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Does your agency use the full capacity of its automation/information system (A/ISystem)? Do you know what that capacity is?
If you're like many agents I've met, the answers are probably, 'I don't think so,' and 'I'm not sure.'
For the past three years, I've crisscrossed the country teaching agency principals and managers how to evaluate their agency's use of automation. I'd like to share several observations based on this experience, then give you a tool to help you evaluate your own agency's automation performance.
Each agency I visited had been using a comprehensive A/ISystem for more than six months. They all had a working knowledge of automation, but were by no means 'techies.' In short, they were average automated agencies. Their automation usage was measured using the enclosed survey, which can be used for any A/ISystem, although terminology may vary among different systems.
Financial Controls: Good News, Bad News
Virtually every agency surveyed is using automation effectively for financial controls. System utilization averages 65%. However, there are shortfalls in using open-item accounting (both receivables and payables), binder billing, and financial statement analysis.
Billing and receivables management are the two areas in which most agencies needed improvement. Open-item billing requires the agency to allocate payments to specific invoices, while trust accounting requires agents to identify specific items being paid. Agents cannot use other clients' money to pay these premiums.
Customer statements are also understood more easily using an item format rather than the traditional balance-forward presentation. This increases customer satisfaction, since confusing balance statements can create a major source of frustration.
Receivables management is greatly enhanced if your system allows you to change 'aging buckets' on your aged accounts receivable report.
The traditional aging buckets (0 to 30 days, 31 to 60 days, 60 to 90 days, and over 90 days) are irrelevant because agents must pay their company statements on a 45-day basis. With traditional aging buckets, an invoice is almost overdue before it kicks out of the 0-to-30 day bracket. For tighter receivables management, consider using 0 to 14 day, 15 to 30 day, 31 to 45 day, and over 45 day buckets. This will allow collection activity to begin earlier in the policy cycle, reducing bad debts significantly.
Client Service: Room For Improvement
Less than half (45%) of the agencies surveyed used their A/ISystem for client service. Claims reporting and endorsement (policy changes) requests are the two most common types of client service transactions. Yet only half of the agencies surveyed employed their A/ISystem to prepare ACORD claims or to do policy changes. Less than one-third made active use of their policy retrieval capabilities, even though this could improve employee productivity significantly.
Many did not use the system to diary transactions.
Employee resistance was the most frequently mentioned reason for not using the service capability of the A/ISystem. For example, many agencies surveyed failed to perceive the value of automated policy retrieval, either because they don't understand the capabilities of ACORD forms or because many CSRs find it difficult to replace their paper files with electronic records. Fearing employee resistance to electronic policy retrieval, most agency principals choose to avoid the issue. This is unfortunate because policy retrieval improves both efficiency and the quality of customer service. Only management can make the decision to overcome employee resistance to using the service capabilities of the A/ISystem.
Marketing Management: A Wasted Resource
The agencies surveyed significantly underutilized the marketing management capabilities of their AI/Systems. On average, agencies were using less than 25% of their system's capabilities. Although nearly all the agencies had automated rating programs, especially for Personal Lines, very few used any of the many other functions available to them.
Cross-selling capabilities were rarely used in spite of their obvious benefits. Lack of familiarity with system capability was the primary reason for this shortcoming. Many systems managers are bookkeepers or financially oriented employees who fail to appreciate the marketing opportunities automation can provide. When agency principals take the time to learn their system's capabilities, utilization should increase considerably.
Successful agencies assigned a person other than the A/ISystem coordinator as the marketing manager, responsible for designing and running campaigns on a continual basis. In small agencies, the principal usually took on this responsibility, while larger agencies designated a producer or sales center employee.
Implementation: The Proof Of The Pudding
Once priorities have been identified, create a timetable for implementation. Involve employees in the planning process and consider assigning specific automation functions to individual employees. Ask each employee to become the agency's resource person for that function and to teach it to other employees.
Involvement of agency principals and managers forms an essential part of implementing the plan. These people must use the system and understand its operation and capabilities.
Users' groups and vendors often provide seminars and other educational functions and training for agencies. Additional seminars are offered by agent associations. You might also prepare in-house training.
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