Category Archives: agency systems

agency management, benefits management, and document management systems

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2008 Best Practices Study Released

Once every three years, the Big I asks its insurance company partners, state association affiliates, and other industry organizations to nominate those agencies they believe to be among the most efficient and high performing agencies in the industry for each of the study’s revenue categories. These agencies are asked to submit operational information in many areas. This information is carefully evaluated and ranked, culminating in the choice of the top 30 agencies in each revenue category. These agencies earn the status of “Best Practices Agency.”

Overall, this year’s study shows that agencies are doing much more with fewer people, and organic growth rate is much stronger than expected. When asked the reason for their success, the new crop of Best Practices Agencies said, overwhelmingly, regardless of agency size, “the quality of our people.” This quality can be defined as a strong work ethic, expert knowledge in agency products and services, as well as high ethical standards and dedication. These factors, coupled with advanced proficiency in agency technology, allowed the 2008 Best Practices Agencies to push productivity levels higher than ever.

Although positive revenue growth was difficult to achieve, Best Practices Agencies continued to invest in new production talent. The majority of agencies with revenues over $2.5 million hired at least 1.5 new producers during the last fiscal year, with the largest agencies hiring an average of 9.4 new producers.

The average starting salary across all revenue categories ranged from $52,000 to $95,000. The largest agencies, those with revenues over $25 million, tended to hire more experienced producers, while those in the lower revenue categories tended to hire producers with less sales and/or insurance experience.

The study and a listing of the 2008 Best Practices Agencies can be accessed at www.independentagent.com, www.reaganconsulting.com, or at bp.reaganconsulting.com.

Through this site, you can also view an HTML version of current and past executive updates, download a Best Practices comparison spreadsheet to compare your agency’s year-end results with the study’s results, and access other Best Practices studies, tools, and products and download order forms.

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A Different Way to Think about Agency Management Systems?

During a recent presentation, I noticed a younger person in the very back of the room working on his computer as he was listening to me talk. (And no, he wasn’t taking a continuing education class.) During one of the breaks, he approached me and said, “We have to talk.”

He explained that he had started a new agency less than two years ago that concentrates on personal lines coverages for individuals with high net worth and high valued homes. He had two additional full-time employees and did not have a physical office. He was receiving most of his leads through Internet lead aggregators, such as Netquote and InsureMe.

As I listened to this “20-something” describe his insurance agency, I was struck by his creativity and willingness to expand beyond what had been done in the past. I’ve since started an e-mail conversation with him so that I can explore how he uses technology to support his organization. I wanted to know how he tracks client information. He uses Salesforce.com. Following are some excerpts from one e-mail conversation:

Q: What’s lacking in current agency management systems?

A: Mostly, they are all commercial insurance driven. (And rightfully so… with their distribution model and the fact that 99% of agencies are general in nature… they’d be foolish to make a niche product for personal lines.) If I have to choose to create workarounds in an existing commercial agency management system or just build one from the ground up using my exact terms and processes, I prefer the custom ground up idea.

The major plus of an existing agency management system would be company integration… upload/download. Because I’m so niched… my primary company barely does anything with upload/download as it is. If I download partial information, I’m really not that much better off than downloading nothing. In the end, if I have to log into the company portal to get “real” up-to-date information… download isn’t that impressive. Not to mention that we have a low target for number of accounts… say 300 to 400. With that low number, using a people-driven process to move data from the company to our system isn’t all that impractical… particularly if we move to outsourced/overnight processing either overseas or in our own backyard (i.e. $12 per hour to look at all the changes posted in [the carrier] system and to move that data into our agency management system).

Q: What are the advantages of SalesForce.com?

A: SalesForce’s “Long Tail” model is its biggest strength. Because SalesForce is simply a platform without a predesigned set of usage guidelines, their focus is keeping the main infrastructure on the cutting edge. I’ve been thinking of it like a box of Legos. They’re constantly adding pieces that we can add to our custom build, so long as we don’t “misuse” pieces. The most exciting part is the SalesForce App Exchange. People can build their own apps and customizations and sell them to people using SalesForce. This means if a guy in India wants to make a few bucks, he can build a .wav to text converter that works seamlessly inside SalesForce.

Bottom line

Traditional agency management systems will be around for a long time. Yet, how many young people are entering the industry without preconceived notions of what a data management system should be? Certainly one young agent does not create a trend. That said, this agent is using (and will use) whatever technology platform he can find that will help run his business.

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Applied Systems Announces New Product

Jim Kellner, Chairman and CEO of Applied, announced a new agency management system—Applied Systems Epic™, at the ASCnet Users Group annual convention last month. The Applied Epic system has been under development for several years. While the company has tightly controlled information about the new system, some information began to surface several months ago.

During the announcement, Kellner called the new system “a simple-to-use, secure, scalable, rich Internet application that is free of browser-based inefficiency.” Applied Systems Epic is the culmination of “a lengthy and intensive undertaking to create a new system, to construct it on totally new architecture that would be flexible and scalable for any agency or brokerage.”

He emphasized that the new system is not an update of any existing system, including Applied’s 25-year-old flagship, TAM (The Agency Manager®). He said the company is committed to continuing development of TAM as well as its other systems, Vision and DORIS. The Epic system will be in general release in the United States on November 12, and in Canada in 2009. TAAR will take an in-depth look at the new system in a future issue.

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Text Messaging Most Important for Cell Phone Buyers

Cell phones aren’t just used for talking anymore. In a survey conducted by Amplitude Research, buyers of new cell phones look at video capability (33%), music (34%), Internet access (61%), e-mail capabilities (63%), camera (67%), and text messaging (73%) as the most important features. For driving in the car, 62% said they would use Bluetooth, while 51% would use the hands-free microphones.

Forty-one percent said they send or check e-mails one to five times per day, while 28% said they do not use their cell phones for e-mail. Thirty percent said they use their cell phones for banking transactions. As these trends continue, agencies will want to learn how to communicate with their clients in multiple ways.

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Are You Planning for Retirement?

How many people on your current staff are eligible for retirement in the next five years?

This is a question I recently posed to the Human Resources director of a 100-person agency. I had been asked to come to the agency to discuss future trends and things the agency should do now to plan for the future. The director didn’t immediately know the answer to my questions—but it didn’t take her long to find out. After running a report on the participants in their retirement plan, she discovered that 30% of the existing staff would become eligible for retirement in the next five years.

Why plan today?
“In talking with agency CSR staff where there has been a loss of individuals who have not been replaced—or who have been replaced with less experienced individuals—the existing CSRs take on more of the workload,” says TAAR writer Pat Alexander. “I see growing backlogs in these cases, and that leads to loss in productivity, burnout, and frustration.”

To avoid this scenario, it’s important to start planning now. It’s also important to remember that just because employees become eligible to retire doesn’t necessarily mean they will retire. Many employees will continue to work because they want to or because they have to. Many Baby Boomers underestimated what they would need financially to retire comfortably, so they work full-time for longer than expected.

Still, it would be dangerous to assume this is the case for your entire organization. An employee’s ability to work can change at any time. A spouse, child, parent, or grandchild who becomes sick or disabled can affect how long an employee might be able to work or how many hours that person can work. Because people are living longer, an increasing number of Baby Boomers are facing the prospect of caring for their parents.

Ask the right questions
Who is likely to retire and when? Who is going to replace these workers? How will the organization attract, hire, and retain people to replace those who leave? How will you train these new staff members? The solution is not as simple as finding new bodies to replace the old ones. How will you capture the knowledge and experience of these valuable staff members?

These are all questions that need to be asked now. Plans need to be put in place that will provide answers. There are some steps you can take to address these questions and begin thinking about how you will solve the problem:

  • Find out who in your organization will be eligible for retirement in the next 5 to 10 years.
  • Build a “recruit or die” mindset. Recruiting new talent needs to be woven into your organizational culture. It should not be a project when you need to fill a position, but a mindset that involves always looking for new talent.
  • Create a career path for new employees. No one wants to be stuck in a “job.” Creating an insurance career will help you retain people longer.
  • Create a training program. The industry, especially agencies, do not do a very good job of providing the tools and training necessary to help an employee become successful.

This issue is not going to go away. Find out now how much of an impact retirement will be on your organization and begin the planning process.