The Top 5 Automation Myths

The Top 5 Automation Myths

Myth #1: Automation will improve productivity.

Automation vendors talk a lot about how the features of their system are going to help you improve your profitability. These features include prospecting and account rounding, professional-looking proposals, application processing, policy detail, transactional filing, carrier interface, diary, renewal processing and claims processing, just to name a few. These features aloneimpressive in a brochure or during a demowill not improve your productivity.

The reality is that vendor systems provide many features that, when properly implemented, will help you increase productivity. However, in most cases, the poor implementation of these features actually has a negative effect on profitability.

Automation vendors provide a centralized database for storing policy detail. You input once into the computer and output many times.

In theory this works. However, in reality, most commercial lines implementations have two databasesone on the agency management system and another on some third-party software. This "other" database is typically a word processing proposal or spreadsheet with complicated schedules. This "other" database is not integrated with the agency management system.

Usually, a paper file also is maintained. So the feature-integrated database provides limited benefit because it is not used to generate proposals or schedules of insurance. Automation in this case actually can make you less productive, less efficient and ultimately less profitable.

Myth #2: Automation will reduce E&O exposures.

Most agency management systems provide many features that will ensure that the high documentation standards established by the agency or brokerage are met. The reality, however, is that most organizations use these agency management system features at the service level only.

Sales and marketing functions typically are handled outside the agency management systems, thus compromising the quality standards. This gives you a false sense of security. You may think that you are using automation to reduce E&O. In reality, two different methods are in place.

Myth #3: Automation improves quality of customer service.

Automation provides instant access to current information about our clients. By creating and maintaining this electronic database, I easily can access information about my clients and be ready to answer their questions. Certainly, that was the promise of automation. The reality is that we stay behind.

To recognize fully the benefits of automation, we must process each insurance transaction using the computer. This means that each phone call results in a transaction requiring our agency management system. This means that each piece of mail has to be processed online. It cannot be done.

In commercial lines, most agencies and brokerages have hired an assistant to process the mail and help stay caught up. To make matters worse, most of us still maintain complete files in commercial lines. The reality is we now have two sets of files: one electronic and one paper.

Even worse, the electronic file can have many componentsthe agency management system, word processing proposals and correspondence, spreadsheets, etc. Customer service does not improve. At best, it stays the same.

Myth #4: Automation implementation is a project.

A good automation implementation will include some type of project management from the vendor. This means the vendor will help you manage your implementation. For most vendors this means conversion and training. A typical implementation could last for a few months. After a few months, most agencies realize it will take a year to get everything cleaned up. Once the year is over, the automation project is completed.

Automation, however, is a process, not a project. It never stops. Technology continues to change. A good vendor provides you a major new release loaded with new features every year. If you are not constantly re-evaluating and changing the way you work, you run the risk of creating redundancies and ultimately becoming less efficient.

Myth #5: The training you get from your vendor is enough.

If you recently have purchased a new agency management system, chances are your vendor will provide training. Typically, this type of new system training focuses on basic, hands-on, button-pushing feature training. It is designed to make sure your staff can do exactly what they are doing today on your new system. Usually, training stops here.

The reality is that training is an ongoing process, not a one-time event. Integrating automation features with practical insurance workflows requires a tremendous effort. Changing the way people work is difficult. It includes educating your staff with concepts and ideas that enhance your current workflow.

How do we overcome the myths of automation? First, we decide what we want our agency management system to do for us. Ask this question: What business problem is implementing this computer system going to solve? In commercial lines, a common answer to this question is that we will eliminate redundancy, thus making us more efficient. Consider the following, with that answer in mind.

The electronic file must become the primary source for information in commercial lines. Paper client files should be eliminated. Some type of transactional filing (or "T-filing") should be put in place.

Fear of the inability to service our clients and lack of sales force automation prevent us from giving up our traditional client files. Most commercial lines departments intend to run dual systems for a year and then go electronic. One year turns into two years, two years into three and the change never occurs.

The solution is first to change the way you file. Then implement the system to support that filing methodology.

Laura Nettles ( is founder of Atlanta-based Nettles Consulting Network Inc., and a member of the Agents Council for Technology (ACT), which is affiliated with IIABA.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, February 6, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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