9.  As the agency grows

Technology, Productivity Enhancement, Best Practices

Effective use of technology will be critical to the future success of your agency. It is extremely important for you to stay current with the latest releases your agency management system. Your operating system, software and hardware should be up to date to ensure efficient operation of current applications. Avail your agency to new company interfaces promptly and use electronic download from the company wherever possible to eliminate paper and improve efficiency. Install Internet access on each agency employee’s desktop with an always on, high-speed connection and an e-mail account for each person. These steps taken together will position the agency to use many emerging real-time technology applications profitably.

Once operational, you need to focus on the security of your systems because the new functionality creates new risks that must be managed. The independent agent’s business model is compelling to insurance consumers because of the agency’s expertise, independence, and multiple company representation. For this business model to excel in the future, however, you must couple these strengths with budgeted, ongoing investments in effective technology.

Proper use of technology and customer/company appeal

Customers are impressed with agencies that use the latest technologies. Not only is the agency’s image enhanced, the agency is positioned to meet the consumer’s increased expectations. Consumers expect their needs to be handled on a real-time basis. More and more, the agency’s technological savvy will be a deciding factor for many consumers in choosing an agent. Consumers will want to deal with agents that have the same technological capabilities that they have in their own homes and businesses.

Technology allows an agency to broaden its geographic reach, as a means of growing its business and serving the customer. It also permits agencies to streamline work flows, get work done more quickly, get answers from companies more quickly, and free up agency employees to engage in productive work. Less human intervention because of automated processes means fewer errors and less unproductive rework to correct errors.

Most companies are moving in the direction of streamlining their own processes. They are spending millions of dollars reworking their processes to take advantage of current technologies. In this, they find agents that are able to transact business with them on a similar platform are much more appealing, and are turning away from the days where they tried to be all things to all agents. It is difficult to keep up with standards and technology and stay competitive when they have to do business with old legacy systems and thought processes.

Viewed in its simplest terms, consumers, companies, and other business entities with which agents deal have increasing expectations regarding the technology capabilities of their trading partners. Agents, who provide the essential link between these parties, must respond to this new reality to continue to succeed in the future. The same reality holds true for carriers and the agents’ other trading partners.

Agency Management Systems

Agency management systems are by far the core of the agency workflow. It is a big capital decision choosing the management system. Most of the systems are very similar in nature and provide the core competencies of an agency such as policy management, certificates and ACORD Forms. There should be a few questions you ask yourself when deciding on a system, but when it is all said and done, it is a business decision based on how much technology you can afford. Buy as much as you can afford.

Due diligence in selecting an agency management system

When choosing a system ask yourself some key questions:

• What is the reputation of the vendor? Are they well known in the industry?
• What is the service record of the vendor? You want to be able to get assistance when you need it.
• Can they provide you a list of customers that you can contact?
• Does the system have a user group? User groups are important for education and interfacing with the company on system upgrades, changes, and issues related to the industry.
• Is the company financially sound? You don’t want to make the investment into a company that will not be around next year since you will need to go through these exercises again. Plus there will be added costs of conversions that could be quite costly.
• Is the vendor involved with standards, and an ACORD approved vendor? Vendors that take the insurance industry seriously will be involved with ACORD, IVANS, ACT, AUGIE and other organizations that help in streamlining the industry.

The above questions are but a few to consider. You may wish to formulate a few of your own based on your needs and concerns, but make sure you do the proper due diligence in choosing a vendor, and plan accordingly on the installation and implementation.

ASP’s (Application Service Provider) on the scene

One may argue that it’s really not technology that’s the issue; it’s the business justification. Some agents might question whether it makes sense to go to the trouble to migrate to an ASP solution at all if it really offers nothing new. In other words, if one is to go to some trouble to make a big change, shouldn’t the change provide significant new benefits—in terms of new functionality, improved workflow and the like? Over the last 20 years agents have been told they should become self-sufficient with their automation—an island with all the information and functionality they need to be profitable. The inter-entity model takes primacy away from the management system model (in part). The more inter-entity, shared database services an agency uses, the more difficult it might be to have a comprehensive view of customers and the agency operation.

The proliferation of ASP services, each appearing worthwhile and valuable when viewed in isolation from the larger picture of agency automation, can make agency life worse rather than better at times. At times, the addition of yet one more “wonderful” single-purpose solution to your agency work flows becomes practically unworkable since they are not always in sync with each other. This poverty of riches often can stand in the way of real, significant change and its concomitant benefits. Agents have been good sports about burying themselves in automation, and have even realized that it is here to stay in not only their business, but with their peers as well. A few would rather do that than sell insurance! But for the most part, agents all are very aware that their business is insurance, not technology, and many wish they could pay more attention to insurance and be less distracted by technology.

Be aware of the expense spikes software and hardware upgrades or conversions can cost you, and take advantage of useful technology without being absorbed in or responsible for the details. This often plagues agents who think they must understand the technology they use or worse yet, that they should be able to do most of the work themselves. Today’s agency is a more complicated business as most businesses are, and hosted solutions, i.e., ASPs, have the potential to provide agents with what they want and need, but with less of the burden. This kind of outsourcing really has not been practical since the low-expectations of the mainframe era. Now agents can actually have all the benefits of a mainframe in their offices while having all the benefits of a service bureau. While the change may be an expense wash, it should smooth out expenses and leave more energy for doing insurance. Leave the IT stuff to the IT people; the same as you would your accountant or legal team! You can play a part in it, but they are the experts at that as you are the expert at insurance.

Hosted by ASP or In-house

An ASP is a company that can host software services on their networks, providing access through secure methods to these systems. In 2000 several ASPs started showing up on the insurance scene doing everything from hosting management systems to on line scanning. To date, most of the major agency management system vendors are players in this arena as well, and can offer the ASP option to your agency. Below is a list of pro’s and con’s about these, and you may add several yourself.

PRO’s

• Lower startup costs
• No need for heavy duty servers
• Regular backups are made
• More secure networks
• Usually housed in superior facilities
• No need for routine software updates
• Reduced needs for internal IT staff
• Usually just requires an Internet connect to run
• Access from anywhere there is an Internet connection

CON's

• Data housed off site, and you have no access to it except through ASP
• When Internet is down, so is your management software
• What happens if your vendor happens to leave the business?
• When your ASP decides to upgrade...so do you!
• Need for third party software may still be an issue: Word, Excel, etc.
• 100% reliant on ASP for support

As you can see from the two lists above, there are some things to think about, and the ASP route may not be a perfect fit for everyone, but is worth exploring. Obviously there are solutions to some of the issues posed above. Primarily, if you do not have the fortified staff to support an in-house system, the ASP might be very appealing to you. Most vendors today have both solutions, so if you think you have outgrown the ASP, you can bring it in-house or branch out and be the ASP to your branch offices.

Agency Management Vendors

The Agents Council on Technology (ACT) maintains a web site for agents to review the current agency management system vendors and their capabilities. You can access that site at www.acttech.org.

Producer toolkit

It is imperative for agency owners to understand their rights under common and contract law to better protect the agency's core asset, its policy expirations. Whether employees or independent contractors, you MUST execute an agreement with your producers.

IA&B has created tools that can help you find the right person and then properly manage them.

• Producer Agreements – a resource that explains the different provisions that should be present in producer agreements and spells out the consequences of improperly drafted contracts.

• Employment Assessment a selection of vendors that provide valuable testing to assist an agency in the hiring process or with management of current staff

• Employment Background Checks Agencies are prohibited from allowing anyone convicted of dishonesty or breach of trust to work in the insurance industry. Therefore, it is crucial that you conduct criminal background investigations of every employee. Includes information on a pre-employment screening tool endorsed by IA&B.

Human resource needs

Running a successful independent insurance agency requires strong skills in recruiting, training and managing employees. Good management practices help with agency stability and perpetuation, and can keep an agency in compliance with state and federal laws. This section is designed with current information, helpful tools and great resources to help you manage your agency effectively.

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