One great advantage of difficult situations is that if you look hard enough, you can usually find opportunities. Agencies that take steps to improve their processing operations are handling the extra workload with less stress than their peers, often without hiring additional employees. In this document, Chris Burand recommends three improvements — written procedures, job descriptions, and limited account shopping — to reduce E&O exposure and the stress of the hard market.
Many agencies are experiencing productivity stress in this hard market. Most notably, they need more staff. Several factors are increasing agency workloads. First, companies are pushing more processing responsibilities onto agencies. Second, agencies have to shop accounts more aggressively. Third, underwriters want more information, and they want submissions to be complete. Fourth, agencies must follow up more consistently with companies to make sure files do not get lost on underwriters' desks or ignored on their computers.
WRITTEN PROCEDURES
Written procedures and employees (including producers) who follow them enable an agency to process business faster and improve the quality of submissions, resulting in better service from companies. Written procedures also reduce the time required to train new employees. Following standard procedures and having complete, detailed submissions reduces E&O exposure.
JOB DESCRIPTIONS
Most agents' eyebrows arch high when I tell them that good, detailed job descriptions reduce the stress of a hard market and increase productivity.
Job descriptions, combined with good procedures, help delineate responsibilities clearly. When everyone knows who's supposed to do what and that people will be held responsible for their duties, they do their jobs better. Employees spend less time blaming others for not doing something (think about producers vs. staff). Fewer items fall through the cracks, reducing E&O exposure and increasing productivity. Submissions are usually better, resulting in higher hit ratios and faster responses. Employees spend less time gossiping about so-and-so's latest mistake. Conversely, missing or poor procedures or job descriptions increase an agency's exposure to EPL suits.
Good procedures and job descriptions also help management answer the frequently asked question, “I think so-and-so CSR is (lazy, inept, incompetent, too slow), but all I have to go on are my producers' complaints. What do I do?” Without procedures and job descriptions, there's no way, except in the most blatant examples, to know if the CSR is or is not performing. To conduct employee reviews fairly, agencies must have job descriptions and written procedures.
Agency owners are often concerned about CSR job performance. After learning about their working conditions, especially the quality of the producers' work, I often find that the fault doesn't lie with the CSRs. Given the conditions I see, CSRs often face the impossible task of doing some of the producer's work, as well as their own. These agencies usually have high turnover and, thus, lower productivity and higher E&O exposure. High turnover is especially damaging in a hard market, where staff familiarity with companies and accounts (and company and client familiarity with staff) is a definite asset.
The solution to these problems is to implement and follow well-written job descriptions and procedures. Many agency managers write and implement job descriptions and procedures, but find enforcement difficult. A simple step is to audit 10 to 15 files per CSR and/or producer every quarter. Check the files (whether paper or electronic) to learn if the staff and producers are following procedures and if CSRs are doing producers' work for them.
LIMITED ACCOUNT SHOPPING
At first, this solution might seem like anathema in a hard market. However, the one resource that limits all of us is time. With the hard market forcing us to spend more time on each account, something has to give. Limiting how many companies, especially brokers, the agency shops with will save time. Moreover, the cost is minimal. Agencies that limit their submissions seem to be growing faster and achieving higher profits than those that shop extensively. They achieve better results because they're not chasing every risk.
An insurance agency consultant I know did a survey of agents which showed that most accounts only have three viable markets, and that agents already know which three those are. So why market to 15 or 20? Sure, agents might lose some accounts if they don't market hard enough. But if they spend too much time marketing an account, they lose the profit — and if there's no profit to be made, why chase the account? Why bother marketing every account so extensively?
Implement written procedures and job descriptions, and limit account shopping. These three improvements will have a major impact on decreasing stress and E&O exposures. They can make the difference between agencies that are thriving in this market and those struggling to stay afloat. Are you a struggler or a thriver?