AUTOMATION/INFORMATION SYSTEMS MANAGEMENT
by Tripp Leach
This article will explore several questions such as: Why must agency automation be managed? What is agency automation and information system management? What are the responsibilities of agency automation managers and/or system coordinators? The best way to answer these questions is to look at various agency activities to see how they are affected by your computer or Automation/Information System (A/ISystem).
The A/ISystem forms the heart, if not the soul, of your agency. If you disagree, unplug your system for just one day and watch what happens. You'll see:
- No claims service
- No policyholder service
- No renewals or new business proposals
- No company communication
- No accounting activity
However, you finally will be able to read that stack of circular file material that's been composting on your desk for the last month or so.
Accounting: Mining Invoices
The first systems, if they could be called systems, required only a basic knowledge of agency accounting (and the vendor's phone number, if something went wrong). They automated such individual tasks as billing/invoicing, preparing accounts current and company payables, tracking producer commission payables, sales analysis, etc. Although automating these activities has provided some efficiencies, it required little management effort because agents basically were doing the same work the same way they always had.
Although agency back-office operations still perform the same functions, the simple act of invoicing is the foundation of nearly all agency statistical information and reporting. To see why, consider what information a single new business invoice provides and its potential impact. Besides automatically creating the accounts receivable, agency commission income, company-payable and producer-payable records, the invoice also:
- Provides a numerical account of the number of new business transactions.
- Gives gross premium and commission income dollars of new business transactions.
- Uses the numerical count and gross premium and commission income dollars to develop averages for new business transactions for the agency, producer, contact, company, line of business, etc.
- Utilizes a source of business code or indicator to record the source of all new business produced.
- Employs the source of business information to measure the effectiveness of advertising and marketing programs and make the appropriate adjustments.
That's just the beginning. With the information from all invoices stored in the agency management system, A/ISystem managers can:
- Allocate accounts evenly among CSRs based on the number and type of transactions, differentiating between direct and agency bill, standard and non-standard policy types, lines of business, gross premium, and agency commission income.
- Track book of business splits among companies and average premium and commissions by transaction.
- Rank customers by gross premium, agency commission received, producer commission paid, net commission income, and transaction averages.
Given the tremendous amount of information available from the simple act of invoicing, it's no wonder that significant management talent should be dedicated to effective utilization of A/ISystems.
Beyond Accounting
Today's successful agency focuses on three areas:
- Improving customer retention through quality customer service.
- New business development through target marketing.
- Increasing internal efficiency and productivity. Your A/ISystem should play a vital role in each of these functions.
Stellar Customer Service through Automation
A major debate is raging currently as to whether 'claims' should be classified as a back-office function or part of the front-office service activity. Since customers buy insurance to pay the claims they hope they never have, I feel 'claims' is definitely a front office customer service activity that can benefit tremendously from the proper management of an A/ISystem.
Nothing can be worse for customers than waiting on the phone, wondering if their unfortunate accident is covered, while CSRs or claims staff try to locate a file to make a coverage determination. Of course, it never fails that the one file you need immediately can't be found, and the customer is told they'll have to be called back. As they stew over the unknown, they become madder and madder at you - the person they turned to for help. Properly implemented and managed, an automation system can eliminate these problems, turning the customer's mishap into an opportunity to demonstrate stellar service. Here's how:
The A/ISystem manager reviews your vendor's daily retrieval model to determine what information will be loaded and maintained online in the system and how it will be used for claims service.
- A plan is formulated to load the information into the system (possibly by downloading from the agency's carriers) and to provide for continuous real-time updating.
- The loaded data is verified regularly for completeness and accuracy.
- Paper files are relegated to secondary storage (drop or transactional filing), as the daily electronic retrieval model becomes the primary source of information.
- As a result, files are never lost.
- CSRs or claims staff make immediate coverage determinations with the customer on the phone in real time, thus providing the desired stellar service.
That's Just the Beginning
Automated claims service offers several other benefits in boosting productivity and efficiency:
- Since all coverage information is contained in the electronic daily retrieval module, integrated ACORD loss notices are pre-filled automatically, leaving only descriptions and third-party information to be input. Just think of the time savings and increase in accuracy by not having to retype driver information, VIN numbers, coverage forms, the names and addresses of insureds, and so forth.
- Loss notices are e-mailed or faxed to the company directly from the CSR's or claims staff's desktop computer.
- Acknowledgment memos to insureds and claimants, together with diary and suspense items, are created automatically.
- Claimants are added to the prospecting module (more on this later).
However, customer service goes far beyond claims to encompass coverage changes, third-party coverage verification (binders, certificates, and evidence of Property insurance), 'what-if?' rating scenarios, questions, transaction history, and general hand-holding. An A/ISystem can also boost efficiency and increase productivity in these areas if managed properly by:
- Ensuring complete, accurate information in the daily retrieval module. Ensuring vendor systems that will:
- Accept daily policy download transaction types, automatically applying them to the A/ISystem and creating supporting invoices, confirmation memos, exception lists, etc.
- Provide single-entry upload transactions integrated fully with the electronic daily retrieval module.
- Integrate company electronic mail (E-mail) and facsimile transmission capabilities from the desktop.
- Provide fully integrated Personal and Commercial Lines rating to respond to 'what-if' rating scenarios.
- Provide fully integrated binders, certificates and evidence of Property insurance forms.
- Offer full on-line transaction history records.
- Provide full on-line history notes.
- Provide full on-line billing and payment history.
- Training CSRs properly in the complete utilization of their A/ISystem, encouraging and requiring that they use the electronic file, rather than the paper policy file, as the primary source of customer information.
Automated Prospecting: Your Agency's Gold Mine
Although superb customer service and efficient, productive back-office operations are essential, to survive and prosper, agencies must also plan for and implement programs for regular, systematic growth. Before examining outside sources of prospects, let's take a look at a set of prospects that too many agencies ignore - current clients.
A fully loaded A/ISystem provides almost unlimited prospects at CSRs' and producers' fingertips. Every client is a prospect for cross-selling and coverage upgrades. From Homeowners without Auto, to Packages without Umbrellas, to Life without Disability, to Health without Nursing Home coverage - from employees of Commercial clients, to claimants - everyone can be cross sold. Anyone you know anything about (and you should know a great deal about everyone in your A/ISystem) can and should be a prospect for some type of coverage or service. All you have to do is decide who they are and what you want to sell them. As we've all been told time and again, it's far more cost effective and profitable to retain a current client than to develop a relationship with a new one.
Here's an example of marketing to existing clients that surfaced at a users' group education seminar I was leading a number of years ago. A young single CSR wasn't having much success finding suitable companionship through the normal channels. Using the agency's information system, she developed a marketing search (or query) that searched the driver information records of all Personal Lines clients to locate the names, addresses, and telephone numbers of all single males insured by the agency between the ages of 25 and 35 who owned certain sports cars (Corvettes, Jags, Mercedes, etc.).
Armed with this list of prospects she proceeded with her 'marketing' campaign by calling them, supposedly to review their Auto insurance. Her creativity paid off - she's now happily married.
Granted, this was an unusual marketing application for an A/ISystem. However, it spotlights the power of a fully loaded system, together with the challenge facing an A/IS manager in determining and acquiring useful information, then creating a marketing system to mine this source of prospects.
New Business Development By Computer
However, successful agencies don't grow and prosper by cross-selling and upgrading alone. New business development programs must form an integral part of their growth plans - and today's automation systems can provide support for these plans and actually run them. This example will illustrate the power and the management challenge A/ISystems can present:
The ABC Agency decides to target family-style restaurants for a Commercial Lines Package developed by XYZ Insurance Company specifically for this type of business. The agency buys a prospect list from a list broker in electronic form and downloads it to the Commercial Selling System (CSS) module of its A/ISystem, being sure to include SIC and target market codes. The A/IS manager and the agency sales or marketing manager determine the individual steps the marketing campaign will include (number and frequency of direct mail contacts, and actions to be taken based on specific responses). The manager then develops the actual marketing pieces (letters) which are stored in the A/ISystem's word processor.
After Sales Center personnel and producers are assigned to the campaign, the CSS initiates Step One (sending a contact letter), then controls the timing of each step. It sends a second contact letter a specified number of days after letter number one if there has been no response. Letter number three goes out after the second letter, and so on. When responses are received and recorded, the CSS 'branches' automatically to create telephone call lists for the Sales Center staff, who use an on-screen phone script to call for x-dates and/or producer appointments. These responses are recorded directly in the CSS. X-dates are suspended for future contact and appointments are noted directly on the producer's on-line calendar.
Before the scheduled appointment, Sales Center staff prepare an individually tailored risk survey to be downloaded to the producer's computer for him or her to use to obtain complete underwriting information. After the sales call, the underwriting survey is uploaded to the CSR and integrated with the rating and ACORD application modules. A complete submission (underwriting survey, applications, and rating worksheets, along with such supporting information as pictures, financials, loss runs, etc.) is prepared and transmitted to the company for final review, underwriting, and pricing. After the company responds with updated terms, conditions, and pricing (possibly by download), the CSS, in conjunction with the word processing module, prepares a final proposal. Once all information is transferred from the CSS to the A/ISystem, the proposal can be sold, coverage bound, the electronic daily retrieval system loaded, and verifications issued - all automatically.
The entire process is handled by the automated CSS without duplicating information entry (this is true single entry . . . at least on the agency side). Even more important, there's no need for hands-on management decisions at each step because the A/IS and Sales managers have pre-programmed the individual steps of the marketing campaign.
The A/ISystem Manager: Building For the Future
As this overview of agency information systems has shown, the responsibilities of managing these systems has grown exponentially. However, despite the importance of A/ISystems to independent agencies, too many principals commit too few resources (in time, people, or money) to selecting a manager for their systems.
The prevailing attitude seems to be stuck in Accounting 101: Since everybody uses the system to invoice, let the bookkeeper manage it. Because the bookkeeper would prefer to balance debits and credits, it's small wonder that their standard response to an agency principal's latest and greatest new idea about how to use the A/ISystem is: 'It can't do that.' This is no indictment of capable, hardworking bookkeepers. But the fact remains that making the bookkeeper responsible for the agency's automation is often a short-sighted and inappropriate decision. The best choice is a person with in-depth knowledge of the agency's goals, strengths, and weaknesses - together with the respect and authority to make the necessary changes.
Selecting a manager for the agency's A/ISystem must be the responsibility of the owners or principals. After all, what other position is as important to the day-to-day operation of your agency? Sales or customer service? Without automation, it would be impossible to manage producers, CSRs, or staff. The ideal A/ISystem manager would be: someone who knows how everything and everyone works together. . . who understands the agency's goals and how to accomplish them . . . who grasps the technology and how to use it . . . who will encourage and motivate staff members to do new work in new ways. Your agency's future depends on this person!