Offense Or Defense? Converting Management Problems To Opportunities

The best insurance agencies are also teams. They know that the points they have to rack up are prospects who turn into clients who never want to go away. They develop tools and techniques to win those clients, discovering along the way that they're stronger and safer organizations. The agencies that sell the best and retain the longest are also the 'E&O-safest.'

These agencies accept today's distribution systems and technology and work with them proactively. They are not mired in the 'We've always done it that way' muck, preferring to deal with what's here and what's coming. Almost as important, they take charge of whatever is within their own control and refuse to whine and groan about the rest. Every problem other agencies see are opportunities to these strong, supple organizations. Let's look at some of the challenges they have faced.

Problem: Renewals are being sent directly to insureds by many Personal and Commercial carriers. That, combined with downloading, is making us lose a traditional opportunity to do account reviews and stay in touch with our clients.

Opportunity: Clients' risk exposures change over time. What's more, their willingness to insure to value often grows and matures over time. Staying in touch with a client not only reminds them about all the wonderful reasons they decided to place their insurance with you in the first place, but allows you to benefit from their maturing recognition of their growing list of exposures.

With carriers mailing policies directly to insureds, the best agencies see a new opportunity: not to save postage, but to use that postage to stay in touch with clients in more important ways. They know that renewal is not a good time to explain and recommend additional coverages because most clients are 'price-fixed' at renewal (and are often being solicited by the competition with lower price offers). It's better to recommend those coverage enhancements at midterm. Good automated work flows free up CSRs' time, allowing midterm account reviews and recommendations to become a reality.

Problem: CSRs often see themselves more as 'producer assistants' than as account managers. This means they'll never become proactive account-rounders and developers. What a shame! The people who have the most contacts with the insured-and thus the most opportunities to round the account-are unwilling or unable to do it.

Opportunity: Agencies can transform their CSRs into more proactive, in-charge, marketing-oriented individuals-maybe not overnight, but it can be done. The change is achievable by transforming the hiring process, by dividing the CSR team into 'contact' vs. 'technical' CSRs, by investing in training, and by changing job descriptions and performance standards.

With proactive, marketing-oriented CSRs taking service calls, every call can become a rounding opportunity. But don't expect even the best CSR to turn into a sales machine without planning. When the phone rings, it's too late to begin reviewing the account. This is when the midterm account reviews just mentioned pay big dividends: The coverage-rounding opportunities discovered and documented in the electronic file will be readily available for the CSR to look up. After handling the insured's reason for calling, the CSR can refer to the file and discuss any coverage gaps with the caller.

Problem: Interactive proprietary interface (IPI) makes your staff the carrier's 'input operators,' which means that the carrier can reduce its expense ratio while stealing time from your staff that it could have devoted (in the absence of IPI) to account rounding and quality time with the client. IPI also increases the agency's E&O exposure: The potential for data-input errors are almost predictable because of the complexity and variances among different carriers' proprietary products.

Opportunity: At the very least, secure a hold-harmless agreement from any carrier that requires your agency to do IPI. Better yet, make like Nancy Reagan and 'just say no' to IPI. This will allow you to commit yourself and the agency to developing a staff of marketing-oriented professionals. Phrased differently, if you're not doing Job 1 -- sales, account rounding, and impeccable service-why are you doing the carriers' work for them?

But the best solution is to work with your carriers to develop SEMCI. (No, it's not dead-and it's a shame that people are trying to bury it now, when it's just beginning to pay off.) Encourage, nag, and educate your carriers to the wisdom of SEMCI; support those that have developed it with robust, profitable volume; volunteer to beta-test for any carrier that is developing it. The agencies that go for the gold get it.

Problem: Buying into a carrier's self-serving definition of SEMCI ('Agent inputs app or change into interactive proprietary system and waits for download into the agency system') is dangerous. That warped strategy leaves the agency system playing second fiddle; renders an up-to-date, credible agency database impossible; and puts several different carriers' systems into the agency with all their training and support hassles.

Opportunity: Use your agency management system as the pen and record everything there consistently and in real time. Get rid of paper notepads and carriers' proprietary systems.

Problem: Too many agencies worry that producers will mess up their database, so they disenfranchise producers from system use. They leave the producers out of training-or don't make training mandatory for producers, which is the same thing. Thus producers get by with documenting little or none of their conversations and other activities with clients and prospects in the system file. CSRs sometimes end up inputting conversation notes into the system for the producer (there we are, back in 'producer assistant land'). The agency becomes resistant to transactional filing because they can't imagine system-illiterate producers surviving without a traditional paper file. Producers worry that without a traditional paper file, they won't know what to take out into the field when they visit a client.

Opportunity: The available solutions are not as spectacular as we would like, but they're certainly workable. One agency management system allows producers to check out clients' accounts for field use on a laptop, but important documentation such as activity notes do not upload back into the data files at the office. Until enhancements improve that process, laptops can be used as remote workstations via modem, and producers should be encouraged-no, required-to update client account records with contact and activity notes, much as physicians update their patient records online these days.

Problem: All of us, CSRs, producers, and principals, are wearing P/C blinders. There's a pile of Life, Health and financial services money within our grasp, but unless the wind blows it our way, we do our best to ignore it. Any lost potential for legitimate income is a missing coverage, and therefore an E&O exposure. What if your client, for whom you are the exclusive agent, is seriously disabled and has no Disability Income coverage? Wouldn't it feel good to be the kind of producer or CSR who wouldn't let that happen? Wouldn't a principal feel better if an offer of Disability Income was documented in the client's electronic record?

Solution: Stop talking about Life, Health and financial services, and create a business plan for making them a profit center-a profitable profit center! For beginners, profile the most needy and/or likely candidates in your client database, and use your system's marketing and tracking module/function to get organized, purposeful, and successful this year.

Problem: There's a distressing tendency to get so caught up in the 'soft market renewal frenzy' that you fail to notice (or gloss over) the detriments of a cheaper renewal alternative. Examples: the Umbrella that doesn't include 'employees' in the definition of 'insured'; the Commercial Auto policy that limits radius of use; the claim, as opposed to loss, deductible; the Property policy with out an agreed-value provision; the Rental Property Liability coverage with a Pollution exclusion.

Solution: Develop an online coverage matrix for any line in which coverage varies from carrier to carrier, and for company-specific products. Keep them current. Get double duty from that effort by using the matrices in your proposal documents to show why your proposed coverage is better that the competition's (or to show why a cheap alternative has coverage detriments).

Problem: 'I never said that,' often uttered in response to your CSR's statement to the insureds that they removed their Physical Damage coverage just a few months before the vehicle was vandalized.

Solution: Send a confirmation letter from your office for every change processed by your agency. Ideally, your agency system should be set up by management, so that these letters will go out as a normal part of end-of-day processing: a non-optional byproduct of the system's change transaction activity code.

Problem: Your carrier non-renews a policy for legitimate underwriting reasons. Your clients assume that you, their wonderful agent with all those companies, will replace the policy and keep the coverage in force. No problem at all if you can replace it-but it could be a huge problem if you can't replace it, or don't want to.

Solution: Attempt to remarket such accounts, but notify clients with as much lead time as possible if finding a replacement promises to be difficult. A power-user idea: Trigger automatic lists to manage all non-renewed policies (via a status code search) to ensure that a replacement letter, or a 'Sorry, no can do' letter, is sent. Loose ends sink ships.

Good agency automation gives us time to listen, analyze, document, sell, communicate, and, at the end of the day, sleep well, knowing our bases are covered, our clients are protected, and our income has been maximized. That's when we know we've won the game.