In this episode of “The Digital Broker”, Steve and Ryan discuss the growing importance of speed in the insurance industry as well as the difficulties and pitfalls incumbent in increasing the speed of processes.
By listening to this episode, you’ll learn:
- How speed can add value to an agency
- How speed can serve as a powerful metric
- How to use speed as a competitive advantage
- What an agency can do to identify areas of improvement
- How increasing the speed of an organization is difficult
Technology has not only increased the pace at which we live our lives but has also affected our expectations regarding the speed at which services are provided. The insurance industry is not immune to these changing needs of the consumer. This episode discusses how an agency can overcome use speed as an added value, while not damaging the customer expectation of carefully thought out advice and counsel.
How Has a Faster World Affected the Insurance Market? (1:05)
The subject of speed is a topic that cannot be ignored. While the rapid delivery of services provided by new technologies is often viewed as a positive in many businesses, that same speed can be a double-edged sword within the consultative arena of the insurance industry. Clients expect a certain quality of customer support and care. Speeding up processes can threaten that quality. If efforts to increase speed are implemented within an agency poorly, it can quickly be perceived as a negative or even hurtful attribute of an agency.
At the same time, clients are becoming more accustomed to speed in other areas of their lives and are now expecting it with their insurance experiences.
This dichotomy between the expectations of fast service versus the expectation of professional advice is a great difficulty facing the insurance industry today.
How Can Speed Be a Value? (6:40)
A powerful example of speed being a value is exemplified through Amazon. Take for example an individual looking to purchase a printer for their office. They could scour the various local office supply stores, expending time and gasoline or they can access an online vendor such as Amazon, offering a seemingly unlimited inventory of choices. Within minutes, the consumer can analyze and select the best product for their needs using product ratings and user feedback.
In addition to this demonstration of speed from the order placement side, technology has incorporated speed into the delivery of the purchase as well. Vendors such as Amazon Prime can deliver the products selected within a day and often even sooner. Other vendors such as grocery stores and restaurants are capitalizing on the speed of delivery as well. This speed is not only a value but a metric as well. Today’s technologies have circumvented barriers that would not even be recognized as such only a few years ago.
How Can the Insurance Industry Improve Speed While Maintaining the Value of Expert Services? (8:45)
There is a perception in the insurance industry that processes are outdated and slow. Agents and brokers have a critical need to examine agency processes as well as consider how they engage with their clients. As the business world, in general, develops faster processes, the insurance industry needs to find areas to incorporate speedier services while not losing its true value of consulting the client through the insurance process.
An area that hinders speed and could be improved lies in the barrier between clients and the information within the agency. It is often very difficult and slow for consumers to acquire the necessary information to complete an insurance transaction without encountering “friction.” This friction adds time and frustration to the entire process. This is compounded by the fact that while insurance is recognized as necessary, the prospect does not have the immediate impetus to acquire policies with the same zeal that a consumer pursues a new car or a printer. Agencies need to create ways to minimize that friction without overly commoditizing the product itself.
The purchase of insurance is a complex decision but there are aspects that can be improved. Insurance technology can play a role in improving speed and reducing friction in the industry. An area that becomes immediately evident is during the application process for property insurance. Applications related to property used to consist of upwards of sixty questions. With databases and other technologies now available to easily collect most of the information needed, these questions could be auto-filled for the customer, leaving only a few questions required for them to complete themselves.
Why Is It Difficult to Sell New Projects to Internal Stakeholders? (10:05)
Often promising ideas that can eliminate frustrations and increase the speed are difficult to implement within agencies. Some of the resistance can include prejudice at having never done it that way before, existing organizational barriers, and inability to understand the process. In addition to these concerns, the accuracy of a newly developed product is a major concern, especially regarding Errors and Omissions (E&O). Senior management often has the worry that the veracity, ability and even integrity of the agency could be damaged through the use of a new software. In many ways, because of the nature of the business and the fact that insurance professionals see some of the worst things that can happen, there is a resistance to the use of a new product.
How Can Speed Be Effectively Introduced into An Agency? (12:08)
What has been found to work best is the use of small teams, especially small teams that have a personal stake in ensuring that the product works for them.
New products can be tested using small groups where analysis can be performed, and improvements made before rolling the product out to the entire agency. Once the product has been effectively developed, the entire agency can be shown the effects and benefits of the product. Once this type of product analysis has been put into place, innovation will come at a faster and faster pace. Owners and staff begin to realize that new products are not apocalyptic and that any issues with innovative products can be addressed and corrected.
What Are Some Ideas to Improve Agency Speed? (14:45)
A source of great frustration with customers is during the quote process. Often it can take upwards of three days to get a quote. These problems seem to be universal, be it an independent agent or an agent representing a large carrier. Industry complaint files are rife with tales of requests for information going unanswered or being followed up slowly. There are national online insurance sites where prospects can request information from an independent agent. One would think this would solve part of the problem but often these leads go to waste when the agency does not answer calls that have been transferred. This type of problem is both avoidable and fixable.
One fix is the use of a “secret shopper”. This is an individual who is hired to approach an agency as a customer would and report how they were treated. Many agencies would be surprised at how their processes work, or in many cases, do not work. A secret shopper can help uncover slow or unresponsive service issues and allow agency management to resolve the issues. Timely and informative responses by an agency can go a long way in the reduction of friction.
Another example of adding speed to the process is the use of electronic signatures. Few agencies have implemented electronic signatures, but today, every application and policy should be signed electronically by the applicant or insured. Resistance to the process, especially by small agencies is common, pointing out the difficulties of the process. In the case of a small business application, the agency will have to collect information from the prospect, submit applications to several carriers as well as to an online rater. These submissions take time and often must be repeated to complete the quotation process. While this is not really an “agency problem” it is frequently perceived as one. In this situation, the agency has options to mitigate the slowness of the process. The agency can ensure that their staff is well-trained and effective, they can create slot-rated applications for certain identified niche risks and set up processes to effectively retrieve data from APIs. These improvements can be complicated and difficult but if properly implemented, the agency can add both speed and effectiveness to the process.
Another way to improve speed within agency processes is the through partnerships with insurance carriers and technology vendors. This type of partnership to improve the products, technology, and processes is critical. The customer is demanding and expecting change. If the agencies and carriers do not implement meaningful improvement, someone else will.
A problem that can be addressed through partnership is the inability of agencies to easily create comparative ratings of policies that were mentioned earlier. Currently, the agency needs to submit the information to the portal of each carrier from which they desire a quote. There is no unified portal for submission to multiple carriers. The carriers are not particularly interested in creating easy methods for independent agencies to provide comparisons. This is not a technology issue but may very well be a business choice to avoid comparisons.
Carriers will employ an API for a “cover wallet” but will not do it for agencies because the efforts are not scalable for all agencies. This is a situation where the agency cannot change the process but by working with partners at the carriers and technology companies, a solution possibly could be developed. The agencies can pressure the carriers but cannot force them to change and should not wait for that change.
What Changes Can be Made in The Interim? (20:40)
The agency needs to adopt a mindset of working toward what is best for the customer. With that mindset, the agency is then embarking upon a mission of figuring out exactly what can be done to deliver better value quickly.
Some ideas which can easily and quickly be implemented include:
- Electronic signatures
- Electronic payment capabilities
- Mobile documents
- Text messaging to clients to provide information or bill reminders
- Real-time claim notifications
Some management systems are beginning to add some of these capabilities, but these are all improvements that have no unified source of implementation and present an opportunity for the agency to provide self-created value. The agency needs to create that mindset to be looking for and pushing for solutions even if cobbled together until more seamless and professional solutions are created.
This kind of innovation is possible if a strategic plan is created from the top levels of the agencies and communicated to the granular levels to ensure buy-in. It can happen. There must be a strategically laid out plan coming from senior management down to a granular level to get people to buy in. Agencies that decide to use technology to improves processes survive, while others that ignore the future will be acquisition candidates.
Another possibility is deriving an agency focus to pursue markets that other agencies or brokers do not want or are not actively seeking, such as small policies. While this type of business is not often sought after, it can be groundbreaking because the agency is reaching out to customers and setting expectations for them in getting insurance in ways that they had never experienced before. Reaching into new markets creates a mindset for customers that things that they had not considered do need to be insured.
Much of the possibility of improvement begins with discussions, changed mindsets, and pushing for change. The agency needs to consider what the “pain points” are in the organization and devise ideas to remedy them. The process includes discussions as to what the agency is good at, what needs improvement, how relations can be improved with the customer, as well as where in the process can friction be removed to speed up tasks.
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