Personal lines carriers and their commercial lines counterparts have at least one thing in common when dealing with independent agents: It is absolutely critical for carriers to offer solutions that make it easy for agencies to do business.
At commercial lines carrier CNA, Belen Tokarski, assistant vice president of technology and agency solutions, has learned that not all agents are ready for the newest technology, so knowing the agents is imperative.
“Agents want some level of ease of business, so we make sure we have a solution that meets the needs of any agent selling small-business policies, regardless of their level of technical sophistication,” she says.
One problem carriers face when they do business with independent agents is the agents are exactly that: independent.
“The agency marketplace is not uniform,” says Nort Salz, president of the consulting firm Deep Customer Connections.
Salz reports the most frequent comments agents make to him about their business involve technology, yet when it comes to rating factors that affect their business, technology often comes midway down the list of issues they deal with.
“I think that’s a manifestation that it’s different for different agents,” he says. “All of them are thinking about what carriers can do to help them sell, but they have different processes for how they sell—some are early adopters and want to go real-time, but others don’t.”
Compounding the problem is every insurance carrier is trying to find ways to differentiate themselves from the competition. Finding ways to be more efficient also is on their to-do list.
“Margins are slimmer in all businesses these days, and everyone is looking for ways to bring more efficiency to the operation yet also have a differentiator for their brokerage partners,” says Jon Siglar, vice president, chief sales & field services officer for Pacific Compensation Insurance Company.
“Ease of doing business is sometimes an overused term, but we’re serious about it,” says Siglar. “What it comes down to is with the touches we have with our broker we need to be efficient, responsive, and deliver expertise when needed. We needed differentiators, and the one that has been positive for us has been our partnership with FirstBest Solutions and rolling out the AppReader solution to our brokers.”
Agents also want commercial lines carriers to find a way to conduct the transaction in a way that’s less expensive for the agents, according to Ralph Blust, executive vice president for Willis Commercial Network.
“It costs a lot of money to handle [small commercial] transactions because there is just as much work [for the agent] on a $1,000 BOP as there is on a $50,000 commercial package policy, yet there is so much less revenue associated with the [BOP] account,” says Blust. “[Agents] say if there was a way to do less work on the smaller business and yet still provide the level of customer service needed and expected by the client, well, that would be fantastic.”
Dan Driskell, a producer for Brower Insurance, believes that in today’s business environment, people want things faster.
“They don’t necessarily want it today, but it’s not what it used to be in the industry,” he says. “With the advent of technology it’s crucial we stay on the cutting edge and get information to the correct people in a timely manner.”
Driskell believes some commercial lines carriers are reluctant to quickly step into the technology realm beyond accessing the Internet. National carriers typically roll out programs first for small-business policies and simple products that don’t involve much underwriting. Such a strategy can enable national carriers to pick up more of the small-commercial market.
Technology and the Internet have made ease of business possible in virtually every industry, explains Blust, who adds consumers can buy a refrigerator or a car online.
When it comes to insurance, though, carriers have taken it upon themselves to create their own online platforms, points out Blust.
He believes it makes sense for an appointed agent to go on the carrier’s Website and complete an application for that carrier. Such a method is more efficient and faster than for agents to create an ACORD application in their office, email it to an underwriter, and go through the download with the underwriter to receive a quote.
The dilemma for agents comes when an agent is appointed by multiple carriers that all have independent online systems, explains Blust.
“There’s an incredible amount of rekeying and redundancy in [an agent’s] work effort, and frankly it’s taken them a step backwards” he says. “They are doing the same work over and over again for carriers on a direct appointment for a small account.”
CNA offers technology solutions that meet the needs of the highly technical, the group of agents working through their own agency management systems, and those agents who process business through the CNA Website.
The first group is taking advantage of the real-time quoting system CNA has implemented from SeaPass Solutions. According to Tokarski, the solution allows the carrier to accept ACORD XML forms directly from an agency without going through data exchanges such as Vertafore’s TransactNOW or IVANS’ Transformation Station.
Some of the highly-technical agencies have proprietary means of generating ACORD XML, points out Tokarski. She adds that the success and ease of real-time quoting is dependent on the quality of data that resides within the agency management systems.
“We put down the foundation for the highly-technical solution and, on top of that, we put a very cool UI that is focused on user experience,” she says.
At the same time, CNA realizes there are agents who aren’t ready for real-time quoting, so one of Tokarski’s jobs is to find ways to make life easier for that group. One thing CNA has done for those agents is to make sure the carrier Website for rating is as easy to use as possible. For instance, CNA has created producer templates that allow an agent to define coverage limits, deductibles, and optional coverages for their BOP each time they log in.
“Our intention is to minimize the number of keystrokes and data entry for an agent who might not be ready for real time but who has some desire to expedite the quote process,” she says.
CNA realizes some agencies may not be large enough or have the interest to embed technology in their business model; so, the carrier wants to ensure it is offering solutions that meet everyone’s needs.
The carrier recently created a team to train all its agencies, regardless of an agency’s level of technical sophistication, explains Tokarski. This allows the carrier to make an assessment on the agency’s readiness for technology and how CNA can aid agency efficiencies so the agents can spend more time winning business and servicing accounts.
WORKING WITH AGENTS
Most of Brower’s middle market and large commercial accounts still need face-to-face communication with the underwriter, which involves more time and expense.
Some carriers prefer agencies pick up the phone and discuss coverages prior to sending in submissions, explains Driskell.
“We’re cognizant of that threshold and what we need to do to write it effectively and still be profitable,” says Driskell.
Salz explains that while technology is ubiquitous in the insurance market, what some agents look for is old-fashioned hand-holding.
“They are looking for relationships,” he says. “They want more technology, but they also want the carrier to help them figure out how to use it.”
Some carriers are willing to accommodate, explains Salz, and are discussing what they can do to train and support agents in using the carrier system.
This often is done in ways such as Webinars or online training, but some carriers are getting out to the agencies personally to focus on that individual agency and how everyone in the agency can use the system more effectively.
“This is a tough nut to crack,” says Salz. “One of the things some carriers are considering is getting the underwriters to directly support the technology to expand usage and make it more comprehensive.”
The environment agents are operating in changes expectations, points out Salz. Agents are experiencing consumer technology from companies such as Amazon.com and find it to be relatively simple.
“To some extent that shapes their expectations when it comes to carrier technology,” he says.
Brower works with approximately 15 carriers and has different segments of business,” explains Driskell.
“We specialize in quite a few segments, and every segment has specialized carriers, so that’s probably why we have that many we regularly go to,” he says. “In this competitive atmosphere we need to have more carriers in our quiver just to be competitive.”
CNA creates opportunities to get in front of agents and Tokarski maintains what is most important is the personal conversations where CNA personnel can drill down into what the agencies actually do in seeking quotes and other business functions.
“What we find is [real-time] is not a priority for most of them,” she says. “It’s a change-management issue. I think also you have to get everybody in the agency using [technology] for it to be successful. We sometimes find the agencies start using it, but if it is not part of their standard operating procedure or they can’t do it the same way for all carriers, the agents tend to back off.”
CNA appreciates the support of the user groups from the various agency management system vendors and groups such as GetRealTime.org, but Tokarski is unsure about the level of involvement by agencies in these organizations, which is why the carrier believes in face-to-face meetings with its agents.
“We can be more personal and have conversations with the agents, but it’s going to take a paradigm shift for the industry to get out of the world of working directly in carrier Websites,” she says. “By giving agents a taste of what technology can do with ACORD XML, we are slowly moving them up the spectrum until they are in the high-end of technical adoption; but, you can’t force real-time quoting. They have to get interested themselves.”
CNA created its first real-time quoting solution in 2006, according to Tokarski. The carrier had high expectations for adoption and utilization, but Tokarski reports CNA was disappointed at the results.
“What we realized is it’s not ‘if you build it, they will come’ as some in the industry like to think; it’s more like you have to have solutions for all agents and you can’t hang your hat on just one solution,” she says.
CNA learned the solution it had built was not what the highly-technical agencies needed. CNA reinvested in the SeaPass solution because it was important for the company to maintain relationships with those agents who were ahead of the technology curve.
Tokarski believes less than five percent of the agencies CNA works with could be classified as highly technical. Another 20 percent fall into the technical classification. The remaining 75 percent are those that use the carrier Website, but aren’t necessarily working in real-time.
Salz maintains there is confusion around the whole process of real-time. Agents have gotten used to the idea that different carriers have different approaches, different systems, and support different workflows.
“So it’s all a little bit chaotic in the minds of agents,” he says.
Salz shared a quote from one of the agents he deals with: “It’s really difficult to remember how to operate seven or eight different carrier Websites. Not only are we keeping up our own data systems but possibly four or more others when we have to keep putting information in. I’ll do whatever I can to place a piece of business with you if you are willing to help me.”
Still, Salz maintains there is the adjacent effect of personal lines becoming more real-time and technology-based so there is pressure for more things to be automated, particularly commercial lines.
“Some aspects are more inviting to technology changes,” he says. “In personal lines it is emphatically around quoting—getting the sale done. You don’t experience that in commercial lines. There is more emphasis there on getting renewals out on time and having an underwriter available to help with something.”
PacificComp implemented FirstBest AppReader early in 2011, according to Siglar. Most of the account executives in the brokerages PacificComp deals with are seasoned and are hesitant to take on anything new because their workload already is high and they don’t want to go through several different passwords.
“When we implemented the AppReader portion of the underwriting management system, they were excited,” says Siglar. “[Brokers] can take a PDF out of their agency management system and download it into our UMS within our portal. With one password they are already in the system. There’s no double entry. It’s automatically populated with an ACORD app and that cuts down on inputting errors and time. As we move forward with the brokers, it greases the skids—the path of least resistance. Brokers want to go to a company that is efficient and can get them a quote right away.”
Siglar believes brokers and their CSRs often are set in their ways so PacificComp needed to do face-to-face training. Siglar believes it helped that the AppReader solution is an intuitive system, which meant users could be trained quickly.
At this point, more than 60 percent of PacificComp’s submissions are coming straight through the UMS via the AppReader, which brings more efficiency into the back-office side of underwriting, concedes Siglar.
ON THE MARK
The ability to have one hub to connect to multiple carriers through a single application is where Blust and Willis believe the value proposition exists for small business. Willis runs the Insurance Noodle hub and Blust believes it is filling that void.
“There were some levels of integration with carrier systems; however, there wasn’t an integrated element of a single-entry, multi-carrier, instant-quoting platform,” he says. “We are finding that in 10 minutes or less an agent can fill an application on the Insurance Noodle site and between a minute-and-a-half and six minutes they receive bindable quotes back from carriers. If you compare that to the way even the Insurance Noodle operated six months ago where it was a 45-minute application and it took a day to three days to get your quotes back, you can see where the efficiency and immediacy mirrors other industries.”
Willis asked what the client wanted and how the brokerage could deliver. From that, Willis realized they needed to partner with outside vendors who would be responsible for the creation of many of these carrier platforms.
“By partnering with SeaPass Solutions, which created and designed this platform with insurance carriers, we were able to build a low-cost and efficient model,” says Blust.
Not finished at that point, Blust explains, Willis asked agents what they felt the next step should be.
The Insurance Noodle is focused on being an access point for small, independent insurance agents to work with admitted national carriers, but Blust points out many of those agents have non-admitted business and E&S needs.
“So we partnered with a wholesale broker of like mind, the Crump Group, that was willing to make the investment into a parallel platform with SeaPass to connect the non-admitted insurance company marketplace to the same platform,” says Blust.
By working with a partner who can provide access with the same type of single-entry, multi-carrier quoting platform with the non-admitted marketplace, Blust believes Willis has dramatically changed the retail client’s experience when they have an account.
“If you look at an independent retail agent today, when they take an account in and go to a market, their quote ratio is about 50 percent and their bind ratio is much lower,” he says. “Through this new platform and the professional companies who are disciplined in certain expertise, we are shooting for 90 percent [on quotes].”
Blust believes when you can go to an agent and their chief concern is getting access to solutions for small accounts—other than one or two direct appointments—and offer them a single-entry, multi-carrier quoting platform with the ability to access numerous markets in the admitted and non-admitted marketplace, and hopefully 90 percent of the time they will receive quotes, that’s a value proposition that’s hard to beat.
“We think people are going to be drawn to the solution, and that is evidenced by the first four weeks of the program where we have contracted over 1,100 agents,” he says. “There’s specific interest in this platform.”
Blust points out that statistics from Dow Jones show there are 6.6 million businesses in the U.S. and 6.1 million of them have fewer than 15 employees and under $10 million in sales.
“We saw an enormous market opportunity and decided to make the investment,” he says. “We looked at the way the business is currently done and designed a fresh platform as opposed to taking what we had and retooling it.”
TECHNOLOGY OR PEOPLE
With many commercial lines carriers, Siglar believes the technology is holding up real-time download. He points out many carriers are working with legacy systems that were in play through M&A activity.
“We were strapped with an underwriting system that was inefficient,” he says. “Carriers recognize they need to embrace technology.”
But brokers do as well.
“If you dump a manual in front of them, they won’t use it. But if we can quickly show how the system works, they are all over it and using it the same day,” says Siglar. “Changes in workers’ compensation and the commercial side are difficult because they can be costly and involve training issues. But at the same time you are trying to deliver a value-added service to your brokers.”
Siglar reports he is seeing a new generation of brokers coming into play who are savvier with tablet devices and smartphones. He believes they are looking for ways to be more efficient to counter the soft market and the lower revenues that have accompanied it.
“They are struggling to find ways to be more efficient and working with fewer people,” says Siglar. “If a carrier can bring in a system that is easy to use and can save brokers time, that is going to raise some eyebrows. To be able to do that is a differentiator.”
Brower puts a premium on technology and has traditionally spent more on the technology side to help its staff be more efficient, explains Driskell.
“The producers and principals in our office rely on the customer-service reps quite a bit to handle the day-to-day activities of our accounts,” he says. “[Producers] are in the business of bringing in new revenue, and we need a great staff behind us to bring in renewals. We find making life easier for them keeps everyone happier and streamlines some of the efficiencies.”