| ||Fast Focus|
It’s a widely held notion that technology in the
insurance brokerage industry is behind the times.
Our industry has surprisingly few options for automating our
When you focus your technology on your customers, you can
change entire models of doing business.
Pointing in the Wrong Direction
Here’s what’s wrong with
today’s agency technology. Banking changed while we were
In the beginning there was service, and it was good. It had to
be. Customer service was and arguably still is the main reason
for insurance agencies to exist.
The current distribution model of agents and brokers grew
from a logical progression of customer service needs. To
compete on a national scale, carriers needed a local presence
that understood the needs of regional businesses. A
distribution network of agents and brokers put boots on the
ground in the backyards of customers and set the stage for the
global insurance industry as it exists today.
These days agents and brokers have expanded services far
beyond coverage procurement, and with good reason. Competition
has increased. Tough economic times and soft pricing have
forced us to become cleverer with our value propositions.
Consolidation into brokerages with a national footprint has
changed the economics of the industry. Sustained profit growth
for large organizations requires diverse revenue streams.
A regional agency in 1939 might have been the only game in
town for specialized expertise and locally flavored customer
service, but today companies rarely think twice about hiring a
broker headquartered on the other side of the country.
Technology and communication have matured in a way that
alleviates many concerns. Coverage experts are now competing
with not just a handful of similarly qualified experts, but an
army of them.
The evolution of agency technology is rooted solidly in
these growing pains. It’s a widely held notion that
technology in the insurance brokerage industry is behind the
times. We hear this at industry functions, from our servicing
teams and sometimes from our customers. But what does this
really mean? How do we advance to the next level? Before we
move forward, it’s critical to understand where we are
and how we got here.
Prior to World War II, the path to success for an insurance
agent was pretty clear-cut: Establish relationships with
insurance companies, build a network within your local business
community, demonstrate your expertise, and smother them with
service. If you followed this model, you stood a reasonable
chance of being successful.
“When I think back to my early days in the industry,
every agency was a family business,” says Stan Loar, the
vice chairman of Woodruff-Sawyer & Company. “Nobody
was truly corporately owned or managed until the 1960s. This is
when a need for automation really became clear.”
From a technology perspective, this growth trend created a
problem of efficiency. Until the 1970s, managing paper
contracts and processing accounting relied on technical
advances in filing systems and secretarial and filing pools.
Hardly high-tech stuff. As insurance agencies merged, the
manual processing of business hindered growth.
“The foundations of running a successful agency are
really the same today as they were 40 years ago,” Loar
says. “The number of accounts per employee has risen to
the point where we need the technology today to provide the
same levels of service to a much larger customer
As computing matured, our industry experienced a
technological disruption. In the early days, computerized
systems focused solely on accounting. Although most interaction
between brokers and carriers was paper-based, it became
apparent that noting even basic policy information in the
computer system had a huge impact on customer service. Fewer
people could accomplish the same volume of work (or the same
people could serve more customers). The growth problem was
solved. The agency management system was born.
“I knew in 1978 that, if I was going to grow our
business, using computers would be a key part of the
strategy,” says John “Shorty” Sneed,
president of Bancorpsouth Insurance Services. “I remember
flying to Pittsburgh to meet with a software vendor only to
find the meeting was in the basement of the family home, which
doubled as the agent’s office. During one of the breaks,
I’m pretty sure someone swapped out the