By Nancy Doucette
What's one definition of an optimist? Someone who sees a glass as half full rather than half empty, right? Let's put a slightly different spin on that. What's one definition of a successful agency owner? Someone who views technology as an investment rather than expense.
Or at least that's how Ft. Lauderdale, Florida, agent Mike Weinberg sees it. He explains that Gateway Insurance, where he's executive vice president, partner, and shareholder, views software and hardware upgrades as investments because, "if there isn't a return on it, then we don't do it."
The evaluation process begins with an intriguing assumption: that the technology is free. "That allows the agency's management team to evaluate the merit of the technology without the detriment of the cost association," he continues. The implementation process, the learning curve, and any initial inefficiencies which may occur are also examined at this point. What impact do these factors have on the technology's anticipated efficiencies? How long will it take to achieve those efficiencies and what's the net cost effect of those efficiencies? These issues are also considered.
If the evaluation concludes the technology being considered will enhance the agency's workflow, the next point of consideration is: What is the cost savings? What's the bottom line cost effect if the technology were free? "Most agencies focus on the cost of technology--the actual purchase price," Weinberg notes. "But the actual expense, or savings, is in what it does for you. The initial cost is incidental."
Gateway's definition of technology isn't limited to desktop computer hardware and software. "We view technology as any device that will aid us in servicing or selling insurance," Weinberg says. The agency recently implemented a new phone system which offers "clear advantages" to the workflow. In addition to the caller ID, voicemail and beeper functions, the system also includes a call accounting package. This enables the agency to identify accounts which take up a disproportionate amount of phone time compared to the income those accounts generate.
"We've become a penny business," he points out. "Profits are very narrow. We have to look at everything."
Since Gateway installed its first computer 15 years ago, Weinberg says the agency has been completely restructured. "With the possible exception of the receptionist, we expect every person and every piece of technology in this agency to generate a profit. We use our accounting system to do departmental accounting to assure that that happens. Technology is driving the agency because technology is what drives the cost down."
Gateway's emphasis on profit is also reflected in its compensation structure. Weinberg explains that weekly paychecks are adjusted quarterly based on how well the agency does this year compared to the same period last year. (An interesting result is that by eliminating so-called merit raises in favor of profit raises, everyone takes ownership in the success of the operation.) "You have to have profound changes in the way you operate the agency to survive."
Automation and management consultant Rick Morgan supports that concept. "If an agency will rethink how they take advantage of automation, implement it, and manage it, they can, in fact, receive great benefit from it." And when they don't, he cautions, that's when technology gets expensive.
From Morgan's perspective, the opportunities provided by communication technology are significant, but in order to drive some of the expense out of the distribution system, all parties must be willing to change. Important first steps include becoming more adept at doing electronic mail and taking advantage of Internet technology.
At the agency level, "pockets of inefficiency" must be eliminated. "Everybody in the agency--including owners and producers--needs to have e-mail access," he urges. If somebody in the agency isn't part of the e-mail system, it disrupts the process for the rest of the agency, making it more difficult to justify the expense of the technology.
E-mail access would take place through the communications server and a gateway into the Internet. "E-mail needs to be Internet enabled, not proprietary," he stresses.
At the company level, they need to work with agencies to create effective communication and guidelines. For instance, they need to publish the e-mail addresses for underwriters and establish how quickly agents can expect a response.
Morgan reminds agency managers they should "continually take the capabilities of technology into account as they restructure and manage their operations. Technology is too big a part of our society and the way we do business to be ignored."
Some agencies make decisions about technology on almost a daily basis, according to management consultant Judi Newman. As president of Phaze II Consulting, she works with agencies of all sizes. For those agencies that are adding people, making an acquisition, or adding an office, keeping current with technology is seen as part of the growing process.
She becomes acquainted with many of the smaller agencies she works with through E&O audits. This process enables her to look at an agency's workflows--how they handle their paperwork, correspondence, and log phone calls. She can see if they're using the features of their automation system or if they're still doing certain tasks manually. She also checks the amount of client and policy information on the system. "New technology isn't going to help unless the agency makes the electronic file its primary source of information," she maintains.
Newman believes agencies should be trained on how to audit electronic files when they buy their system. "If we're not consistently looking at the accuracy of the data, it can go sour fast," she explains. The process entails using a checklist to manually spot check 10 randomly selected files. She recommends that the system coordinator administer the process to be sure that all the pertinent information appears in the proper fields and that correspondence is properly documented. "The audit process shows you where the holes are in what you do. If there are problems that are consistently appearing, it's obvious there's additional training that needs to take place."
Consistent processing techniques are a critical element in errors and omissions prevention. So agencies which have their feet in two worlds--the paper world and the electronic world--are especially vulnerable to E&O situations because they're not using either system exclusively.
Newman reluctantly reports there are still agency principals who don't have workstations in their own office and are, therefore, dependent on paper files. Another impediment: a part-time system coordinator, or one who is not totally "comfortable" with technology.
Rick Morgan says agencies need a "technology evangelist" to keep everyone abreast of what's possible and thinking about how they can make the office run better. Judi Newman adds that agency principals looking for such individuals need look no further than their own staff. "Every agency has at least one person who is very curious and willing to step outside the box to find out what the system is capable of."
Developing that person's skills could start with attending user group meetings. Understanding the functions of Windows and Windows 95 is also key. Newman suggests contacting local computer stores, vocational schools, junior or community colleges as they all offer courses in hardware and software.
But what about the position that person vacates? "More often than not, if agencies would use all of the features of the technology they have, that person who leaves their current role to become system coordinator would not be missed as much as the agency owner might think," she maintains.
Reminiscent of Mike Weinberg's comments earlier, Newman concludes: "Technology is an investment. Too many agencies have spent $50,000 to $100,000 on a system and they're using it like a word processor! A system coordinator will continue to find new and better ways to do things within the agency using technology."
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For more information...
Rick Morgan, Automation Management Group, Boulder, CO,
phone: (303) 581-0525, e-mail: rickmor@msn.com
Judi Newman, Phaze II Consulting, Inc., Fort Myers, FL
phone: (941) 481-6001, e-mail: judinewman@aol.com
Mike Weinberg, Gateway Insurance Agency, Inc., Ft. Lauderdale, FL
phone: 800-9940-5501 x 503, e-mail: scuba77123@aol.com
