Alleviating the “time” problem
By Cheryl Koch, CPCU, ARM, AAI, ACSR, AFIS, and Mary Belka, CPCU, ARM, ARe, RPLU, CIC
The more things change, the more they stay the same. The uniquely American quest for that magical cure for all that ails us never ends. Agency owners and managers are no exception, as they seek to solve the puzzle to relieve the top operational symptom that never seems to disappear—that of having an overwhelmed servicing staff.
Historical perspective
Over the past 45 years, our industry has evolved from manual processing, snail mail, mag card typewriters, and no voice mail, to a landscape of incredibly sophisticated technology and communication tools, now ubiquitous and available to the smallest of agencies. Commissions have decreased some 55% since that time, and both commission and contingency income continue to erode, while old costs of doing business have been replaced by previously unimagined and exponentially higher expenses, for instance payroll and technology solutions. Education and training for all those great tools is now largely left up to individuals to figure out on their own on web-based apps, and their use is often neither mandatory nor consistent. Carriers continue to shift responsibilities to agencies, which fall primarily on servicing staff, and E&O (errors and omissions) claims have increased eightfold, to say nothing of emerging and evolving coverages, court cases, and nuclear verdicts.
Sounds like things have changed—and will keep changing for the foreseeable future!
And yet, all things being equal, the revenues handled per account manager have not risen significantly over many years, despite the technological tools now available. Operational efficiency, and the ROI on increased expenses have not kept pace with those advancements. There is arguably more complexity to the account manager job today; yet few agencies have formal, written, audited procedures in place.
Could it be that some things have stayed the same, despite our many advancements?
Replacing your operational environment
with a culture of confidence and efficiency
will ensure that your agency reaches its full potential.
Account manager perspective
We have surveyed account managers in agencies large and small for years; the answers remain the same. From the service provider perspective, nearly every challenge relates to “time,” or the lack thereof, to complete assigned tasks. The biggest time bandits are ironically timeless, as they have remained relatively unchanged over the years, including excessive remarketing, time management, duplication, lack of consistent procedures/workflows, producer involvement in servicing, carrier response, and lack of adequate education, training, and accountability.
Add to that, the many tasks that don’t need to be performed by anyone, but live on in perpetuity, for lack of intentional oversight in most cases. Examples include taking payments, endless low hit ratio quoting without prequalification, contacting clients who do not pay on time, remarketing more than 10% of renewals, and copying producers on servicing emails, to name just a few.
In nearly all cases, there are more than enough people in most agencies; yet not enough is getting done. How do we turn it around?
Reset—bringing it all into focus
From a management perspective, the path toward a better result includes a reset of your agency environment to enable servicing staff to work efficiently and confidently. And it starts at the top.
It is important to note that there is an order of things to eliminate chaos and the culture of being overwhelmed. It does no good to start with procedures; they must flow in this order from a consistent foundation, or they won’t take hold. You may get some relief, but without leadership commitment to realign all agency staff under a clear structure and agencywide procedures, no real change is sustainable. Relieving those who are overwhelmed starts at the top; the process follows a specific path, resulting in consistently managed—and caught up—desks for all.
- Strategy. What a good idea it is to have one! It doesn’t need to be complex, but it should be in writing and include the basics, especially agency goals of profitability, growth, and retention.
Performance-based compensation for service staff tied to strategic goals is a differentiating factor for the best agencies. Compensation should be tied to departmental and individual goals, so all account managers are working consistently in sync to achieve agency goals. This includes among other things, identifying your ideal/target client for each department, creating pre-qualification questions, and building them into your procedures.
Carrier and marketing considerations should be included as well. A proper roadmap is a minimum requirement to create a chaos-free environment.
- Business model. Although it seems counterintuitive, this is the most important step in regaining control of each desk and creating consistency across your organization. A clear organizational chart including position descriptions, reporting relationships, and accountability is essential. Everyone should know who does what and avoid costly duplication or omission that can occur without a clear path in place.
There are three areas of agency management: financial, sales, and operations. Professional operations management/oversight is a critical component of your organizational chart and represents the largest scope of management in your agency.
We are proponents of a simple model. Assistants, “techs,” and/or outsourcing of part of the account manager’s duties do not appear in our organizational charts or procedures manuals. Our experience is that they generally slow down the process, mask problems, and create inconsistency.
As E&O auditors, we know that every handoff represents an increased potential for E&O issues to occur. It is impossible to create accountability for a servicing position that is carved up and distributed among many people.
Clients are best served by qualified account managers who are responsible for all aspects of the accounts they handle. Someone is either doing the job, or training to do the job. Trainees learn to do the job by handling all aspects of a small number of accounts, not by “assisting” account managers.
Again, it may be counterintuitive, but it has been proven that a smaller number of professional account managers can handle more accounts effectively than minions of “processors,” with properly implemented, consistent procedures followed by all. It requires management commitment to operational oversight, but it works.
- People. The right persons in the right seats with the right training, directives, and processes/procedures can effectively manage their workload without becoming overwhelmed. We have mentioned before that personality testing is a must; it’s never too late to begin doing things the right way!
It is important to identify the gaps in education and/or training your account managers may have. Using an educational career path, that is updated quarterly, will help to establish a culture of excellence and accountability in your agency, and track the professional development of each staff member.
Their goals should track with global agency goals. Do they understand all aspects of all software you are asking them to use? Are they using workarounds you aren’t aware of? Are they struggling to keep up, because they don’t know enough? What training and education do they need to excel in their job?
- Technology. Every techstack component should be used properly and to its fullest. This requires training and auditing/oversight. Consistency is critical. All tech components should be identified and evaluated for continued relevancy, and their use discontinued over time, as appropriate. All technology should be used as appropriate; it should not be optional. Ongoing ROI should be determined for every technology investment.
- Procedures/workflows. This is where agencies try to start the process of “fixing” the backlog and chaos when, in fact, it is nearly the last step of a successful implementation to reset operational efficiency. Procedures are not just for service staff; they guide everyone in the agency and succeed only if all are held accountable for following them. Exceptions are the opposite of consistency.
The E&O standard is now “invariable” procedures, not just “consistent.” Included in this component are education and training for all procedures. Primary procedural reset components include:
o A specific plan and timeline for catching up—and keeping up—all aspects of backlog, including but not limited to email, unhandled system activities, and critical and non-critical workflow.
o Ending unnecessary practices, for instance, contacting clients who do not pay on time; taking payments; etc.
o Revamping and updating all procedures, at least annually once they are established and you’ve made it through the first year.
o Alignment of procedures with educational career paths and performance-based compensation plans.
o Monitoring and providing oversight of all procedures. Coordination with sales and financial managers.
Take the first step!
Overwhelmed account managers cannot provide world-class service. They may even leave the agency. Producers tend to slow down sales when account managers seem unable to handle their current workload; or worse yet, they begin “helping out” the account managers with servicing tasks, further reducing organic growth.
The direct and indirect costs of chaos are higher than you might think. Replacing your operational environment with a culture of confidence and efficiency will ensure that your agency reaches its full potential.
The authors
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, and MLIS.
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.
