IT’S STILL ABOUT PEOPLE
Supporting what’s at the heart and soul
of the insurance industry
By Mary Belka, CPCU, ARM, ARe, RPLU, CIC, and Cheryl Koch, CPCU, ARM, AAI, ACSR, AFIS
The start of 2023 saw so-called insurtech companies struggling mightily. The idea behind insurtech is simple: create a marriage of traditional insurance and technology, driving down costs and improving efficiency. The appeal in an industry that lags woefully behind most others technologically is to maximize the return on investments in technology, which most agencies would (perhaps reluctantly) admit has eluded them for decades.
On its face, we would agree that further use of technology is sorely needed, but perhaps the reason this hasn’t been the panacea is because it fails to recognize one important fact: People are still at the heart and soul of the insurance industry. While technology must be effectively and efficiently used to support people within the industry and serve its external customers, in and of itself it’s not the solution for which we’ve all been waiting.
The incredible advances in technology that we have seen in the last few years are certainly laudable. But most of us didn’t get into the insurance industry because of its cutting-edge automation (cue the horse and buggy processes still common to many agencies). It was because what we do in our industry, particularly within the service ranks of the independent insurance agency, matters to those who purchase our products and avail themselves of our services.
Those who excel at the account manager position within agencies often possess what we call the “servant’s heart.” They see their role as solving problems and providing answers to people who need their professional help navigating the often-muddy waters of insurance transactions.
Are there internal processes within agencies crying out for the application of technology? Most certainly, but not to replace people, rather to free up their time to serve their customers in an even more personal and meaningful way.
In a book entitled Making Money the New-Fashioned Way, published by the Independent Insurance Agents and Brokers of America (IIABA) in 1999, appeared the following statement, which still rings true: “… risk management services will be the value agencies can add to the insurance transaction. Insurance education will become critical in bridging the gap between the techno-savvy CSR and the insurance technician.”
If we go back in time to the beginnings of agency automation, things began to change in terms of the skills that were required for the account manager position. Without the need to understand automation, account managers who possessed vast insurance technical knowledge were very much in demand. It was not at all unusual for most account managers in an agency to attain their Certified Insurance Counselor (CIC), Associate in Risk Management (ARM) and even Chartered Property Casualty Underwriter (CPCU) designations. Achieving these was no small feat and, although supported, was not demanded by agency owners. Insurance knowledge was sought by those individuals who wanted to be better partners to the agency’s clients. Advanced knowledge and education are, in fact, the hallmarks of being considered a professional.
[I]t’s when automation savvy and technical knowledge are both high that you have
the best possible outcome for all concerned.
Gradually, the ability to utilize technology and process transactions quickly and accurately overtook the demand for deep technical knowledge. But it’s when automation savvy and technical knowledge are both high that you have the best possible outcome for all concerned. To us, this book was already identifying the concept of insurtech, but with a very different meaning than the one we have today. In this case, it was the convergence of technology skills and insurance knowledge.
When we think about E&O losses—and we are both E&O auditors—we know they generally fall into one of two categories: knowledge-based errors or procedural errors. The latter is easy enough to address by implementing and monitoring solid internal procedures that are followed by every individual in the agency. This won’t eliminate E&O, but it is a powerful loss control technique and a defense to an E&O action should one occur. When procedures aren’t in place or aren’t followed, mistakes happen.
Agency owners have done a reasonably good job emphasizing the importance of creating, implementing and monitoring procedures, although we occasionally find agencies who have not yet adopted good internal operating procedures. More troublesome is that many agencies have probably not been as diligent about making sure they have the best trained and educated insurance professionals at every position in the agency.
The most recent IIABA Best Practices Study gives us a glimpse of agency owners’ level of commitment to professional development. Across all revenue categories, the average percentage of revenue being spent on training is 0.3%. That number would be substantially lower were it not for the efforts of the very smallest agencies, where spending is double that of larger organizations.
Contrast this with spending on IT, which is an average of 2.8% of revenue. If you spend one-tenth of what you spend on technology to train and educate your people, you’re likely getting what you paid for: cutting edge technology with people who don’t really know as much as they need to know about clients’ exposures and the products and risk management techniques available to address them. We fear this “knowledge gap” is being exacerbated by the Great Resignation and the Quiet Quit, especially in agencies that don’t have a formal plan in place to raise up everyone’s level of knowledge.
Another thing to consider is current educational standards. At the very time when everyone needs to know more, and there is so much more to know, some education providers seem to be “dumbing down” their curriculum to make passing courses and exams easier, especially for early-career students. There is nothing inherently wrong with easing people into formal education, but that should mean creating new courses that are designed for people just entering the industry, not taking established curricula and stripping it of important details.
So, what can agencies do to ensure they have people with the highest levels of insurance knowledge and to reduce those knowledge-based E&O situations? It’s really pretty simple and like so many things in agency management, it all starts with a plan.
- Plan it. Develop a formal, written educational career plan for every individual in the agency, with goals and a timeline that is appropriate for their current position. For example, a new hire with no insurance experience who is going to be a receptionist should take an introductory course on insurance during their first few months on the job. Let everyone know what the educational requirements are for every position, so if they wish to advance in the organization, they know what will be expected of them.
- Communicate it. Demonstrate how the agency supports employees’ professional development endeavors, both financially and emotionally. When people make a commitment to themselves and their insurance career, it can be daunting. Make sure everyone who is engaged in formal learning has an assigned mentor who can check in with them and see how they are progressing, offering much-needed support and encouragement. When the agency pays for people to attend a course, have that person present to others what they learned.
- Reward it. We’ve said it before, but it bears repeating: What gets rewarded gets done. It should be part of every person’s performance-based compensation plan that they take and pass at least one national-level insurance course each year. There are plenty from which to choose. Create a bonus plan that rewards attainment of national designations based on the complexity of the material covered and the time commitment required to achieve it. Non-financial rewards are also important, so consider giving people some designated time to learn and study.
- Celebrate it. Have a quarterly meeting where employees’ educational accomplishments are recognized, similar to what many agencies do when a new piece of business is written. This shouldn’t just be internal recognition, but also communicated to your carrier partners and your clients, so they understand how important ongoing education is in your agency’s culture.
- Live it. What matters most to you will matter to them. If you’re in a leadership position in your agency, people will take their lead from you when it comes to training and education. If no one at the top of the organization appears to place any value on continued professional development, it will be difficult for the people being led to see why it matters or how it could benefit them.
Let’s be clear—we know everyone has state-mandated continuing education (CE) requirements, but that’s not what we’re talking about. In fact, mandated CE may have set back the cause of ongoing professional development, not propelled it forward.
We often find that timing or location is what motivates someone to attend a particular CE course—not the advancement of their insurance education. It would be interesting to track what spending was on training and development prior to the enactment of state CE laws. Our hunch is it was much higher.
Higher agency profitability should not come at the expense of professional development of staff. In fact, it’s time to stop considering training and education as an expense. It’s really an investment in what matters most–our people.
Mary M. Belka is owner and CEO of Eisenhart Consulting Group, Inc., providing management and operations consulting to the insurance industry. She also is an endorsed agency E&O auditor for Swiss Re/Westport. A graduate of the University of Nebraska, Mary holds the CPCU, ARM, ARe, RPLU, CIC, and CPIW designations.
Cheryl Koch is the owner of Agency Management Resource Group, a California firm providing training, education and consulting to producers, account managers and owners of independent agencies. She has a BA in Economics from UCLA and an MBA from Sacramento State University. She has also earned several insurance professional designations: CPCU, CIC, ARM, AAI, AAI-M, API, AIS, AAM, AIM, ARP, AINS, ACSR, AFIS, MLIS.