportunities.
Jeff Yates is Executive Director of the Agents Council for Technology (ACT) which is part of the Independent Insurance Agents & Brokers of America. Jeff can be reached here. ACT has posted further information on many of the subjects discussed above at This article reflects the views of the author and should not be construed as an official statement by ACT.
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