The age-old dilemma of what agents want vs. what they get from carriers isn't going away any time soon. In fact, of late, the argument has taken several turns. With organic growth an imperative, carriers of all sizes and lines of business are keeping several balls in the air at once: understanding the nuances of their existing customer set, using analytics to realize new opportunities, developing appropriate products that play to those opportunities, and bringing those opportunities to fruition by keeping their channel happy.
Providing the technology that makes that possible is seen by most insurers as essential, creating a competitive advantage when done properly. But how do carriers fare when responding to a channel that faces increased business demands of its own, such as cost reduction, technology efficiencies and faster quote/bind capabilities?
Insurance specialist Haylor, Freyer & Coon Inc. (HFC), may epitomize those channel demands, explains Cyndy Smith, VP at the Syracuse, N.Y.-based agency that claims 200 employee owners in 10 offices.
"Because of this long, extended soft market, agents are constantly focused on driving expenses out of the operating side of the business," she says. "New business aside, we all closely monitor revenue because premiums are down based on sales in this economy. So agents need to find ways to improve expense management on our operational side."
When Frank Petersmark served as CIO at Amerisure, a provider of commercial lines property/casualty and health insurance, he tried, over his 13-plus-year tenure, to help his agent and broker network keep costs down. Working with agents using Vertafore's myriad products such as Sagitta, AMS 360 and AIM, as well as Applied Systems' EPIC and TAM agency management systems, Petersmark came up with a solution: an Amerisure portal "with the dream of straight-through processing," says Petersmark.
Now CIO Advocate for X by 2 Inc., a consulting firm specializing in enterprise and application architecture for insurers, Petersmark says that the reasons carriers such as Amerisure upgrade their systems is obvious. "They want to save agents and brokers time and money with technologies that will improve the agent/broker's ability to deliver business."
Pointing to real-time rating including comparative raters and agency management systems as a way to access multiple carriers at once as a prime example, Petersmark says that real-time is becoming a deal-breaker. "Carriers that don't support it are being passed over for those that do."
The agent/broker network has skin in the game, too. Having agency employees use real-time tools through their management systems offers a range of management benefits, says Smith, who is also past co-chair of the "Get Real Time" campaign, a movement based on the work of a group of agents and brokers, carriers, technology providers, user groups, and agent and industry associations to advocate implementation of Real Time and Download interface applications by independent agents and companies.
"Ideally, everything should come electronically through our agency management system," she says. "We don't want to deal with paper and we want to work in a real-time, secure environment. E-mail can't be the solution-it needs to come into my agency management system in a way that I can manage it...and it needs to be delivered to my clients via that same system."
The "Get Real Time" movement includes routine stakeholder surveys, garnering feedback that can help facilitate better, faster and cheaper ways to transact business, and looking at ways to develop further technologies to that end. Not surprising, the most recent Get Real Time/Download Campaign survey results revealed more than 3,100 independent agents and brokers from every state placing the highest priority on getting more insurance carriers to offer real-time interface functionality to ease workflow issues in their agencies.
"According to the survey, agents want to use Real Time even more, but the failure of some carriers to offer the functionality leads to multiple workflows, which makes them less competitive," says Cal Durland, CPCU, director of member relations at ACORD, the AUGIE (ACORD-Users Groups Information Exchange) facilitator and Real Time/Download Campaign sponsor. "To take it to the next level, agents say they want more of their preferred carriers to work with them in real time and to offer the full range of real-time transactions across the major lines of business. It's becoming a differentiator when agents choose where to place business."
Durland believes the insurance industry has made strides over the last few years in standardizing workflows by implementing Real Time through their agency management systems and/or comparative raters. "This has saved agents and brokers time and money, especially when compared with going from carrier portal to carrier portal," she says.
Yet the popularity of portal use can't be understated, says Matthew Josefowicz, partner and managing director of the insurance practice at research and consulting firm Novarica. "What agents really want is responsiveness and speed," notes Josefowicz. "It doesn't matter how they get it."
For direct writer Progressive, enhancing its portal technology is only part of their scheme to keep its 35,000-plus independent agents productive and happy. The insurer recently launched new capabilities to its agency-dedicated website, ForAgentsOnly.com, making it accessible from iPad tablets, so agents can quote and sell personal auto insurance anywhere, anytime. Android compatibility is due the next few months, confirms Matt Lehman, Progressive's mobile business leader.
"We recognize that our marketplace is now mobile, and providing agents with this capability will help them stay competitive and connected with both Progressive and their customers," he says. "In fact, we've seen mobility really populate throughout all the ways we interact with customers and agents, and we intend to deliver as much innovation as possible to that platform. We'll continue to innovate along the same path and add features and functionality to make the process easy to work with us," says Lehman.
Whether agents are best off transacting business using mobile devices, portal technologies or their own agency management systems, however, is still the subject of debate. In a July 2011 survey of 96 independent insurance agents conducted by the Personal Lines Growth Alliance (PLGA), 42 percent of respondents said that working through a carrier's portal rather than through their own agency management system was the preferred choice for transacting business.
With each holding 40 percent of the available agency management systems' technology marketshare, Applied Systems Inc. and Vertafore Inc. have their own view of the survey results.
Criticizing the sample size as being too small to draw adequate conclusions, Doug Johnston, VP of Partner Relations & Product Innovation at Applied Systems, points to a larger survey conducted by the Agents Council for Technology (part of the Independent Insurance Agents and Brokers of America) and the ACORD Users Group (AUGIE) that noted that agents prefer and want to work within their agency management system.
"My problem with the Novarica/PLGA survey is that a lot of carriers still don't do a good job of integrating their services with agency management systems, and instead focus on standalone websites that are not integrated. If I'm an agent and my carrier has done a really bad job of integrating with my management system, but has done a good job building out its website, I might prefer the website too, but it means I prefer a good website over their crappy interface."
Johnston points to insurers such as Penn National, EMC, Cincinnati, Allied Insurance and New York Central Mutual as examples of insurers doing it right. "If you look at some of the integrations they've done with agency management systems, you'd never want to use a carrier website again-you'd cancel the carriers that didn't do that."
Bruce Winterburn, VP of Industry Relations at Vertafore, would like to change the discussion from an either/or to the bigger picture. "We keep taking this tact that it has to be one way or the other," he says. "What's missing in the conversation is the essence of the market we serve-the independent agent market. The value that the independent agent brings to the channel is one of choice, so by definition you must have multiplicity, because you could have four or five carriers out there with beautiful technology, but you still have to enter the data twice."
HFC's Smith, a Vertafore client, agrees. "As carriers build out portals, agency management systems are trying to keep up with various nuances," she says. "Agency management systems can bring value by making all portals look the same to me. They need to deliver a single solution to end user."
Smith notes that portal technologies work well within her agency, especially in personal lines, where they have the ability to use a personal lines rating tool.
"We are in New York State, and represent more than 50 total carriers," she says. "We can put an auto set of data in once and see 30 of those carriers' ratings, but the two (portals and agency management systems) must work in tandem, because portals really represent upload. It gets down to understanding what a portal is."
Smith says that portal use is easier with personal auto, but a bit more complicated with the various data points that funnel into homeowners quotes, and due to the complexity issues inherent in commercial lines, is a yet-to-be fully realized goal for the agency. "Every time a carrier makes a change in their portal, the agency management system must be made aware and must make a corresponding change in the system that talks to the portal," she notes.
A Tech Fix?
Deb Smallwood, principal at research and consulting firm SMA, asserts that the solution may be to have both carriers and agents agree to move to more of a cloud vs. hard-coded pipeline environment for connectivity between agents and insurers, where they can share and collaborate.
"But currently, agency management systems only work with their own software; it's proprietary, so their cloud solution will only work within their cloud solution."
Johnston confirms that new Web services communication technologies were built into Applied Systems' offerings 10 years ago, giving Applied's agents the capability of working in the cloud, and confirms that 60 percent of his clients conduct business there.
Vertafore also has addressed this issue with the launch of Engage, a cloud-based bolt-on to its WorkSmart solution that's designed to provide independent agents with secured workspaces to share team communications in real-time and collaborate on client and policy documents.
One thing is certain: The rapid changes that technology brings will force both insurers and their agents to make better decisions about how they do business.
"We are at the tip of the iceberg in terms of efficiencies," says Vertafore's Winterburn. "We've made huge strides, and have teams working on hand-held devices, creating a look and feel that's more familiar to people. If you recall the days of green screens, consider that today every agent CSR goes home and communicates to their family on Facebook, so we know where we are headed and we are looking toward a lot of that."
Applied's Johnson also believes technology's rapid changes are part of an ongoing evolution. "We have transactions we do today but didn't do two years ago," he says. "At the end of the day, carriers have to embrace all of the channels-there won't be one that replaces the other."
As carriers ramp up their technology efforts, X by 2's Petersmark would like to see the agency management vendors fundamentally repurpose their platforms. "Agents in some ways are the same way carriers were: married to old legacy platforms," he says. "I'm not sure where the resolution is, but I think the industry will keep plodding along the way it has-in fits and starts."
Smith, meanwhile, is confident that the industry will move in the right direction. "From a carrier perspective, the independent agent network, in many cases, is their only sales arm," she says. "So from a technology perspective, we know carriers will make sure they do everything they can to help us remain successful."
No Easy Answers to Change
Carriers and agents may have the same overarching business development goals, notes Deb Smallwood, principal at research and consulting firm SMA, but they are not yet on the same page when it comes to the technology plans that will best facilitate them.
"Carriers are upgrading and enhancing their core systems," she says, "but they still operate in silo fashion. They don't necessarily connect the dots to the channel."
Further, although insurers are listening to agents and brokers and trying to provide them with what they need, "if you look at the independent agent channel, 50 percent of them are very small, and don't have the capacity, financial backing or labor to embrace technology... or they just don't believe in it. In some ways that's holding everything back."
Frank Petersmark, CIO Advocate for X by 2 Inc., a consulting firm specializing in enterprise and application architecture for insurers, agrees that larger technology strategies such as legacy modernization, core systems transformation, business process improvement, direct portals, virtualization, data warehouse and marts is a double-edged sword. "Now they can offer some more self-service to agents than before," he says. "It's broadened beyond a world of shared standards to portals, the cloud and beyond, but agents are resisting carriers; they don't want to take a lot of time to change their workflow habits or be retrained; they would rather focus on selling. It's one step forward, two steps back."
Customer Ownership Still a Matter of Debate
Insurers and their independent agents agree that improved sales and customer service is the end game, and that technology is a key to facilitating a win. But what's not always clear is the three-way relationship between carrier, agent and customer.
"In the big picture, the agent owns the customer," says Doug Johnson, VP of Partner Relations & Product Innovation at Applied Systems. "During the term of the policy, the carrier is responsible for that customer, but the agent can cancel-with the customer's approval-and move that policy mid-term," he says. "So the customer has a contractual relationship with agent and with carrier, but the entire premise of that system is that the agent owns the right to renew that policy."
Yet in a world of channel complexity and consumer empowerment, the fact that agents are able to offer those customers a choice of companies (and coverages) is not the most important thing to customers, notes research results from The PIA Partnership, an insurer group offshoot of the National Association of Professional Insurance Agents. From the customer's point of view, what's important to them is that agents can deliver value. But it also points to the need for agents to have the tools and technologies in place to be able to deliver on their value proposition.
"If your life depends on your independent agent channel, you are smart to invest more in ease-of-use technology because you want independent agents to sell, sell, sell. For this, the onus is on the carrier," says Frank Petersmark, previously CIO of Amerisure and now CIO Advocate for X by 2 Inc.
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