TECHNOLOGY
Early adopters of Transformation Station see increased
profitability and efficiency
By Bill Jenkins
It's a matter of simple business logic: If you spend more than you make, you have a problem. When many agencies "run the numbers" on their costs related to writing new businessowners package policies, they find a thin line between profit and loss. BOPs generate relatively low commissions and require considerable time and effort. In fact, agencies often find that they sink far too much time into obtaining quotes and preparing proposals before they even know whether they have the business.
But an increasing number of agencies are using a new approach to agency/company interface as their springboard to achieving increased profitability and efficiency in writing new BOP business. It is fully integrated with their agency management system and utilizes an industry standard approach to agency/company interface that is being provided by IVANS. These agencies are using Transformation Station to collect and submit the information that their carriers need to deliver fast and accurate quotes and proposals back to the agency within a matter of minutes. Dozens of insurance carriers are building technology links to Transformation Station that will allow them to connect in real-time with agencies using Applied, AMS and DORIS management systems. (See the
May 2002 issue of Rough Notes for a related article titled "On the right track.")
In this article we'll spotlight three agencies that are early adopters of Transformation Station and learn about their success in working with Travelers--the first early adopter on the carrier side. These Travelers agencies are among the first to reap the benefits of new policy sales, enhanced efficiency and the ability to target writing new BOP accounts as a growth area for their agency.
For its part, Travelers is pleased to be taking a leadership role and even more pleased to see that leadership paying off. "Our focus is on partnering with independent agents to offer real-world solutions to agents' business challenges, so they can grow profitably," says Larry Illion, president and chief executive officer of Travelers' small commercial insurance division. "We like to offer our agents choices as to how they access us electronically, and Transformation Station provides an attractive option for agents who view the efficiency of real-time SEMCI as critical to maximizing small commercial profit margins."
One of these agencies, is the Litwin Castle & Christ Agency located in Orchard Park, New York. Until recently this agency focused on personal lines "because that's where the revenue was coming from," according to Jo Ann Litwin--one of the agency principals. Now the agency is at 70% personal lines and 30% commercial lines and by year-end the agency expects to be closer to 60% personal and 40% commercial. She says that "even in this hard market, we're growing in policy count as well as overall commercial lines premium." In the past, this agency had analyzed its costs to quote new business using traditional methods such as DOS rating, Internet rating, and manual rating. The results of the analysis led the agency to slowly move away from the small commercial lines market. According to Jo Ann, "It wasn't cost-effective for us to have a policy that might be generating a couple hundred dollars in commission income costing us 160 minutes of person time (which translates to probably over $200 when you cost it all out) before we know if we're getting the business."
She says using the Transforma-tion Station approach with Travelers has opened up a whole new market that the agency wasn't actively going after before. "Since we can work with the information we've already entered into our Applied agency management system to get an accurate quote so quickly, Travelers is the first place we go since all we have to do is fill in a few edits."
Another agency taking advantage of Transformation Station to grow its commercial lines book is the Guilderland Agency located in Albany, New York. As agency Office Manager Kathy O'Keefe explains, technology has helped the agency grow. "Even with the increased book of business, we haven't had to hire additional staff. We haven't lagged at all--the automation has kept up with our needs. I can take the information while I'm on the phone with the client, put it in the system and by the time I'm finished talking with them, I can have their quote."
Using carriers' Web sites to obtain a quote isn't nearly as quick. "It can take two hours or more," Kathy says, once she takes down the information, goes into each system and then calls the customer back--sometimes the next day. "Using my Applied System with Transformation Station, my first quote is always the Travelers because it's so much easier. Customers expect a quick response from an agency. If you're not back within the time frame that they expect for a quote, then you've lost the opportunity."
Another agency that's been able to use this technology to achieve a larger share of its growth potential is Seely & Durland--located in Warwick, New York--about 50 miles outside of New York City. The agency's commercial lines book represents about 55% of the total, with personal lines representing 45%. The agency's marketing is geared toward commercial lines. To grow that business, Seely & Durland has extended its marketing area to include a 40-50 mile radius. Although the agency already had a commercial lines focus, agency principal Stu Durland explains that carriers are also setting higher volume requirements. "We're an average-sized agency and find ourselves constantly challenged by carriers (especially in commercial lines) to pro-duce more business. They have greater premium volumes that they want us to commit to--especially if we're going to get some contingency dollars."
Since they need to renew their current accounts at the same time they're quoting new commercial lines prospects, Seely & Durland sees ease of doing business as an extremely important issue. From Stu Durland's perspective it's a balancing act. "Right now, we're spending a lot of time in the office just renewing the customers we have. Because of this, there's a limited amount of time for our staff to market new business. Transformation Station gives us the capability to quote more efficiently.
"When we do get that lead, we find it very difficult to spend all the time it takes to go through numerous quoting systems. It takes us from 17 to 22 minutes per system, versus 7 minutes when we go through our Applied agency management system and use Transformation Station. So we're using Transformation Station with Travelers every time we quote." Seely & Durland participated in an agency workflow time study conducted earlier this year and sponsored by the Applied System Client Network, so Durland's numbers aren't mere "guesstimates." (More information about how Transformation Station can save agencies time and yield better results in quoting, billing and claims inquiries is available at www.SEMCI.org.)
Durland commends Travelers for stepping up to the plate to help agents become more profitable and efficient. "I believe that those companies offering technology that helps make us more efficient, lets us do more quoting and provide better service to our customers will reap the rewards. The business is going to sway to those companies. There's no doubt about it." *
The author
Bill Jenkins has worked extensively with independent agents for the past 16 years in the areas of marketing, advertising, communication and technology.