Inside Matters

By Mary M. Belka, CPCU, ARM, ARe, RPLU, CIC, CPIW

REAL SERVICE–THE DIFFERENTIATING FACTOR

Creating win-win-win for sales, service, and the client

When you strip it down to the proverbial bones, the two critical, core components of any insurance agency’s business are sales and service. Both are essential to the agency’s success, and the symbiosis is clear: One doesn’t function fully without the other. When each group does what it is supposed to do, and does it well, things hum along.

When there is overlap, duplication or omissions may result as lines blur, reducing efficiency and profitability. When this happens, success is uncertain.

Effective, productive account management creates a competitive
advantage that cannot be underestimated.

Balance is the key; when both sales and service deliver, everyone wins, especially the clients. Effective, productive account management creates a competitive advantage that cannot be underestimated.

Service defined

Dictionary definitions provide a bit of insight: “useful labor that does not produce a tangible commodity”; “help, use, benefit”; and “contribution to the welfare of others”. In our world of insurance agencies, the service definition is simple. It incorporates everything outside of sales, most of which is the responsibility of the account manager:

• Maintaining a high level of client service and satisfaction on assigned accounts, managing all inquiries, changes, requests, and correspondence accurately, per agency procedures
• Marketing and placement of new business and renewals
• Policy stewardship—assuring that insurance contracts are correct at inception and on an ongoing basis
• Contributing to agency account retention goals through proactive risk management review, account rounding, and up-selling of limits and coverages—in short, providing extraordinary client service

Put another way, sales is making promises, service is keeping them.

The Rumpelstiltskin factor—spinning straw into gold

There are many barriers to an account manager’s ability to provide optimum service. Some are out of the agency’s control, or that of the account manager, but many can be eliminated or mitigated with a commitment to operating efficiently:

• Complex client needs and expectations
• Scope of emerging exposures and subsequent coverage developments
• Scope of technology—baseline of 14 to 20 software tools just to do the basic job each day
• Ineffective business model—overlap of sales into service resulting in excessive producer involvement, which reduces both servicing efficiency and sales results
• Reactive vs. proactive approach
• Continued carrier shift of responsibility to agencies for services they previously provided
• Outmoded processes persist which waste time and offer no real benefit to clients—old habits die hard if they are not intentionally replaced or eliminated. For instance:
• Taking cash or direct bill payments; calling/contacting clients who do not pay on time; rewriting policies of clients whose policies cancel for non-payment
• Renewal timelines too compressed
• Persistence of paper and exceptions for those who cannot adapt, for instance, printing out items that come into the agency electronically—yikes!
• Three-ring binders for policy delivery
• Critical mass for time waste has been reached in regard to Certificates of Insurance and so-called compliance organizations (a subject in itself, for another column)
• Email—blessing or curse?

The list is deceptively simple, yet change is hard.

The level of expertise required to do the account management job well is high and continually expanding. Obtaining deep insurance knowledge and high-level technology skills can be daunting. There is something new to learn every day. The range of cyber liability exposures alone is nothing short of breathtaking. Did I mention COVID-19?

Missing in action

It once was possible to learn most aspects of the account manager position on an OTJ (on the job) basis that combined training, education, and experience. You’re not imagining things—professional, qualified, experienced and effective account managers have become an increasingly rare commodity.

As Ernest Hemingway wrote in The Sun Also Rises, “How did you go bankrupt? Two ways. Gradually, then suddenly.” The reality is that gradually—then all of a sudden—the retirement of knowledgeable, experienced account managers is outpacing our ability to replicate that wisdom. Agencies struggle to find qualified servicing employees. Few agencies effectively train and educate account managers, yet all seek to hire “seasoned” staff.

Agencies need to contribute to seasoning—and growing—the pool of account managers if they expect to benefit from it as they seek to hire.

Processing vs. service

The account manager position includes elements of “processing.” It is unavoidable. Conventional wisdom says that it must be possible to segment “menial” processes from account manager responsibilities. But what, exactly, is menial? The position has been parsed, dissected, and reworked, but dividing does not conquer when it comes to account management. The best account managers want to understand and manage all of the interrelated aspects of their assigned clients’ accounts. Each handoff creates the potential for E&O.

The person who orders a policy or change, should review that transaction for accuracy, which arguably is the account manager’s most important job. Increasingly, checking policies, endorsements, and audits is considered “unnecessary” and is simply being eliminated, especially if they are received in electronic form. Electronic delivery has not eliminated carrier errors; it is simply a delivery method.

The usual excuse is lack of time. I’ll just pose a few questions about this denial:

• Does anyone consider it a problem that event coverage is omitted from a policy specifically purchased to cover events for a neighborhood association—two years in a row?
• Is it a problem for employers’ liability to be omitted from Coverage A—Schedule of Underlying Coverage on the commercial umbrella—again, repeatedly?
• What about advancing the retroactive date on a claims-made policy?
• Speaking of overlap, is it a concern when a producer and account manager have requested different limits in separate emails to an underwriter on a new policy, and neither matches the proposal? What did the client agree to? If a processor is checking the policy, what do they check it against?

Are you comfortable that these issues aren’t occurring in your agency, and are you auditing consistently at a management level to make certain they are not? These are just a few of the examples I’ve seen in the past several weeks in the course of my work—a bit of a red flag that something systemic is occurring.

Most important, are you meeting your clients’ basic expectation that their policy reflects the coverage they think they purchased? Is checking to make certain just “processing” or is it service?

Pressure to outsource

In an effort to change this dynamic, agency principals have turned to outsourcing alternatives. As mentioned earlier, the core competencies of an insurance agency are sales and service. Outsourcing those functionalities that fall outside your core business makes sense, if they’re done right. IT/network management, human resources, and accounting are examples of non-core areas that can be successfully outsourced to professional organizations/services, if done correctly. Operations oversight is still needed but delegating these non-core competencies can free up time for operations management to focus on creating optimum service for your clients.

It may seem easier for agency owners to outsource service components when they feel overwhelmed by managing all things operational. The absence of operations management creates this gap, yet outsourced work still needs oversight and auditing. Who is providing it?

It is a slippery slope to outsource what should make you special. Service is more than processing. If your agency writes accounts of any substance, account managers are essential to the equation. Some level of processing is part of the essence of that job, so figure out how to do it and do it well.

The better solution is to exhaust the possibilities inside the agency on your core business before seeking outside solutions. If agencies invest in improving all components of their own core business of providing real service, they might be surprised at how they can raise the bar and out-perform their competitors.

Old school, new age

It may be simplistic to think we have come full circle, where just doing the job “old school” and leveraging new-age technology to increase productivity are effective ways to differentiate your agency and create a competitive advantage. It does take energy and intentional oversight, but can be done:

• Commit to stop doing things no one should do, creating “found time” for getting the real job done
• Establish performance standards for the quality service you want to provide, and determine any training or education gaps to fill, to reach that level
• Insist on quality performance and audit for compliance
• Write larger accounts
• Create consistent, streamlined procedures and processes—and audit for compliance
• Invest in and use the full potential of available technology; know your ROI
• Identify the people and tools you need, invest in them, and measure for ROI
• Because knowledgeable account managers work better and faster, insist on continuous learning for optimum performance

Great service is essential to sales. It gives producers the confidence to write new, challenging accounts, knowing they will be well-handled professionally and with ease by account managers. Agencies that can master the balance can attract the best, and experience profitable results.

Keep it simple, doing what you do at your core and doing it right. Address our industry knowledge drain by making sure your inside experts can handle any account professionally with ease, and you won’t need to outsource.

The author

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.