SYSTEM UTILIZATION WHAT'S YOUR RETURN ON INVESTMENT?
by Tripp Leach
Are you getting your money's worth? Yes, you know you're getting value from your Agency Management System (AMS). But do you really know how much of the system's capability your agency is using? You probably know the Return on Investment (ROI) on your last stock or mutual fund, but what about the ROI on your AMS? Does it really matter?
Many agents don't know the answer to these questions; in many cases, they've never given it any thought. They dutifully bought a system 'because it was the right thing to do.' Then they immediately turned it over to their bookkeeper or accounting department (since computers were for 'number crunchers') and blissfully went about the business of selling and servicing.
Today, most agencies have a comprehensive automation system. They also have a high degree of automation knowledge, but are still not what you would call 'techies.' For the most part, they have no idea if they're using their system to anywhere near its full capability.
The Agency Management System Utilization Survey that follows will allow you to measure your system usage and then take action to improve it. Although neither a complete survey of every possible function in every major agency management system, nor a measure of every type of software available to agents and brokers, the survey will open your eyes to forgotten uses of your AMS.
Take the time now to print and complete this survey. Measuring your agency utilization is the first step toward improving it. The test can be completed in a few hours. Once you have completed and scored it, your strengths and weaknesses will be apparent. Several key people in your agency should complete their own copies of the survey, and then compare their answers to get an accurate overall picture.
AGENCY MANAGEMENT SYSTEM UTILIZATION SURVEY
DIRECTIONS:
Read the description of each automated activity and give yourself two points if your agency performs the activity as described. Give yourself one point if your agency performs part of this activity. Give yourself an extra point if your agency performs the extra-point (EP) activity.
SCORING:
Total your score at the bottom of each section and divide by the number indicated to get your percent total. Then total all sections and divide by the number indicated to determine your percentage Return On Investment (ROI).
SECTION I - FINANCIAL CONTROLS
BILLING and COLLECTION:
___ Open item billing is used.
___ All invoices are system generated, and only one copy is printed.
___ Graded commissions are entered so that the insured receives a single-line invoice but the detail prints on the company account current.
___ Installment plans are created when billing the policy.
___ EP: Installment registers are reviewed before printing.
___ Binder billings are issued for all new business.
___ Binder billings are issued for all renewal policies at least 15 days before the renewal date if the policy has not been received.
___ A binder register is run weekly.
___ EP: A binder register is generated monthly for management review.
___ EP: A binder register is generated by the company for review with company field persons.
___ The binder bill suspense account is reconciled monthly.
___ Aged accounts receivable reports for agency-defined aging periods are generated at least twice a month.
___ EP: Aging periods are the same as company payables payment dates.
___ The open item payable report is run to review unpaid invoices prior to paying companies.
___ Past-due notices or letters are part of the agency's letter library and are generated by the accounting department.
___ Prebilled items due within the next 30 days appear on an insured's monthly statement.
BILLING AND COLLECTION SCORE ______ DIVIDED BY 24 = ______%
ACCOUNTS PAYABLE:
___ Companies paid from company statements are set up as open items for ease in reconciliation.
___ The company payable account is reconciled monthly using the company payable summary.
___ Producer commission is entered on invoices, and producer statements are used to pay producers.
___ All checks are produced by the system.
ACCOUNTS PAYABLE SCORE ______ DIVIDED BY 8 = ______%
GENERAL LEDGER:
___ The balance sheet and income and expense statement are printed and reviewed regularly.
___ EP: Departmentalized accounting is used to track individual profit centers.
___ Budget figures are loaded and reviewed periodically.
___ Spreadsheets are used to review retention, account development /commissions, operating and administrative expenses, liquidity, etc.
___ EP: Data is downloaded rather than re-keyed.
___ Direct bill accounts are reconciled.
GENERAL LEDGER SCORE ______ DIVIDED BY 8 = ______%
SECTION I-FINANCIAL CONTROLS
SCORE ______ DIVIDED BY 40 = ______%
SECTION II-DAILY MANAGEMENT CONTROLS
___ System backup is performed daily.
___ Additional shared drive backups are performed on a regular basis.
___ Daily management summary is reviewed each day.
___ EP: Corrective action is taken immediately to correct errors.
___ Policy Expiration Report is used on a daily basis to confirm that binders have been issued.
SECTION II-DAILY MANAGEMENT CONTROLS
SCORE ______ DIVIDED BY 8 = ______%
SECTION III-CLIENT SERVICE MANAGEMENT
CLAIMS PROCESSING:
___ Computer files are consulted for coverage information before paper files when a claim is reported or there is an inquiry.
___ All ACORD claim forms are system-generated.
___ Loss information is entered directly to online ACORD forms by the CSR when taking the claim over the phone from the insured.
___ All insureds who report claims receive personalized form letters that confirm the claim has been reported to the company and provide adjuster or other information.
___ EP: Personalized form letters are sent when the claim is closed.
___ A narrative of contacts with insureds, company claims persons, and adjusters is maintained on the system.
___ Claims are entered in diary for follow-up.
___ EP: System-generated follow-up notices are used.
CLAIMS PROCESSING SCORE ______ DIVIDED BY 8 = ______%
ENDORSEMENT PROCESSING:
___ Computer files are accessed before paper files when insureds call with a change request.
___ EP: A letter or memo is sent to the insured confirming the request to the company.
___ Change-request forms are system generated.
___ Policy detail data is changed at the time of the endorsement request.
___ Endorsement premiums are calculated with an integrated rating system, and an estimated invoice generated.
___ Change requests are entered into the computer's diary.
___ EP: System-generated follow-up notices are used.
___ Endorsements are checked against computer files for accuracy when they are received from the company.
___ A personalized form letter is sent with the endorsement to the insured.
ENDORSEMENT PROCESSING SCORE ______DIVIDED BY 14 = ______%
RENEWAL PROCESSING:
___ Expiration lists sorted by producer and contact are run monthly.
___ EP: A direct bill list is generated by company, producer, and expiration date.
___ An 'unprocessed' renewal list is run at fixed intervals.
___ System-generated renewal requests are submitted to companies at least 60 days in advance.
___ An account loss summary is run to review claims.
___ EP: Account loss ratios are computed as part of renewal process.
___ Renewal applications for remarketing are system generated.
___ Integrated rating is used to compute renewal quotes if they are not ordered from the company.
___ Expiration notices and renewal quotes are sent to all non-standard policyholders 30 days in advance of renewal.
___ EP: Final notice is sent 10 days in advance.
___ EP: An expired notice is sent on the X-date.
___ Renewal requests are entered into the computer's diary.
___ Renewals are checked against computer files for accuracy when they are received from the company.
___ A personalized form letter is sent to the insured with the renewal.
___ Certificates are system generated, with prefilled insured and policy data.
___ EP: Certificate holder lists are stored on the system and reviewed at renewal.
___ A 'canceled' policy list is prepared periodically, and reason (rationale) codes are reviewed to determine why the policy was canceled.
___ EP: A 'Thank you for your business' letter is sent to each client.
___ Canceled clients are re-coded as prospects and entered into diary for future sales contact.
RENEWAL PROCESSING SCORE ______DIVIDED BY 26 = ______%
SERVICE SUPPORT:
___ A single, central diary system is maintained.
___ Each employee maintains a diary on the system.
___ Diary items are closed when the action is completed.
___ Diary lists are printed/reviewed daily by each employee.
___ Management periodically reviews open-diary items.
___ Diary lists for employees who are ill or on vacation are reviewed by a designated person.
___ Producers use the system to enter account contacts into diary.
___ Standard letters and paragraphs are stored for all routine agency correspondence.
___ Word processing is used for all correspondence.
SERVICE SUPPORT SCORE ______ DIVIDED BY 18 = ______%
SECTION III-CLIENT SERVICE MANAGEMENT
SCORE ______ DIVIDED BY 66 = ______%
SECTION IV-CLAIMS MANAGEMENT
___ Paid, reserve, and subrogation information is maintained on the system.
___ Open claims are entered into diary for follow-up.
___ Claims reports are run on a regular basis for review of claims status.
___ Claim summary reports by producer and company are run at end of year.
SECTION IV-CLAIMS MANAGEMENT
SCORE ______ DIVIDED BY 8 = ______%
SECTION V-MARKETING MANAGEMENT
DATABASE:
___ Prospects are loaded in the system as they are identified.
___ EP: Prospects are coded so that they can be separated from clients.
___ EP: A separate prospect database is used to maintain prospect information.
Prospect coding includes:
___ A method for identifying what you wish to sell the prospect and an X-date.
___ A method for identifying the date and type of last contact.
___ A method for identifying who is responsible for calling the prospect.
___ A method to identify the source of referral business.
___ EP: An appreciation letter is part of the letter library.
___ A method to identify unwritten prospects who are maintained for re-solicitation.
___ EP: Prospect files contain dollar value of policy.
___ A method to identify previous clients who are still prospects.
___ A method to identify the Life needs of P/C prospects.
___ A method to identify lines of business not written for clients.
___ Certificate holders are part of the prospect database and have been solicited.
___ Third-party claimants have been added to the prospect database.
___ EP: A claim service survey letter is sent.
___ A list of new prospects with X-dates or SIC codes is purchased for soliciting new business.
___ A method for deleting and purging prospects on a regular basis.
DATABASE SCORE ______ DIVIDED BY 26 = ______%
WORD PROCESSING:
At least one letter is stored which:
___ Solicits a missing line of insurance from an insured.
___ Introduces the agency to prospects, telling them you will be calling.
___ Thanks a prospect for an X-date or an appointment.
___ Thanks an account for its business.
___ EP: The letter contains a list of employees and/or the service personnel.
___ Recommends additional coverages and higher limits.
___ Describes market changes for certain customers.
___ Asks for referral from clients.
Word processing is used for:
___ Boilerplate proposals covering the parameters of a quote.
___ EP: Proposal software is being utilized.
___ Correspondence with insurance companies.
___ Target marketing.
___ Contacting prior clients.
WORD PROCESSING SCORE ______ DIVIDED BY 22 = ______%
SALES SUPPORT:
Our agency:
___ Uses coverage checklists generated by proposal software to analyze exposures and recommend coverages.
___ EP: Coverage checklists are used when renewing policies.
___ Sends policy quotes to underwriters with applications.
___ Uses computer-generated ACORD applications for quotes.
___ Uses a computer diary program to track activity (letters, calls, etc.).
___ EP: Binders are entered into system diary for follow-up.
___ Uses an automated method to track producer and company 'hit ratios.'
___ Uses an automated home cost estimator.
___ CSRs request X-dates for missing lines of business.
___ CSRs suggest appropriate upgrades in limits/coverages by telephone.
___ CSRs are assigned producer codes for commissions earned on new business through account rounding.
SALES SUPPORT SCORE ______ DIVIDED BY 18 = ______%
REPORTS:
Reports generated on demand include:
___ Both Personal and Commercial lines prospects with X-dates for the month and the next 12 months.
___ A list of accounts for cross-selling, generated on a regular basis.
___ Codes are used to identify business written during a specific sales campaign.
___ Sales costs are compared to income periodically during a sales campaign.
___ The gross profit analysis report is run at least annually.
REPORTS SCORE ______ DIVIDED BY 10 = ______%
SECTION V-MARKETING MANAGEMENT
SCORE ______ DIVIDED BY 76 = ______%
SECTION VI-RATING AND UNDERWRITING MANAGEMENT
Our agency:
___ Uses Personal Lines comparative rating programs.