Surviving in Today's Challenging Environment

We are all well aware of the hard economic times our country faces. Unemployment is up, credit availability and auto sales are down, and businesses are scaling back. For our industry, fewer car and home purchases translate into fewer personal lines policies. Fewer business investments translate into fewer commercial lines policies. In this type of environment, the simple path may seem to be to pull back, to dig in, and try to ride out the storm.

Periods of change, however, are often ideal times to re-examine how we run our businesses and to consider making adjustments that will enable us to thrive in the long term. The Florida market provides an additional dimension to the overall national economic situation. Carriers with captive networks are modifying their business practices -- in many cases pulling out lines of business or leaving the Florida market altogether. As a result, customers are looking to new channels for new services, even new carriers and agents.

This can be an opportunity to capture new customers. But as you seek to expand your client base, you also should examine your operations to determine if you need to modify your technology infrastructure to become more competitive.

Let's look at the four key drivers for a typical agency, the things that you focus on every day to make sure your business is strong.

Customer retention and great customer service. In a slowing economy the first thing that you need to focus on is retaining good customers, and providing great service is a key to doing this.

Revenue growth and a deeper understanding of customers. You need to be creative in how you look for opportunities in the current environment. Growth is not easy to come by today, and you must search even deeper for new avenues for business expansion.

Streamlined operations and improved business processes. Maintaining and improving operations is vital in this day and age. Reducing costs and improving delivery are two aspects of business that never go out of style.

Succession planning and maximizing the value of your agency. Some of you may be ready to retire, and are contemplating who is going to succeed you. It may be a family member; it may be consolidation with another agency. Either way, you need to ensure that your business is operating at peak levels to ensure maximum return for you and maximum value for the buyer. Even if succession is not in your near-term plan, it should be a part of your long-term thinking.

Examining these key business drivers is a great way to evaluate your agency infrastructure and determine if you have all the right tools to achieve your business goals. While a good agency management system is the cornerstone of a well-run agency, it is not the complete solution to agency automation. In today's technological and economic environment, arming yourself with a broader set of tools allows you to maximize the potential of your firm.

Find Competitive Prices With Real-Time Rating System

A key element to retaining customers is ensuring that you are getting them the most competitive rates possible. For the independent agent, a real-time rating solution allows you to go to multiple carriers and find the policy that best fits your customer's needs. After all, a key differentiator for you as an independent agent is the ability to go across carriers. Only a true real-time rating solution allows you to do this. Some vendors masquerade their carrier transaction interface solutions as real-time raters, but they are not. An interface that goes to a single carrier that only provides manufactured rates is not the tool you want or need to get the best rate for your customers in this bottom-line oriented economy.

In addition to getting the best rates for your customers, you want to be sure that your CSRs are able to easily process policy updates and endorsements and have the right tools to immediately address customers' needs. An on-line agency management system enables your CSRs to access customer information from any computer on the Internet. If you have multiple offices, you can load-share the work. If there is a spike in the activity for one office, then CSRs from another office can pitch in to temporarily help off-load the work.

In addition, supporting and servicing customers in off-hours becomes much easier. If one of your largest customers suffers a loss or accident over the weekend or during off-peak hours, with an on-line agency management system in place the client can contact your agency and you or one of your staff can immediately log in and begin the necessary processes. This can be done from your home without having to drive to the office. And if a natural disaster impacts your office, then you can move to another county or even out of the state and continue to support and service your customers.

We cannot ignore the fact that the world has changed in the last decade. More business is being conducted on the Internet. In this environment you want to make sure that you can attract customers who prefer to use a Web site to check on and update their policies, print certificates, or manage their employee benefits, as opposed to picking up a phone or visiting an office. When electronic interaction is done right, customers feel better about the service and you can reduce costs within your agency.

Expand Your Revenue Sources By Cross-Selling

A first step in growing revenue is making sure that your producers are properly licensed; you do not want to pay penalty fees because of a credentialing oversight. But for multi-state operations, keeping current with the multitude of regulations poses a significant challenge. Done manually, it can be a very expensive and time-consuming process. There are solutions available today, however, that directly link to state licensing authorities and enable you to conduct real-time licensing certification renewals at limited cost to you.

Once your producers are licensed they need good tools. Yes, many management systems give you a consolidated view of your customer base and tools that allow you to cross-sell customers. But in this day and age you want to look to new markets and new opportunities. What happens if your producers are unfamiliar with a specific line of business or need help in writing the policy?

Subscribing to a source of content that pulls from multiple libraries and is structured around specific topics is probably the best way to approach this. Producers can quickly get up to speed regarding requirements and easily obtain the necessary information to build a policy that provides the best value to customers while limiting risk for everyone. Even better is access to a solution that enables producers to write policies and develop proposals on the spot. Having a tool that has built-in knowledge that helps guide your producers through new lines of business is something that can differentiate you from the agent down the street.

For property and casualty agencies looking to diversify their business, employee benefits are a great add-on product to sell to commercial customers. Providing benefits products to your commercial accounts makes you an invaluable partner to them.

However, because the benefits' eco-system differs somewhat from the property and casualty eco-system, benefits management requires a set of operations and procedures that may not be familiar to your agency employees. It requires a different set of relationships and processes, and much of that industry is moving to an on-line environment. You can't shoehorn benefits into a generic line of business process and assume that you can run it effectively (or drive great customer service!).

Streamline Operations and Improve Business Processes

Of course, you need a central hub of information to house your customer, policy and business information, a place where you can effectively manage your accounting and finances. The management system should have a rich Web-based user interface that enables your staff to perform multiple actions without having to scroll through multiple screens.

Being able to easily access information allows you to respond quickly to customer inquiries and manage more policies with fewer resources. An optimized accounting package that is tailored to the insurance industry and adheres to standard accounting principles such as double-entry accounting means that you spend less time closing your books at the end of the month. It also ensures that your finances are always accurate.

A key element to streamlining your operations is to better manage the paper that still forms the basis of much of our businesses. A modern content and document system that goes beyond 1980s era bar-coding technology allows you to support robust workflows based either on industry best practices or tailored to your specific needs. You can design workflows that enable you to take information in from customers, assign specific tasks to specific people, and even process the paperwork straight through to carriers, thus eliminating multiple steps and opportunities for errors in the paperwork.

Maximize the Value of Your Agency

Once you've retained your customer base, grown your business, and set up effective operations, you have in effect maximized the value of your agency. If you are contemplating merging with or selling to another agency, you have done everything you can to make your agency as valuable and attractive as possible. And if you are at the point in your life where you are ready to hand off the business to a family member or friend, you have set them up as effectively as possible to continue growing the business and positively impacting your local community.

The technology landscape for agencies has evolved significantly over the past decade. No longer are agencies solely reliant on just their agency management systems to automate their processes. A well-run agency can take advantage of numerous advances that have occurred in the industry; technologies exist to simplify everything from licensing to producer productivity to customer service and financial management. Taking advantage of these advances is something that can improve your agency's bottom line and its overall value. And in these economic times, both are important.

Gytis Barzdukas is vice president, product management, agency solutions, at Vertafore in Bothell, Wa. He may be reached at 425-354-6297, gbarzdukas@vertafore.com, www.vertafore.com.