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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 agencies.

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 idle.

By  Christopher Gagnon

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.

Office Technology

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.”

Always Service

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 base.”

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 laundry.”

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