https://completemarkets.com/Article/article-post/1859/AUTOMATION-INFORMATION-SYSTEMS-MANAGEMENT/
Automation/Information Systems Management
AUTOMATION/INFORMATION SYSTEMS MANAGEMENT by Tripp Leach This article will explore several questions such as: Why must agency automation be managed? What is agency automation and information system management? What are the responsibilities of agency automation managers and/or system coordinators? The best way to answer these questions is to look at various agency activities to see how they are affected by your computer or Automation/Information System (A/ISystem). The A/ISystem forms the heart, if not the soul, of your agency. If you disagree, unplug your system for just one day and watch what happens. You'll see: No claims service No policyholder service No renewals or new business proposals No company communication No accounting activity However, you finally will be able to read that stack of circular file material that's been composting on your desk for the last month or so. Accounting: Mining Invoices The first systems, if they could be called systems, required only a basic knowledge of agency accounting (and the vendor's phone number, if something went wrong). They automated such individual tasks as billing/invoicing, preparing accounts current and company payables, tracking producer commission payables, sales analysis, etc. Although automating these activities has provided some efficiencies, it required little management effort because agents basically were doing the same work the same way they always had. Although agency back-office operations still perform the same functions, the simple act of invoicing is the foundation of nearly all agency statistical information and reporting. To see why, consider what information a single new business invoice provides and its potential impact. Besides automatically creating the accounts receivable, agency commission income, company-payable and producer-payable records, the invoice also: Provides a numerical account of the number of new business transactions. Gives gross premium and commission income dollars of new business transactions. Uses the numerical count and gross premium and commission income dollars to develop averages for new business transactions for the agency, producer, contact, company, line of business, etc. Utilizes a source of business code or indicator to record the source of all new business produced. Employs the source of business information to measure the effectiveness of advertising and marketing programs and make the appropriate adjustments. That's just the beginning. With the information from all invoices stored in the agency management system, A/ISystem managers can: Allocate accounts evenly among CSRs based on the number and type of transactions, differentiating between direct and agency bill, standard and non-standard policy types, lines of business, gross premium, and agency commission income. Track book of business splits among companies and average premium and commissions by transaction. Rank customers by gross premium, agency commission received, producer commission paid, net commission income, and transaction averages. Given the tremendous amount of information available from the simple act of invoicing, it's no wonder that significant management talent should be dedicated to effective utilization of A/ISystems. Beyond Accounting Today's successful agency focuses on three areas: Improving customer retention through quality customer service. New business development through target marketing. Increasing internal efficiency and productivity. Your A/ISystem should play a vital role in each of these functions. Stellar Customer Service through Automation A major debate is raging currently as to whether 'claims' should be classified as a back-office function or part of the front-office service activity. Since customers buy insurance to pay the claims they hope they never have, I feel 'claims' is definitely a front office customer service activity that can benefit tremendously from the proper management of an A/ISystem. Nothing can be worse for customers than waiting on the phone, wondering if their unfortunate accident is covered, while CSRs or claims staff try to locate a file to make a coverage determination. Of course, it never fails that the one file you need immediately can't be found, and the customer is told they'll have to be called back. As they stew over the unknown, they become madder and madder at you - the person they turned to for help. Properly implemented and managed, an automation system can eliminate these problems, turning the customer's mishap into an opportunity to demonstrate stellar service. Here's how: The A/ISystem manager reviews your vendor's daily retrieval model to determine what information will be loaded and maintained online in the system and how it will be used for claims service. A plan is formulated to load the information into the system (possibly by downloading from the agency's carriers) and to provide for continuous real-time updating. The loaded data is verified regularly for completeness and accuracy. Paper files are relegated to secondary storage (drop or transactional filing), as the daily electronic retrieval model becomes the primary source of information. As a result, files are never lost. CSRs or claims staff make immediate coverage determinations with the customer on the phone in real time, thus providing the desired stellar service. That's Just the Beginning Automated claims service offers several other benefits in boosting productivity and efficiency: Since all coverage information is contained in the electronic daily retrieval module, integrated ACORD loss notices are pre-filled automatically, leaving only descriptions and third-party information to be input. Just think of the time savings and increase in accuracy by not having to retype driver information, VIN numbers, coverage forms, the names and addresses of insureds, and so forth. Loss notices are e-mailed or faxed to the company directly from the CSR's or claims staff's desktop computer. Acknowledgment memos to insureds and claimants, together with diary and suspense items, are created automatically. Claimants are added to the prospecting module (more on this later). However, customer service goes far beyond claims to encompass coverage changes, third-party coverage verification (binders, certificates, and evidence of Property insurance), 'what-if?' rating scenarios, questions, transaction history, and general hand-holding. An A/ISystem can also boost efficiency and increase productivity in these areas if managed properly by: Ensuring complete, accurate information in the daily retrieval module. Ensuring vendor systems that will: Accept daily policy download transaction types, automatically applying them to the A/ISystem and creating supporting invoices, confirmation memos, exception lists, etc. Provide single-entry upload transactions integrated fully with the electronic daily retrieval module. Integrate company electronic mail (E-mail) and facsimile transmission capabilities from the desktop. Provide fully integrated Personal and Commercial Lines rating to respond to 'what-if' rating scenarios. Provide fully integrated binders, certificates and evidence of Property insurance forms. Offer full on-line transaction history records. Provide full on-line history notes. Provide full on-line billing and payment history. Training CSRs properly in the complete utilization of their A/ISystem, encouraging and requiring that they use the electronic file, rather than the paper policy file, as the primary source of customer information. Automated Prospecting: Your Agency's Gold Mine Although superb customer service and efficient, productive back-office operations are essential, to survive and prosper, agencies must also plan for and implement programs for regular, systematic growth. Before examining outside sources of prospects, let's take a look at a set of prospects that too many agencies ignore - current clients. A fully loaded A/ISystem provides almost unlimited prospects at CSRs' and producers' fingertips. Every client is a prospect for cross-selling and coverage upgrades. From Homeowners without Auto, to Packages without Umbrellas, to Life without Disability, to Health without Nursing Home coverage - from employees of Commercial clients, to claimants - everyone can be cross sold. Anyone you know anything about (and you should know a great deal about everyone in your A/ISystem) can and should be a prospect for some type of coverage or service. All you have to do is decide who they are and what you want to sell them. As we've all been told time and again, it's far more cost effective and profitable to retain a current client than to develop a relationship with a new one. Here's an example of marketing to existing clients that surfaced at a users' group education seminar I was leading a number of years ago. A young single CSR wasn't having much success finding suitable companionship through the normal channels. Using the agency's information system, she developed a marketing search (or query) that searched the driver information records of all Personal Lines clients to locate the names, addresses, and telephone numbers of all single males insured by the agency between the ages of 25 and 35 who owned certain sports cars (Corvettes, Jags, Mercedes, etc.). Armed with this list of prospects she proceeded with her 'marketing' campaign by calling them, supposedly to review their Auto insurance. Her creativity paid off - she's now happily married. Granted, this was an unusual marketing application for an A/ISystem. However, it spotlights the power of a fully loaded system, together with the challenge facing an A/IS manager in determining and acquiring useful information, then creating a marketing system to mine this source of prospects. New Business Development By Computer However, successful agencies don't grow and prosper by cross-selling and upgrading alone. New business development programs must form an integral part of their growth plans - and today's automation systems can provide support for these plans and actually run them. This example will illustrate the power and the management challenge A/ISystems can present: The ABC Agency decides to target family-style restaurants for a Commercial Lines Package developed by XYZ Insurance Company specifically for this type of business. The agency buys a prospect list from a list broker in electronic form and downloads it to the Commercial Selling System (CSS) module of its A/ISystem, being sure to include SIC and target market codes. The A/IS manager and the agency sales or marketing manager determine the individual steps the marketing campaign will include (number and frequency of direct mail contacts, and actions to be taken based on specific responses). The manager then develops the actual marketing pieces (letters) which are stored in the A/ISystem's word processor. After Sales Center personnel and producers are assigned to the campaign, the CSS initiates Step One (sending a contact letter), then controls the timing of each step. It sends a second contact letter a specified number of days after letter number one if there has been no response. Letter number three goes out after the second letter, and so on. When responses are received and recorded, the CSS 'branches' automatically to create telephone call lists for the Sales Center staff, who use an on-screen phone script to call for x-dates and/or producer appointments. These responses are recorded directly in the CSS. X-dates are suspended for future contact and appointments are noted directly on the producer's on-line calendar. Before the scheduled appointment, Sales Center staff prepare an individually tailored risk survey to be downloaded to the producer's computer for him or her to use to obtain complete underwriting information. After the sales call, the underwriting survey is uploaded to the CSR and integrated with the rating and ACORD application modules. A complete submission (underwriting survey, applications, and rating worksheets, along with such supporting information as pictures, financials, loss runs, etc.) is prepared and transmitted to the company for final review, underwriting, and pricing. After the company responds with updated terms, conditions, and pricing (possibly by download), the CSS, in conjunction with the word processing module, prepares a final proposal. Once all information is transferred from the CSS to the A/ISystem, the proposal can be sold, coverage bound, the electronic daily retrieval system loaded, and verifications issued - all automatically. The entire process is handled by the automated CSS without duplicating information entry (this is true single entry . . . at least on the agency side). Even more important, there's no need for hands-on management decisions at each step because the A/IS and Sales managers have pre-programmed the individual steps of the marketing campaign. The A/ISystem Manager: Building For the Future As this overview of agency information systems has shown, the responsibilities of managing these systems has grown exponentially. However, despite the importance of A/ISystems to independent agencies, too many principals commit too few resources (in time, people, or money) to selecting a manager for their systems. The prevailing attitude seems to be stuck in Accounting 101: Since everybody uses the system to invoice, let the bookkeeper manage it. Because the bookkeeper would prefer to balance debits and credits, it's small wonder that their standard response to an agency principal's latest and greatest new idea about how to use the A/ISystem is: 'It can't do that.' This is no indictment of capable, hardworking bookkeepers. But the fact remains that making the bookkeeper responsible for the agency's automation is often a short-sighted and inappropriate decision. The best choice is a person with in-depth knowledge of the agency's goals, strengths, and weaknesses - together with the respect and authority to make the necessary changes. Selecting a manager for the agency's A/ISystem must be the responsibility of the owners or principals. After all, what other position is as important to the day-to-day operation of your agency? Sales or customer service? Without automation, it would be impossible to manage producers, CSRs, or staff. The ideal A/ISystem manager would be: someone who knows how everything and everyone works together. . . who understands the agency's goals and how to accomplish them . . . who grasps the technology and how to use it . . . who will encourage and motivate staff members to do new work in new ways. Your agency's future depends on this person!
https://completemarkets.com/Article/article-post/1045/ESTABLISH-AN-ORGANIZATIONAL-STRUCTURE/
Establish An Organizational Structure
ESTABLISH AN ORGANIZATIONAL STRUCTURE by Gary Holgate When analyzing the organizational structure of an independent insurance agency, you will find that there are four different general functions performed: 1) Sales 2) Service 3) Paperwork 4) Management Before going into a detailed definition of each, let's discuss the types of contact that an agency has with existing and prospective customers. TYPE OF CUSTOMER CONTACT When I first began analyzing agencies in the late 1960s, I quickly learned that an agency has two basic types of contact with existing and prospective customers: Demand Contact Public-Relations Contact 'Demand contact' with a customer occurs when an existing customer contacts the agency and, 'upon demand', requires the agency to perform some type of service. Examples could be a policy change for a new vehicle, a change of address, a claim, a billing question, or a coverage question, to name a few. The important aspect to remember about a demand contact is that the agency does not control when the request will be made, or what the resulting workload will be during the next hour, day, week, month, or year. When the customer requests service, the agency must deliver it in a timely, courteous, and accurate manner. A 'public-relations contact' takes place when the agency generates a contact with an existing or prospective customer. Examples of public-relations contact include a sales representative calling a new prospect or visiting an exceptional Commercial customer. The important fact to remember about a public-relations contact is that the agency, not the prospect, generates the contact with the customer. SALES AND SERVICE DEFINED Once these contacts have been identified, demand contacts should be called 'service', and public-relations contacts could be defined as 'sales.' I often ask, 'How many sales representatives have had a lot of time for public relations contacts in the past year?' The number of people responding is normally very low-fewer then 10%. What sales representatives are saying is that if they don't have time for public-relations contacts, they don't have time for sales. WHY SO LITTLE TIME FOR SALES? After personally analyzing more than 450 independent insurance agencies, I could probably write a book about the reasons why sales representatives don't have time for sales. However, there is one predominant reason for this dilemma: The typical sales representative (owner or non-owner) attempts to perform public-relations contacts and demand contacts at the same time. In other words, the sales representative is attempting to sell and service customers simultaneously. If your job involves demand contacts, this may occur: You are driving to work and determine that you have three tasks you want to accomplish that day. The time to complete them should take no more than half an hour. Let's say these tasks include calling a customer for a renewal appointment, contacting an underwriter to follow-up on a large risk that is being placed, and making an air-line reservation to attend a seminar. You arrive at work at 8:30 a.m., get a cup of coffee, sit down at your desk, and find the number of the customer with whom you want to make the renewal appointment. The telephone rings and another customer asks a coverage question (demand contact). You answer the customer's question, begin to call for the renewal appointment, and the telephone rings again. It is another customer with a billing question (demand contact). This goes on all day long, until it's 5 p.m. The agency is closed to the public. You are tired because you worked hard all day and desk before going home, and then think of the three objectives that you set for yourself that morning. Were they accomplished? Nine out of 10 times the answer is 'No.' Why does this happen day after day after day? The answer is very simple: When an employee attempts to perform service functions and sales functions at the same time, the service functions cause the employee to lose control of business life, simply due to the nature of the service function. This is why it is best to establish an organizational structure for an agency; separate sales and service functions, and ensure that an employee is not assigned to perform both, if at all possible. If these two functions are mixed into one employee's job description, service time will always consume sales time, and the sales objectives of the agency will suffer. WHAT ABOUT MANAGEMENT? One of the major deficiencies of the average independent insurance agency is the lack of time devoted to management. Another question I always ask when consulting or conducting seminars is, 'Does your agency have a full-time manager who does not sell or service, and spends 100% of the time managing?' Again, there is a very low positive response-usually fewer than 5% answer that they have such a full-time manager. If this is a fact, it means that more than 95% of the independent insurance agencies are combining management with sales, service, or both. The problem is clear: If you combine sales or service, or both, with management in one employee's job description, management will suffer. Sales and/or service duties will always consume any time available for management. Management is something that can always be put off until tomorrow. And when that happens, problems become crises, and the majority of management time is spent 'putting out fires.' PAPERWORK Paperwork is like management. It can always be put off until tomorrow. That's why, when paperwork and service are combined, service time will always consume paperwork time, and backlogs will occur. When combining paperwork and sales, one or the other will suffer. And finally, if you combine paperwork and management, management time will always suffer, as the paperwork will always consume management time. WHAT DOES THIS MEAN? When establishing an organizational structure for an agency, never combine these functions into one employee's job description: 1) Sales and Service 2) Sales and Paperwork 3) Sales and Management 4) Service and Paperwork 5) Service and Management 6) Paperwork and Management WORKING WITH INSURANCE COMPANIES There are three types of P/C customers. They are: 1) Exceptional Commercial Lines customers 2) Non-Exceptional Commercial Lines customers 3) Personal Lines customers If an insurance company wants to write the large, exceptional Commercial Lines customers, agency owners should be involved. My studies reveal that more than 95% of exceptional customers are written by the owners in the average agency. If the company wants to write non-exceptional Commercial Lines customers, it could work with either a sales representative, a small (non-exceptional) Commercial Lines manager, an operations manager, or a Commercial Lines customer service representative (CSR). If the insurance company wants to write Personal Lines business, it could work with a Personal Lines manager, an in-house Personal Lines salesperson, or a CSR, depending how the agency is organized. If someone other than the owner is involved in a project, that employee will enjoy working on the project since it's something new and different. Each situation varies, depending how each agency is organized. The important thing to remember is that owners are the busiest people in the agency and, whenever possible, should delegate to employees. THE POSITIONS IN AN AGENCY To help identify different positions in an agency and what each position generally entails, the following charts and description are provided. Remember, these are only general definitions and will have to be adjusted and modified with each agency. PERSONAL LINES The Personal Lines Manager, in addition to managing the Personal Lines department, often acts as a CSR, and may even serve as the agency Personal Lines Assistant. The Personal Lines Manager could also be the In-House Sales Representative, who handles new walk-in business, telephone quotes for new business, and follow-up expiration dates on additional coverage for existing accounts. The Customer Service Representative (CSR) usually handles the demand contacts for Personal Lines customers including claims. The Personal Lines Assistant usually processes the paperwork regarding policies received from insurance companies. COMMERCIAL LINES The Commercial Lines Manager could, in addition to managing the Commercial Lines Department, perform some or all of the duties listed in the other positions below. The Account Manager (a new position that I have recently created) works with Sales Representative on information gathering, as well as placing and servicing exceptional Commercial Lines customers. The Placer takes the information gathered by a Sales Representative and placed the business with insurance companies. The Placer mostly works with exceptional Commercial Lines customers. The CSRs handle demand contact from Commercial Lines customers. Through the years, I have attempted to have exceptional customers and non-exceptional customers and non-exceptional customers assigned to different CSRs. For example, the Non-Exceptional CSR handles only non-exceptional Commercial Lines customers. The Commercial Lines Assistant is an employee who performs the paperwork for both exceptional and non-exceptional customers. SALES DEPARTMENT The Sales Manager manages all sales activities of the outside sales staff. This person is usually an owner. The Commercial Sales Representative is an outside salesperson who is normally responsible for prospecting for new clients and handling all outside work with exceptional customers. The Life and Health Sales Representative sells Life and Health insurance to existing agency customers and other prospects. Many agencies use an insurance company representative in this position. The Sales Department Coordinator is a relatively new position in agencies. The coordinator's major functions include coordinating sales objectives, telemarketing for new clients, and narrating management reports. This person sometimes acts as the owner's secretary. OTHER AGENCY POSITIONS There are many other positions you may find in an agency, such as bookkeepers, word processing operators, receptionists . . . depending of course, on agency size. The point in organizing agency personnel along these lines is to free your staff of distractions to concentrate fully on particular clients. After all, the organizational flow is a key element in the success or failure of the agency.