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Technology Delivering risk management services By combining various off-the-shelf products, agencies create custom solutions that meet their unique needs By Dave Willis Car salespeople sell cars. Broom salespeople sell brooms. And insurance agents and brokers sell insurance. That’s just what they do. Well that’s what some insurance agents and brokers do, anyway. Others differentiate themselves. More and more, they’re achieving distinction through the delivery of risk management services. And they’re tapping technology to help. Focus on risk Scott Addis, CPCU, president of The Addis Group, based in King of Prussia, Pennsylvania, has built a process that he’s dubbed “The Risk Management Audit.” “This lets us, very efficiently, uncover an organization’s risks, prioritize and measure them, and then set a strategy to mitigate those risks,” he says. Addis’s staff also evaluates related tools and processes that the entity has in place, including claims management systems, insurance program design, risk management procedures, and any training initiatives. The whole task requires some heavy lifting. “We go in, typically, nine months before renewal and go through this process,” Addis says. This raises a slew of eyebrows among his peers. They’re convinced the work, while beneficial, just can’t be cost effective. Addis disagrees. “It’s just the opposite,” he says. “When we go through the audit process, which typically takes from two weeks to two months, we literally become the broker on the account instantaneously.” He’s adamant that the audit process is less time-consuming than traditional agent practices. Plus, his hit ratio hovers around 90%. To help deliver, Addis and his team use automation—from customer relationship and management tools to robust risk management software. He’s also developing and refining technology to make the process more efficient, something he sees as necessary for agents and brokers who want to, as he says, “get away from the commodity trap.” Delivering service Todd Tyler, CIC, AAI, principal of Charleston, South Carolina-based Commonwealth Insurance Group, is one such agent. He believes good agencies—those that stand out from the pack—focus less on selling insurance and more on helping businesses manage risk. This philosophy led him and his staff to create RECON 365, a proprietary risk management program that introduces and delivers risk management services to businesses. The name works literally—short for reconnaissance, which Tyler says agents should be ready to perform every day—or as an acronym: Research the data, Examine the risk, Collaborate on solutions, Organize the players; and Neutralize the risk. Either way, it features a service timeline that covers the entire policy period, spelling out exactly what the agency will deliver each month. “It’s been unbelievably successful,” Tyler says. “We’re able to renew many of our accounts two months before renewal date. That keeps a lot of our competition out.” Effective use of technology helps drive RECON 365. In creating the program, the agency bought commercial software where it existed and built tools to fill gaps. The piece-meal approach came, in large part, because Tyler wasn’t satisfied that any product on the market at the time would meet all of the agency’s requirements. RECON 365 does. A key element is automated communication between agency and insured. Included in this are electronic newsletters the agency sends clients, addressing risk management issues that businesses face. Online claims viewing is also included. “For companies interested in managing their claims, we create regular reports, using proprietary software, and then hold quarterly review meetings,” Tyler says. “We take carrier claims information and present it to clients in graphical format, complete with analysis.” These meetings can take place in person but often are done online using Web conferencing software. The agency also uses off-the-shelf and proprietary software to deliver OSHA logs and other safety and wellness information. And clients can perform online policy self-service through InScope, a feature of the agency’s management system. “They can go in and look at their policy whenever they want,” Tyler explains. “They can print out certificates of insurance, automobile ID cards and dec pages on their own schedule,” Tyler notes. Tyler likens this functionality to the online banking that consumers have grown accustomed to—fond of, even. “We’re doing work the bank used to do, but we do it when we want, how we want, without having to rely on someone else to handle the transaction,” he says. Analyzing risks For Bob Higgins, CPCU, ARM, ARM-P, CIC, FRM, CRIS, CRM, technology helps focus clients and prospects on risk management. Higgins, senior vice president at Cincinnati-based Schiff, Kreidler-Shell, an Assurex Global Partner, believes what sets his organization apart is its ability to help clients assess risks up front. Higgins and his staff use proprietary software, along with products from two Australian firms. The process involves a thorough examination of the types of events that could affect the firm’s people, income, reputation, and objectives. “Clients work through what could possibly happen to their business from a natural catastrophe, human, political, or environmental standpoint,” Higgins explains. “They make a master roster of everything from Sputnik falling out of the sky to whatever.” For each of these, they identify likelihood and potential impact. Then the software assigns a risk score or value to the exposure, based on frequency and severity, and plots them on a grid called a risk map. This score and position on the grid lets the broker and client prioritize exposures as the first step to minimizing losses—financial and otherwise. Once identified, categorized, and prioritized, Higgins’ staff works with the client to determine how best to control risks and protect against financial loss. “Clients are very interested in seeing the end result,” Higgins says. “They understand the value of having a final risk map that shows, for example, their top 25 business risks.” It’s something tangible they can work from, at all levels. Higgins tapped into the risk assessment process because, as he says with just a hint of jest, “I was tired of peddling insurance.” On a more serious note, he explains, “The risk manage-ment side is something I’ve always gravitated toward. There aren’t a lot of agencies or brokers doing it.” To get started, he did some research and then settled on the two products, RiskWizard and Incom’s Risk Register. The agency also uses home-grown technology to deliver a more basic, less robust analysis and presentation. The commercial products are starting to gain traction in the United States, Higgins explains, after developing a strong following in Australia and New Zealand, where risk assessments are mandated for certain business segments. Similar products exist in Europe, where laws also govern risk assessment, he notes. Even with technology, Higgins admits, the process requires considerable dedication and time investment. “It’s a very manual process. You still must enter hundreds of risks, one at a time.” Managing costs Hetrick & Associates Account Executive Pam Stewart, CIC, CRM, CWCA, and her team are distin-guishing their agency in their service area—the Upper Peninsula of Michigan, northern lower Michigan and northeastern Wisconsin—by offering ProComp Systems, which she describes as a “unique and exclusive program” the agency created to deliver risk management services to large employer groups. ProComp Systems incorporates tools and services to support workers comp and group benefits insurance. The product came about because the Marquette, Michigan-based agency wanted to develop a niche in a geographic area that doesn’t lend itself to niche marketing. It’s sparsely populated and lacks concentration of any particular industry. “Because of our locale, we couldn’t be niche-oriented in the traditional sense,” Stewart says. “So we developed ProComp Systems to create a niche made up of large employers, regardless of industry.” These businesses have at least two needs in common: group health and workers comp. The goal is to help clients control long-term costs for both lines of insur-ance. “With workers comp, for instance, it supports the employer before, during, and after an accident occurs, assuring the best possible outcome for every claim,” Stewart explains. Part of the focus is on managing experience modification factors. For that, the agency incorporates a software product designed to calculate mod factors and analyze issues affecting them, such as frequency and severity. “Too often, workers compensation mod factors are mismanaged,” Stewart says. “The software helps us get this under control.” Injury management and a back-on-the-job focus also are included. “We work with an on-site point person to make sure injuries are managed properly,” Stewart explains. “Procedures kick in starting right at the moment of injury.” Much of this is built around a modularized manual that is customized for each client, based on their sophistication level and needs. ProComp Systems uses technology for reports the agency and insured use to understand claims and drive improvements. It also features a home-grown, Excel-based calendar that outlines monthly service delivery. Human resource consulting is also part of the mix. Much of this is human-based, rather than tech-based. But that will change. Stewart is eyeing online resources to help strengthen service in this area. The team also uses risk analysis features of AMS Producer Plus, software that includes risk and exposure questionnaires, coverage checklists and more. Stewart believes ProComp Systems works for the agency and its clients. Claims and costs are down, even as payrolls increased. And clients aren’t leaving. “Our retention has been quite high,” she says. They’ve lost just two accounts in five years; one was due to the business being sold. That retention performance would please any salesperson. * The author For more information |
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