The Agency Management Process

In order to accomplish this, an agency needs to establish processes that incorporate four cornerstones to effective procedures: Efficiency, E&O Protection, Perceptible Customer Service, and Ancillary Sales Opportunities. Most agencies that I visit aren’t doing this. A high level of agency profitability is achieved only when focus returns to the customer and agency profitability.

The steps to achieve this level of success are Analysis, Structure, Written and Enforced Procedures, Full Implementation and Utilization of Available Technology, and Accountability.

To devise an action plan, the agent must determine where the agency is. A first step could be to determine where you rank with other agencies of your size in your area. You can find excellent peer group comparisons in the Best Practices Study published by the IIABA and the Growth and Performance Standards published by the Academy of Producer Insurance Studies.

Next, audit your existing systems and procedures. This requires a systematic analysis of all agency operations. Occasionally agency personnel can accomplish this, but outside assistance is often required. I’ve seen many agencies in which the owner and personnel have never worked for another agency. The old adage, 'You don’t know what you don’t know' applies here. Agencies waste time and money because 'we’ve always done it that way.' Why? Because agency personnel have never seen another way.

Analyze every agency activity to answer these questions:

• Is this necessary?
• Does it provide perceptible customer service?
• Is it so time consuming that it penalizes a majority of the customers?
• Is it profitable for the agency?
• Can we simplify or automate the process or procedure?

Once this is accomplished, move on to the next issue: the agency structure.

When I interview CSRs, I usually ask them questions about account development, cross selling, and up-selling. The usual response is, 'I know that I should do more, but I just don’t have the time.' In most offices the CSR spends 82% of their time processing paper. As a matter of fact, when I ask a CSR what their No. 1 interruption is, they’ll tell me, 'the phone.'

My response is, 'No, dealing with the customer on the phone is the reason that you’re called a customer service representative.' To the CSR, Processing has become synonymous with Customer Service. Most CSRs can’t wait to get off the phone so they can get back to what they perceive to be customer service.

There’s one more step needed to fully understand the problem and how to fix it. I’ll ask the CSR, 'Have you ever worked a Saturday or Sunday, when there was no one around and the phones were off?'

They’ll answer, 'Yes.'

I then ask, 'How many days of paperwork can you get done in one day under those circumstances?' The response is usually four or five days. If that’s the case, then shouldn’t one qualified CSR be able to do the paperwork of four to five CSRs in one day, if they’re removed from contact with the phones, producers, and customers?

Now that we recognize the problem, how can we correct it? We don’t need to throw money at the problem; all we need to do is to look at reallocating our personnel. I’m sure that many agencies have CSRs who are great technically and really move the paper, but aren’t very good with the customers on the phone. Because their job is still so important to the agency, I see no need to reduce their position or salary. These individuals should given the title Quality Control Representatives (QCR).

Another candidate for Quality Control Representatives is the person who takes an extended or permanent leave of absence following the birth of a child. If the agency has adopted and is properly using imaging, the QCR can be linked to the agency management system by phone or the Internet. Once this link has been established, the QCR will be able to provide the same services as if they were still in the office.

I recently helped an agency in Ohio split the service and processing functions. On my last visit they told me of their initial skepticism about the number of personnel required to handle the paper processing for all the CSRs.Within two weeks they were pleasantly surprised to find out that not only could they handle all the paper processing, they were able to attain zero backlog — a a status that the departments hadn’t seen in years. The CSRs were then able to make proactive service and 'goodwill' calls to the customers. Personal Lines CSRs will begin calling customers to do annual exposure reviews. This hasn’t been done for more than 10 years. The beauty of this redeployment is that it requires no additional personnel and in some cases provides the opportunity for staff reduction.

Our next consideration is the creation of written procedures. The manual should incorporate proper procedures and accountability. In many agencies, I’ve found folklore procedures. They’re not written, but are passed down from one employee to another with different emphasis and interpretations. Procedures must be in writing. Store all procedures and other manualsoin the agency’s computer system. This gives instant access to all employees. No employee can say, 'I couldn’t find my manual.' Also, if the manual is published in Microsoft Word, the user can use the 'Find' function to locate the exact procedure that’s required for the indicated process.

The manual should include forms and form letters to be used by the agency personnel. The completion and use of these documents should be a non-negotiable activity in the agency. All procedures should incorporate the main objectives: Efficiency, E&O Protection, Perceptible Customer Service, and Ancillary Sales Opportunities.

Procedures should incorporate all timesaving programs and technologies available to the agency and the agency management system being used. It should also contain procedures for each process performed by the staff, from quoting Personal Lines policy to reporting a Commercial Lines claim. If the agency produces financial services business, procedures should address all of these activities.

The agency then has to address the actual customer contact, with the idea that they’ll be performing proactive customer service and sales. But how can agency staff spend more time with the customer when they’re bogged down with processing paper? The answer is imaging. Transactional Filing (T-Filing) has been touted as the answer to the paperless office. Although it was a great interim step, it continues to require paper. There are also problems with reconstructing files, misfiled items, and more.

T-Filing touches only one aspect of the paper problem — the filing. It hasn’t solved the problems of searching, handling, and day-to-day processing. T Filing has also presented a challenge to producers who usually aren’t as computer literate as CSRs. They resent being forced to look up dates, and then search through T-Files, only to be told that they can’t remove anything from the file.

During the past few decades, CSRs have dealt with an increasing amount of paper. Many of them feel that their jobs have degraded to that of paper-pushing processor.s For a CSR, who’s been in the business for 10-20 years, this can be quite depressing. Studies have shown that people’s mental attitudes have a direct correlation to their effectiveness and productivity.

Many agencies continue to work with traditional customer files, and haven’t yet made the move to T-Filing. For these agencies, we suggest a move directly to imaging. An imaging system allows a CSR to eliminate handling paper, and focus on what’s truly important — the customer. Imaging impacts not only the paper, but also the entire mindset of the CSR and agency. It includes filing, distribution of information, and every aspect of customer service. Imaging gives the CSR the ability to do virtually everything from their desk, with little or no interruption. This ability will save the average CSR more than two hours per day. Imaging allows the CSR to use their knowledge to help clients protect their assets, which is far more satisfying than processing paper. Imaging is a mindset and a way of life that’s meant to eliminate the problems with paper, not just the paper itself. Imaging will result in an immediate hard cost savings for the agency, something T-Filing could never do.

Postage and supply costs have escalated to the point that they represent a substantial percentage of an agency’s expenses. In the new and improved agency, an agent can reduce these costs substantially. To do so, they must begin to retrain themselves and their customers to move away from costly, old-fashioned mail to an economical electronic method.

Postage costs are only a part of the picture, together with the tremendous cost in personnel, toner, paper, and other supplies. Studies show that the average cost for mailing an envelope isn’t just thirty-five cents; it’s $2.50. When you multiply this by the number of items mailed every day, you arrive at a staggering figure.

Agencies are beginning to think electronically and communicate electronically. In a perfect world, no one would ever print or mail anything. Why mail something when you can send it electronically? CSRs can use software to combine a scanned document with any other document from a Windows-based program and fax or e-mail them to a company or client.

Let’s say that your claims person wants to send a Loss Notice, together with an imaged copy of a Dec Page, plus a scanned copy of a police report. The Loss Notice and the Dec Page can be printed directly to some scanning software, stacked on top of the Police Report, and sent directly to the company without the CSR ever leaving their desk. Individual supporting documents, such as receipts and doctor’s bills, can be filed in certain software, until the claim is settled, and then archived to disk for future reference.

Likewise, the CSR can scan a copy of a commercial endorsement, copy the invoice and cover letter to the scanning software, and send all three documents to the customer in one step. Both the agency and the customer copy can then be tossed.

Another benefit of electronic communication is that most fax/e-mail systems keep a log of all items sent and received. This provides proof that a customer received their document. Logs can be printed and stored on paper, or they can be copied to the software and stored electronically.

In addition to cutting costs, an imaging system will increase productivity from 25% to 48% for CSRs, marketers, and claims people. The time freed up can be spent providing the perceptible customer service that will overcome some of the price differentials of your competitors. Also, this new concept can show you how to integrate technology to match, and even exceed, the benchmarks in the Best Practices Study.

The final piece to the puzzle is accountability. There’s an old saying that says, 'People don’t do what’s expected. They do what’s inspected.' Agency owners should develop job standards, as well as job descriptions. In other words, what are the minimum measurable expectations of each person in each position? This might include the solicitation of referrals; the amount of acceptable backlog; when renewals must be ordered; account retention; etc. An agency that has established and measured minimum standards for each employee can then accurately reward those who exceed the standard and provide additional training or supervision to those who don’t.