As the world ushers in AI technology, the insurance industry
is ready to leverage the opportunity to improve results
By Lori Widmer
It used to be that technology was a bit of an option. In the 1980s, the agency management system was born as a means by which agencies could get their accounting in order. Even in the 90s, systems were handling accounting and beginning to handle client account management.
Fast forward to 2023. Today’s management system is a full-scaled platform from which agents can manage sales, risk management, marketing, data, contracts, clients and more. The entire agency workflow and productivity hinges on a system that can automate tasks and free staff of time so they can focus on growth initiatives.
As the internet has pushed the evolution of business, so too have agency management systems had to evolve and respond. With independent agencies now vying with large entities for the same client business, agency management systems have responded, allowing agents to compete.
“An agency management system should function as a partner that gives the agency the choice to use the tools and vendors they prefer, much like independent agents give their insureds the choice of which carriers to write with. The management system should not hold you hostage to a single system or way of using your data.”
Chief Marketing Officer
Yet, in a hard market and an inflated economy, competition is that much tougher. “Agents are facing a lot of new challenges in the current hard market, including rate hikes, carriers refusing to write new policies or renew some existing policies in certain markets, and all the associated customer churn,” says Rushang Shah, chief marketing officer at HawkSoft.
Shah says that the industry is starting to see how carriers will respond to the hard market conditions, and how that will impact independent agents and their customers. “Rising premiums are prompting consumers to shop around, but remarketing a large volume of policies can be burdensome and costly for both agencies and carriers.”
It’s an environment best illustrated by the consolidation activity in the industry. In 2022, there were 708 merger and acquisition (M&A) deals, according to data from MarshBerry. While the number of deals dropped from 924 in 2021, it shows a significant increase since 2005, when M&A activity included just 205 deals.
The reason? Blame inflation and a tight insurance market. “The economy and hard market are top of mind for many of the agencies we work with,” says Dana Pasquali, vice president of product management for Vertafore. “Some agencies are seeing profit boosts from the market’s higher premiums, but they are also having to fight harder to retain clients. And M&A has slowed down in most sectors of the industry, which is changing up how some agencies are planning for their future, whether they are looking to buy or get bought.
“We’ve been in a hard market for some time, but this year we’re in a bit of a perfect storm: Big-name carriers are pulling out of markets and lines of business, inflation remains high, and natural disasters continue to drive big losses,” Pasquali adds.
Moreover, agencies are faced with parsing more data than ever before. “Our industry is the custodian of vast swathes of data,” says Rose Hancock, senior director of product management for Zywave. “As we transition towards digitalization, a major challenge we face is how to integrate these disparate, unstandardized data sources into seamless platforms that enable better workflow efficiency and less duplicate entering or repetitive tasks.”
“While agents might be slightly concerned about the speed of tech adoption, there’s also a lot to be excited about. Today’s technology can have a positive impact on nearly every function within an agency … .”
Senior Director, Product Management
The tech evolution
However, Hancock says, the problem with getting agencies to innovate often lies within the very systems they already have in house. “Too often, businesses are tied to expensive, proprietary systems that don’t allow for data to flow between other solutions.”
She says that an open software architecture, like the one her company utilizes, can improve the flow of data across multiple systems. “The standardization and open flow of data not only increases workflow efficiency, but also enables agents to customize their tech stacks, only investing in the areas that make sense for their business needs.”
“Many insurtech companies have been using more traditional forms of AI and machine learning for years to process and facilitate data … . Agencies should definitely keep an eye on how this technology evolves, but also be thoughtful about how and when they start to explore its use.”
Vice President, Product Management
So how does an agency compete and stay viable? By recognizing the need for technology. However, even technology can pose issues. “Another major challenge—or potential opportunity—facing agents is the speed at which technology is changing,” says Hancock.
The challenge could be coming from outdated systems that are not handling enough of the back-office tasks or are not equipped to manage today’s workflows. “Many of the challenges that independent agents face in the insurance industry are rooted in inefficient processes, unnecessary paperwork, long cycle times, and a disjointed means of sharing information,” says Anupam Gupta, chief product officer for Applied Systems.
Putting that innovation to work in an independent agency can boost productivity and shift focus in meaningful ways. “Connectivity is the lifeblood of innovation, and technology is at the heart of connectivity,” Gupta says. “Agents who invest in their technology can connect all systems, people, and stages of the client journey and policy lifecycle, helping independent agencies benefit from new levels of productivity, simplicity, intelligence and value to drive success today and tomorrow.”
As the industry is pushed further into the digital age, Hancock sees plenty of opportunity. “While agents might be slightly concerned about the speed of tech adoption, there’s also a lot to be excited about. Today’s technology can have a positive impact on nearly every function within an agency—from front-office lead generation and marketing to back-office workflow management, accounting, and commission tracking.”
AI and the IA
Enter AI—artificial intelligence. “There are some extremely exciting things happening with insurance technology at the moment, like innovative applications of AI and other integrated technology that can help independent agents provide service at scale without sacrificing quality,” says Shah.
Pasquali says that artificial intelegence could transform insurance and with it, the role of the independent agent. “The industry is looking at how we can balance the immense potential of this technology to create new efficiencies and drive data insights, while still protecting the sensitive information we’re trusted with.”
Pasquali says that since the launch of ChatGPT in November 2022, the insurance industry has been on the quest to utilize AI to improve data management. “Many insurtech companies have been using more traditional forms of AI and machine learning for years to process and facilitate data, and generative AI could further accelerate the digitization of agencies’ day-to-day work,” says Pasquali. “Agencies should definitely keep an eye on how this technology evolves, but also be thoughtful about how and when they start to explore its use.”
What ChatGPT did for AI was to introduce it to a larger audience. “Even though AI has been around for decades, generative AI seems to be going from 0 to 60 in no time,” says Hancock. “We use AI in our everyday lives for tasks like using voice-to-text, facial recognition on our phones, and ad recommendations in social media, so using AI at work for marketing, sales workflows, and customer operations seems like a no-brainer.”
Systems in evolution
Not just AI, but also providing other functionality has been the constant focus for agency management system providers. “The management system is the engine for both an agency’s business and the agency’s overall tech stack,” says Pasquali. “Across the board, agency staff spend more time in there than just about any other system.”
Hence the reason that insurtechs are working to improve the management system day-to-day user experience for agents. Improving the technology partner offerings, she says, creates better data exchanges. This in turn helps agencies work with better efficiency.
Gupta says in his own company, that’s exactly what’s going on. “We are doubling down on accelerating the digital roundtrip of insurance, further connecting agents to the data within their businesses, to their customers and to more markets.”
That includes the automated payment process, which helps agents get paid faster while improving the client payment experience. The company is also investing in “modern data infrastructure and visualization technology that are creating ways to help make data accessible and useful so that agents can make better decisions, spot growth opportunities, and become more operationally efficient” as well as delivering a streamlined method for quoting multiple lines of business to multiple carriers, he adds.
For Shah, the HawkSoft focus is three-fold: rolling out a new cloud platform, expanding on a robust ecosystem of API integrations, and building direct data connections to carrier systems from within the management system. “We want to make the insured-to-agent-to-carrier experience as frictionless as possible, and to do it responsibly and transparently. Our API partners, for example, are asked to share their stance on data ownership right in their partner profile in HawkSoft and be transparent on what, if anything, each partner does with an agent’s data.”
“Agents who invest in their technology can connect all systems, people, and stages of the client journey and policy lifecycle, helping independent agencies benefit from new levels of productivity, simplicity, intelligence and value to drive success today and tomorrow.”
Chief Product Officer
Charting the agency’s course
Putting that innovation to work in an independent agency can boost productivity and shift focus in meaningful ways. “Technologies such as integrated digital payments and commercial lines digital connectivity are making it easier for agents to connect with customers and carriers,” says Gupta. “The shift towards digital payments creates greater efficiency and safety for insureds to complete their transactions, while commercial lines quoting tools streamline operations and offer more carrier access.”
Hancock has seen similar progress thanks to smarter agency management systems. “[W]e’re starting to see insurance agencies shift their focus from back-office operations in their agency management systems to focus on revenue-generating activities, such as lead generation, marketing, seller productivity, and customer engagement.”
With agencies investing in better tech solutions, she says, producers are able to do what they do best—produce. “This has the dual benefit of increasing productivity, while also improving job satisfaction, since those employees feel better equipped to keep up with today’s consumer expectations.”
The investment needn’t take endless research. Shah says agencies can use the partnerships within the system to improve their technology results. “Agencies can build their own tech stack customized to their specific needs and processes, using the agency management system as the hub that feeds data to all the tools and systems they need to be efficient,” he says. The benefits are twofold, he adds. “Staff will appreciate not having to navigate different systems to get the information they need, and customers reap the benefits of an automated ecosystem.”
It’s all about customer choice, Shah says. “An agency management system should function as a partner that gives the agency the choice to use the tools and vendors they prefer, much like independent agents give their insureds the choice of which carriers to write with. The management system should not hold you hostage to a single system or way of using your data.”
Choosing wisely, therefore, can mean the difference between success and frustration. Gupta says agencies should remember who the users are. “Customers and staff interact with simple digital experiences in almost every aspect of their lives, so it’s important for agents to keep this in mind as they evaluate their digital strategies.”
Getting the customer experience right is critical, he adds. “Consumers aren’t afraid to jump ship for a better customer experience—meaning that the competition for their business has increased.”
Knowing what your agency needs—and how your customers will respond to it—is critical. “Technology might not be the first thing that comes to mind when agencies think about their staffing needs and challenges, but where and how employees work absolutely makes a difference,” says Pasquali. User experience, she says, is key to attracting and retaining good employees. A great agency management system, she says, brings that kind of agility. “The added benefit to agencies: It becomes easier and faster to onboard new employees when their systems are more intuitive and data is easier to find and navigate.”
A great management system fit also is a morale booster, Gupta says. The right system can reduce errors, increase productivity and efficiency, and improve employee satisfaction. Plus, “agents that smartly adopt and use technology across all roles in their business provide better work environments for their employees, improve customer satisfaction, and ultimately drive growth and retention,” he adds.
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Lori Widmer is a Philadelphia-based writer and editor who specializes in insurance and risk management.