Better use of technology is one tactic. “The fastest growing segment of our business is the ability to let your clients service themselves,” says Tom Turgeon, partner and senior vice president of sales and marketing for VRC Insurance Systems. “That includes rating, quoting, policy issuance, certificates, inquiries, statements, document exchange and more. This is where people save an inordinate amount of time and money.”

For example, Turgeon recently worked with a Target Markets program administrator—a professional liability provider for nurses, aides, dental hygienists, masseuses and other related disciplines—to automate its processes. In this business, premiums are relatively low, so profitability depends on high volume and low touch.

“If you’re answering a lot of phone calls and getting involved with a lot of paperwork, you can’t make any money,” he explains. “But if you can write and service them by the thousands, you can make a ton of money with a limited staff.” While insureds are able to self-serve, they’re also able call the program administrator, if necessary. That doesn’t happen very much, though.

That approach has a host of applications. For example, a carrier uses it to drive E&O renewals for 5,000 or so agents. “It’s all done ‘no-touch’ and within a 90-day timeline,” Turgeon explains. “Rate, quote, issue. Insureds can pay by credit card, debit card or send a check.”

Turgeon says such technology leveraging lets program administrators redeploy staff to roles that align better with their core strengths. Barbara Donnar, president of Supportive Insurance Services, sees program administrators employing similar tactics in other areas.

“We’re seeing program administrators outsourcing certain functions,” she explains. “It’s a way for them to get more done with less.” Examples include claims, technology, legal services, routing processing and licensing.

The payback is two-fold. “First, through outsourcing, program administrators can gain expertise in areas they don’t have among staff,” Donnar notes. “Second, it frees up time that the program administrators’ employees can use to sell more or deliver better service.

“For instance, instead of having someone in the office handle licensing—a necessary evil that doesn’t produce income—by outsourcing the work, whoever was doing it can start generating revenue,” Donnar adds. “There are certain functions that staff won’t be experts at because they have nothing to do with selling and servicing accounts. That’s where program administrators can find opportunities to outsource.”

Bringing extra value to market is another way program administrators differentiate themselves. Steve Haws, president of Insure Learn, says, “Although many MGAs we talk with are managing profits in the soft market primarily through reducing expenses, some of the more progressive ones are offering value-added services to create a sustainable competitive advantage. To do this often requires thinking beyond the insurance product.”  

Such services can include anything insureds need—loss control services, security services and disaster planning, to name a few. Education is another. “Supporting advancement of your customer’s industry through educational seminars is a great way to provide value beyond the insurance product,” explains Haws, whose firm delivers Web-based, job-specific loss control training. “Teaming with a vendor and tapping carrier resources can keep costs down. But delivering services insureds perceive as valuable in running their businesses boosts loyalty and strengthens bonds with agents and MGAs.”