Every type of organization within the insurance agency marketplace currently faces tough challenges. Insurers are figuring out how to manage through the changing distribution channels, agencies are learning new technology and vendors are fighting it out with competitors. SMA, an insurance analyst firm, set out to examine this environment to determine agencies’ need for, and potential use of, agency management systems as well as to assess the vendors that provide solutions.
Authored by Deb Smallwood and Karen Furtado, the report, “Agency Management Systems: Marketplace and Vendor Analysis,” gathered data from insurance agency interviews, as well as interviews, product demonstrations and survey responses from vendors/solution providers. The report concludes that with budgets remaining tight in the coming year, agencies saddled with obsolete technology will be challenged to compete successfully since consumers have now come to expect real-time service in all areas of life.
SMA asked agencies and agency management system vendors about the business drivers for technology spend. The most important, they found, is operational efficiency, followed by profitability, sales growth, reducing E&O exposure and consolidation.
Elsewhere, agents and vendors were asked to rank the most important benefits of agency management systems. Reducing expenses topped the list, followed by automation, competitive reasons, attracting new customers and attracting carriers. To do all of this, the authors suggest, an agency needs to move beyond a sole agency management system and look at a number of technologies.
The agency technology framework the authors describe in the report includes two categories for overall automation: foundation and extension technology.
The foundation technologies category includes base technologies that are required in any small business today, such as phones, Internet access, office automation tools, and basic imaging and scanning. Foundation technologies make up the core of agency management systems along with policy service, billing, financial and security features.
The extension category consists of two sets of technologies: add-ons and advanced technologies. Add-ons expand and extend the functionality of core agency management systems by including components to manage marketing campaigns, licensing, and commissions. Advanced technologies extend the reach of these systems by adding capabilities such as real-time carrier connectivity and agency/customer portals.
Advanced technologies provide the “anytime, anyplace” environment producers and customers are increasingly demanding. Studies indicate real-time connectivity can save agents and brokers a significant amount of time transacting business each day.
A February 2009 Real Time/Download Campaign survey of 3,200 agency staff members confirms that agents will take advantage of the functionality. Presently, more than half of agency management system users tap a real-time tool to start an inquiry or service transaction. Nearly half of those using Real Time (47%) find time savings of as much as 30 minutes per employee per day (45% in personal lines, and 50% in commercial). An additional 28% (35% in personal lines and 19% in commercial) peg the savings at 31 minutes to an hour per employee each day.
SMA says agencies must embrace technology not just as a necessary cost, but as a business enabler. Yet, agencies are not the only organizations that have challenges related to technology. Agency management system vendors face stiff competition and must keep pace with industry changes as well as demands from consumer policyholders, carriers and the agencies themselves. The report says these vendors need to remain vigilant and watch for unexpected competitors, some of which have already begun to emerge.
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