A step-by-step guide to assessing
what changes should or should not be initiated
Most of us will resist change with all our might because
change is difficult for many people. Yet without
the ability to change, nothing ever improves.
By Cheryl Koch, CPCU, ARM, AAI, ACSR, AFIS, and Mary Belka, CPCU, ARM, ARe, RPLU, CIC
Many years ago—all right, several decades ago, to be more precise—the Association for Cooperative Operations Research and Development (ACORD) and the Independent Insurance Agents & Brokers of America (IIABA) teamed up to offer a then cutting-edge program called The POWER of Change. If you’ve worked in the insurance industry any period of time, you know how much we love our acronyms and abbreviations, and POWER was an acronym for:
Performance
Oriented
Workflows
Ensure
Results
We both were fortunate to have been selected to be facilitators because of our work in agency operations efficiency.
The basic premise of the program was quite simple: Provide the agency’s clients with the highest level of value-added services and do it at the lowest possible economic cost to the agency. If someone told you today that they had a way to ensure your agency’s success by implementing such a strategy, you’d likely say, “Bravo, when do we start?”
Some business ideas really do stand the test of time, and this is one of them. Unfortunately, as is too often the case, we discover something that is relatively simple to implement yet incredibly powerful, then stop doing it.
Let’s take a look at the steps in the program and see if it isn’t just as relevant today as it was all those years ago. Notice that the program title includes the word “change.” As one of our colleagues liked to say, “The only person who likes change is a wet baby.”
Most of us will resist change with all our might because change is difficult for many people. Yet without the ability to change, nothing ever improves.
One of the most important underlying concepts of this program was the agency’s recognition that if they stood still and did nothing, they were falling behind. But change for the sake of change seldom yields the results we seek.
So, what changes should you be making? Here’s a step-by-step guide.
Step 1: Understand your value proposition. We’ve been talking about value-added services for generations in insurance, yet you’ll seldom see anything codified as to what those services actually look like. It’s pretty simple—provide more of what clients want and for which they are willing to pay. That’s the very foundation of our distribution system, yet it gets muddied by the fact that, for the most part, our clients don’t pay us; our carrier partners do in exchange for our sales efforts on their behalf.
Do clients want insurance or do they want advice regarding their exposure to potential loss? Are they willing to pay you to process what may be deemed routine transactions or do they want you to ensure that the coverage they think they purchased is reflected in their policy contracts? Are they willing to pay your agency to have someone call them every month when their insurance premium is due and remind them to pay it or do they want you beside them every step of the way when their business burns to the ground?
The best agencies are constantly asking their clients what else they can do for them, then figuring out how to deliver those services in a cost-effective way. Are you asking?
Step 2: Prioritize your to-do list. Once
you have your marching orders from your clients, you then need to determine which changes you can implement quickly and with little or no cost—the proverbial “low-hanging fruit.” Other changes might represent “prickly pears,” whose benefits will be high to the client but may be more difficult, costly, or time-consuming to implement.
Few agencies can undertake more than about three to five big changes in any one year, so it’s important to understand where you will get the most bang for your buck. But remember: It’s not your evaluation of what’s valuable; it’s what the client would be willing to pay your agency to do, even if we’re not going to require them to do that.
Step 3: Map your current workflow. Let’s say the clients universally respond, when asked, that they wish their renewal process could be streamlined. Keep in mind, while we make our living selling insurance, no one really enjoys buying it, even though they are certainly happy it’s there when they need it.
This is the key step in implementing the program, and it starts by identifying every single step in your current renewal workflow, who handles it, how long it takes, and exactly what is being accomplished that benefits the client. We used to do this with sticky notes stuck on a white board and, frankly, that’s not a bad way to start even now; the final result can be digitized, once complete.
Here are some things to keep in mind when you’re working on a particular workflow:
- How many individuals and how many “touches” does it take to create the end product? Every time a task is passed off to another person to process, it creates a time lag and a point of vulnerability where errors and omissions exposures hide.
- What is the total elapsed time for each step to be handled? For example, five years of currently valued loss runs from carriers is now a required component for most commercial lines new and renewal submissions. Some carriers are finding ways to create barriers to obtaining them, despite their legal duty to provide them to insureds or their agents of choice, adding to the elapsed time component.
From start (determining past carriers and requesting the loss runs) to finish (receiving, reviewing, and processing), how many hours, weeks, days or months does it take? Even when using loss run software programs, there is a time element required to successfully obtain the required data. What exactly is it? - What is the total amount of hands-on time spent by anyone (account manager, producer or administrative assistant) performing each step? Not the time between asking and getting, but the time it takes to ask and receive, and then to handle and/or hand off once received.
- Pay particular attention to any activities that are “circular” in nature—in other words, things getting passed back and forth between various individuals in your own organization. These are usually the primary time-wasters and often increase E&O exposure as well.
- Highlight the “moments of truth” in the workflow—the various times when someone in the agency is in contact with the client. Remember that your objective is to make this a better, more efficient process for them and to continue to build a high-level, trust-based relationship with them.
- Consider client expectations—balancing accuracy and efficiency.
o A licensed, qualified insurance professional should be directly responsible for reviewing and handling all policy contract elements and transactions.
o Regular, thorough, and meaningful audits should be conducted by qualified management personnel to ensure accuracy and compliance, according to recognized quality control standards (10% of all work performed, on a random basis).
Step 4: Get the cost out. So, picture your current renewal workflow in all its glory, sticky-noted and posted on the wall of your conference room. For some of you that, like sausage-making, should never be seen by anyone. But there it is.
Now, go back to the points above. How can you reduce elapsed time, the number of people who touch the process, and the amount of time devoted to each activity, while turning those “moments of truth” into positive interactions that create value for and protect your clients, and that will keep them renewing with your agency for years to come?
Meaningful metrics will tell the story. Are your current processes providing both the results you want, and the value your clients expect?
- Have you reduced the elapsed time for each process?
- Have you significantly increased the overall actual efficiency of your professional staff? Are producers removed from servicing tasks, and are they in a position to add new clients? Are account managers better able to build relationships and retain accounts?
- What is your new business growth rate? Retention rate? Revenues handled per account manager? Revenues per employee? Profitability percentage?
There you have it. What we believe many of you are going to find is that having fewer, yet highly-qualified, trained, and educated people touching the process will result in a more streamlined approach, higher client satisfaction and, yes, higher profitability. Yet, unfortunately, what many agencies have done is the opposite.
Rather than have the process handled almost exclusively by a producer and an account manager who know the account, working in tandem with clear procedures and accountability, we’ve parsed out the individual steps to who-knows-how-many “processors” and greatly increased both the elapsed and hands-on time for every workflow, as well as the overall cost. Perhaps it’s time to re-engage the POWER of Change.
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.
