SCALE GROW TO YOUR INSURANCE BUSINESS

3 Ways to Reduce Operating Costs to Increase Revenue at Scale

By Ellen Lichtenstein, AgentSync

Help your business grow revenue exponentially without growing expenses at the same, rapid rate

Whatever your role in the insurance distribution channel – from individual licensed producer to agency owner to insurance carrier compliance staff, and many more –your organization wants to increase revenue and reduce expenses.

Historically, many roles can only do “so much” before they hit capacity, and another person needs to be hired. For example, if a producer working at full steam seven days a week (and we’re not recommending you do this) can only handle 100 clients at a time, then the agency has no choice but to bring on another producer if they want to serve more clients. You can see how this model doesn’t allow a business to efficiently scale because the costs go up proportionately to the new revenue coming in.

Lucky for insurance agencies, carriers, and MGAs/MGUs that are hoping to grow business without costs getting out of control, modern technology is changing the game. Here’s how technological investments can pay dividends for your revenue growth, so you can scale your insurance business without costs rising at the same fast pace.

WHAT DOES IT MEAN TO SCALE A BUSINESS?

Scaling a business refers to increasing revenue without proportionately increasing expenses. This is why “growing” a business and “scaling” a business aren’t the same thing. You can grow an insurance agency by hiring more producers, but with each new producer you add, you also add a proportionate set of costs. Scaling, on the other hand, is about efficiency and getting more output with the same input (or even with less!).

An example of scaling an insurance business is when you equip staff with something that allows them to do more work with less effort, resulting in more revenue without equivalent expenses coming along for the ride.

How To Grow Your Insurance Business Without Increasing Expenses

To bring more revenue into the business while at the same time limiting new expenses that send money out the door, many businesses turn to technology. Through investing in solutions that automate previously manual processes, and solutions that integrate across multiple systems, people’s time is freed up to do more revenue-generating work. And no, these solutions aren’t free of charge, but the goal is to find ones where the initial and/or ongoing cost easily pays for itself as you don’t have to hire more staff for these tedious tasks.

1. Reduce Operating Expenses

Excessive operating costs are the bane of most businesses’ existence. Whether it’s spending too much on something as small as web hosting and email or paying for unnecessary office space, all the costs that go into operating a business quickly add up.

A few tech-forward tips on reducing operating costs include:

• Consider a remote or hybrid workforce. This can save money on office space, allowing you to add more people without the cost of the physical space they would normally occupy. It can also help with attracting and retaining talent at a time when the insurance industry is facing a talent shortage and most workers still prefer remote and hybrid work instead of fully in-office.

• Go paperless. Get rid of printers and paper whenever possible. Use dry erase boards instead of sticky notes. Invest in digital writing tablets for those who refuse to give up taking notes by hand. It might seem small, but research suggests that companies spend as much as 3 percent of their revenue on paper and that doesn’t even count all the added time employees spend organizing and searching through that paper!

• Use technology to automate any operational tasks you can. This overlaps with the administrative expenses we’ll touch on below, but it’s worth mentioning twice! You may be able to save a lot of human-hours by automating things like your payroll, new-hire onboarding procedures, and other common operational tasks that take up way too much time when done by hand. Then, repurpose those saved human-hours into impactful projects that either help the company bring in more revenue, retain more current customers and clients, or save money by increasing employee satisfaction and lowering attrition.

2. Reduce Administration Costs

Administrative expenses include all the paper shuffling (or, if you’ve gone paperless, email and PDF shuffling) that people spend time doing. None of this admin work is truly leading to revenue, but it’s definitely costing you in payroll, benefits, office space, and many other ways.

For insurance agencies and MGAs/MGUs, onboarding and offboarding producers are major administrative costs that are ripe for automating. Similarly, ongoing producer license compliance management is a task that could easily occupy a full-time employee (if not multiple full-time employees) yet can be reduced down to a fraction of the time commitment by implementing a tech solution.

For insurance carriers and some MGAs/MGUs, appointing producers and doing their own part in monitoring compliance in their downstream partners is equally time consuming. There’s also the added role of insurance adjusters who require attention during the onboarding and offboarding process.

For any insurance business still managing all of this on paper, or even in “modern” ways like spreadsheets and cloud-based shared documents, scaling is still a pipe dream. If you have to dedicate admin staff to supporting your revenue-generating roles, you have no choice but to increase the admin staff (and associated costs) as you increase other roles.

We’re certainly not suggesting that you not grow your business through adding more people! We just know that the business would rather add more people who bring in revenue, and at the same time, the people you’re hiring would prefer to spend their time on high-value work and not repeat data entry. It’s only possible to scale when you let technology take on some of the tedious work so your people can focus on their business impact.

3. Improve the Employee Experience

In a definitive case of “last but not least,” your bottom line isn’t the only thing that’ll be happier when you remove the busy-work from your staff’s plate. Now, more than ever, employees (and we’re counting producers and others who may not be traditional employees, by definition) are demanding a modern and pleasant experience.

If producer onboarding consists of a lot of data entry (and repeat data entry), a lot of follow up emails and phone calls, and a lot of waiting, your operations staff and producers alike are going to start looking elsewhere.

If claims processing involves cross-referencing different systems, hand-written documentation, and an excessive amount of human touch at each step of the way, your adjusters and other claims staff will soon be frustrated by the tedium.

Investing in technological solutions that both automate processes and integrate across systems dramatically improves the employee experience. When you reduce the number of places people have to look for – or enter – data, reduce the number of steps or clicks it takes to do frequent tasks, and even provide self-service capabilities so no single person has to act as your company’s central encyclopedia, employees are happier and more engaged.

Scale your insurance organization without scaling your compliance expenses

Compliance is a non-negotiable part of the insurance industry. But it doesn’t have to be complex, timeconsuming, or costly.

This article originally appeared on the AgentSync website at https://agentsync.io/blog/technology/3-ways-to-reduceinsurance-operating-costs-and-increase-revenue-at-scale. See how AgentSync can empower your carrier, agency, or MGA/MGU to quickly reduce operating and administrative costs while improving your producer and employee experience.

The IIA of IL Technology Committee reached out to several members to get their thoughts regarding Below are a few of the answers we received.

Cindy Jackman, CIC, CISR, CPIA, is Illinois Sales & Marketing Manager for Arlington/Roe. She has been in the business for close to 40 years, 34+ on the retail agency side and five+ on the managing general agency/wholesale side.

What does the “landscape of tech” look like for insurance right now?

Shepherd: It looks amazing right now and in my opinion it is only improving. We’ve come a long way from paper files, handwritten notes to underwriters and issuing COIs on the 3-ply Acord carbon copy paper (white out, anyone?). We are able to service clients so much more efficiently. Artificial intelligence is already being used in the insurance world. And it’s only going to improve over time.

Has the investment in and focus on InsurTech accelerated the tech growth in the industry?

Ogden: Yes, InsurTech has definitely accelerated tech growth.

Roentz: I believe it has because we see the potential for more profitability and ease of doing business in it. Thus, you can’t ignore it. The trick is to implement the best attributes of Insurtech while maintaining the integrity of the independent insurance agent system.

What are we missing? Where is the disconnect that would likely have the most impact if a solution was put in place?

Roentz: We are missing an API that would allow for single entry into each direct contracted carriers’ own rating system. I would just simply say “single-entry,” but I feel like that is about as possible as finding the city of El Dorado. I can’t imagine carriers will abandon their own systems for a single-entry system used by all, and why should they? Suppose you’re one of the few carriers that got it mostly right by listening to agents in the development stages, investing millions into its implementation, and making adjustments along the way with an end result that gives your company a distinct advantage over your competitors. Why would you abandon that advantage to be just like your competitors who maybe didn’t invest the money and attention to their system?

regarding difference facets of the technology space.

How important is it for agents to avoid “shiny object syndrome” when considering new tech for their agency?

Ogden: It is very important to avoid the “shiny object syndrome”, we must always look at the ROI on what it is.

Sager: Very important. You need to consider what is the immediate need for my agency, and how will this technology improve our agency goals.

Samson: This is huge and hard to avoid. There are so many new products out there – new ways to be marketing, posting to social media, gathering info on prospects, giving our clients access to their policy information…every day, it seems there is something new. The problem is, these things all cost money and time. Lots of time! I have tried many of the new products – some end up becoming useful tools for our agency and many fall to the wayside and we end up canceling because the new technology is less efficient than the previous workflow. Sometimes, it might work great for our office, but can’t be implemented by our carriers or clients. The frustration is, it takes so much time to bring a new technology or product in, convince the staff that this new technology is “worth it” and then train everyone to use it. If it doesn’t work, not only have you wasted all that money and time, you make it less likely that people will want to try the next new tech product. You have to be diligent to not bring new products to the agency until you have tested them yourself and you believe in them.

Roentz: Extremely important. A tech product needs to be investigated thoroughly to make sure it will fit within your present workflow and processes, or eliminate an unproductive step in the workflow. If you intend to redefine the entire system with the use of new tech, you need to be certain you know what you’re doing before the point of no return. Making a wrong decision in this area can lead to extremely costly consequences including loss of profits, reputation, and staff.

Sandrock: There are a lot of great products in the marketplace, and we need to be constantly looking at what can make our agencies more efficient, but it can be overwhelming. Between the number of products and the number of solicitations we receive. It’s very important that products bring value from the start of implementation and that we don’t try to take on too much at once. Technology is changing daily so a product that was looked at six months ago may have changes coming. I believe it’s important to constantly be looking, but patient to implement until you know the full story of the upside and downside to a certain technology.

How would you recommend an agency go about reviewing their current “tech stack” and deciding what should be added or changed?

Ogden: As chairperson of the IIA of IL Technology Committee this is something the group discusses often. We look forward to providing agencies ideas to work through this question at CONVO this year during the Thursday morning general session.

Sager: Starting my own agency, I had the advantage of starting from scratch. I asked myself three very basic questions. What are my immediate needs? How can I utilize technology to grow my business? What current technologies meet the vision of where my business is going? For me, my first step was implementing an agency management system. This is a huge undertaking whether you are building from scratch or changing vendors. My biggest piece of advice is to do your due diligence on the vendor’s support team (both initially & ongoing). These are very complex programs and without a good support team, getting the most out of your investment is impossible. When considering the future of my agency, I opted to explore technology that would help me streamline the initial stages of information gathering. This allows a prospect the flexibility to gather information at their convenience. The use of technology in our industry will continue to grow and become more important as the years go on. I feel it is vitally important for my agency to embrace cutting edge technology while maintaining the traditional brick and mortar presence. I feel this positions my agency to service a wide range of clients, the traditional face-to-face client as well as the “tech type” customer.

Roentz: I recommend “mapping out” what you want in terms of the product and workflow. What needs improving? Where is the opportunity? Then preferably going to a similar agency that uses this tech and see it in action for a extended period of time. Take notes on how they use it, and whether it will work the way you want it to in your agency. (Editors Note: See sidebar on the next page.)

How would you rate the carriers in terms of tech advancement and adoption?

Ogden: Getting better!

Samson: Every carrier is different, which makes things VERY difficult. We want to have a single procedure or workflow but “Company A” still does things like it was 1988, “Company B” has an agent’s portal that we have to go to and “Company C” provides everything by download. I think many carriers are very proud of their technology and the investments they have made, but it seems like they never asked any agents how it should work. So, it is hard to give a single rate for all the companies, you would have to rate each company separately on each facet of their tech. They might have a great website, but their download is pathetic, for instance.

What else could the carriers be doing with tech to improve agent workflow and customer experience?

Roentz: Quit retro-fitting old systems, or sticking with systems that were never designed with a sales and customer experience in mind. A good rule of thumb is “If your system was designed by engineers and brought to agents to use, you probably have a bad system. If you had agents design it and told the engineers to build it, you probably have a good one.”

Sandrock: The claims experience. The carriers are leaving a big opportunity for agents on the table by not keeping us better informed about where claims sit and what’s next in the process. Agents can be a great buffer and advocate for carriers during the claims process but most times we waste way too much time trying to gather information or waiting to hear back on small items when the information could be readily available directly to the agency.

Do you feel artificial intelligence (AI) will begin to play a larger role in our industry? If so, how soon?

Jackman: Yes, AI will assist with the underwriting, quotes and claims.

Ogden: I think AI is already here and being used.

Daly: AI will help service teams respond to clients more effectively and efficiently. In addition, AI can analyze customer data to understand their needs and preferences, allowing agencies to offer personalized products and services. Certainly, this can lead to improved conversion rates and customer retention. Also, AI-powered chatbots can provide 24/7 customer support by responding to common questions to allow 24/7 service.

Could AI replace the independent insurance agent?

Jackman: No, it will be a valuable assistant, but not replace the insurance agent. Clients need a relationship with a person.

Daly: I don’t see AI replacing insurance agents but for a certain segment of clients, AI will be the go-to resource to ask questions like how can I shop for insurance? or how do I get a better price or coverage? We need to stay on top of this as an industry and continue to add value so that the answer is to go to an independent agent.

Samson: I hope not! Seriously, I do believe that if we do what we are supposed to do and keep up-to-date on our industry and what our clients are dealing with, we can never be replaced. But if we are lazy or complacent and just push paper or take orders – we have a huge target on our backs. I do believe people like working with people they like but there are limits to everything. If we don’t get back to our clients with good information, they will just go elsewhere to get it. I am hopeful that AI can help us be better, but not replace us.

Roentz: Possibly but there is no substitute for accountability and compassion.

How is technology supporting or improving the most “human” areas of the insurance process –the relationships and service?

Daly: As I mentioned, I think technology and AI will provide great information that will allow our service staff to utilize and modify to respond to our clients in a sophisticated and efficient way. If we are using the technology effectively it will be a blend of artificial and human intelligence and save our busy staff time so they can service more clients and reduce response time thus improving relationships with clients.

Roentz: It has made it easier to store important information about the clients and disseminate it throughout the entire staff.

When you ask someone that’s been in the industry for 25+ years about the biggest difference they’ve seen over the years, they almost all begin their answer with “technology.” What do you think the answer will be 25 years from now?

Jackman: Technology – it is ever changing & evolving.

Ogden: Do you remember when we wrote Replacement Cost on roofs?

Samson: I think it will still be “technology”. 25 years ago, I don’t think anyone could have predicted how our offices would look and how we get through our days. I think we can count on new technologies that will keep coming at us but we probably can’t even imagine what those new technologies will be, yet. As my grandfather used to say, “The only constant is change.”

Roentz: The carriers and the relationships with them.

What do YOU Think?

The IIA of IL wants to hear from you!

Head over to CONNECT, the IIA of IL members-only online community, and let us know how you would answer these questions.

CONNECT is the perfect place to have conversations around technology. In fact, there is an entire group devoted to technology!

Want to pick other agents’ brains about AMSs? Looking to use a virtual employee but still have some questions? Need some assistance with anything technology related (or other agency items)? Ask in CONNECT for feedback from other agents and the association team.

connect.iiaofil.org

One of the biggest challenges agencies face is technology in the office:

Am I using the right thing?

How do I know which is best? I have a product, but I am not using it to its fullest potential.

It’s an ongoing challenge. In most cases, there is no right or wrong answer, but the need to do something, do better.

Recently the IIA of IL surveyed members about some of the technology they are using. We share those results here, but this is just the beginning. Check out the end of the article for what is coming next, and how you can help.

Which password manager do you use?

For those who don’t know, a password manager is a program that stores all your usernames/passwords in one space. Usually a “master password” is used to access the program. Think of it as a more secure virtual black book/ post-it notes (you know who you are).

47.6% of users indicated they are on LastPass. (See the article in CONNECT about the breach they faced last year.)

19% RoboForm

Other options being used: 1Password and Okta.

Here are a few others in the marketplace, but none in the survey utilized yet: Bitwarden, Dashlane, Keeper, Logmeonce, Nordpass, Password Boss, and Zoho.

We did have a couple of people who were honest and responded they use an excel document, post-its, or a “cheat sheet”. Although no password manager is 100% safe from being hacked, they are much more secure than other paper/spreadsheet options.

What CRM do you use?

We are seeing agencies beginning to utilize customer relationship managers (CRMs) more and more. When asked agents responded Zywave was at the top. Followed by several who indicated the CRM is built into their agency management system. Other notable ones included Agency Revolution, Agency Zoom, Microsoft Dynamics, and Salesforce.

What agency management system does your agency use?

As expected, we saw the biggest results with some of the most dominant players in this space.

Applied EPIC – 19% Vertafore AMS 360 – 19% Hawksoft – 15.5%

Splitting up the rest of the percentages would be some of the other systems by Applied & Vertafore such as QQ Catalyst, Sagitta, and TAM, but others included Easy Apps, EZLynx, and NASA.

There was a small percentage of respondents who do not use an agency management system. As a best practice, we recommend agencies consider implementing an agency management system. They are a great tool in retaining documentation and other preventative practices seen in errors and omissions claims. Check out the variety of resources available through IIA of IL’s partner program, Catalyit, who provides a wealth of information around management systems.

Which commercial lines quoting platform are you using?

While the majority (66.7%) are using Tarmika, Zywave & EzLynx both brought in (16.7%) of users. Others in the space include TurboRater, Relay, Quotit, Leadsurance, DAIS, and Coverwallet.

First was marketing automation, followed by commercial lines quoting, social media presence, feedback/customer reviews and agency management systems. Other areas of interest for agencies included: mobile apps, virtual assistants, website content creation and quoting through an agency’s website.

TECHNOLOGY