Technology is revolutionizing the business of insurance.

According to Ernst& Young, technology is the number one external forceimpacting today's insurance market. Technologies such as socialmedia, telematics and analytics are redefining our market,impacting areas from marketing and distribution to customer serviceand pricing.

There is a notion often discussed in our industry thattechnology is just now disrupting insurance. I would argue thattechnology has been impacting the insurance industry for decadesand, frankly, mostly for the better. What is new is the opportunitythat technology is now providing to better connect insurers, agentsand insureds.

A recent Reagan Consulting report notes that technologyinvestments have driven improved productivity and resulted inoutstanding profit margin growth for agencies. In fact, averageprofit margins for Best Practice agencies have grown from 12percent to nearly 27 percent since 1993. These numbers clearlyillustrate how investing in technology can enable agencies to driveprofitable growth, improve operational efficiencies, and maximizebusiness valuation.  

Meeting customer expectations

Technology has clearly driven financial returns, but weshouldn't forget that it has also raised customer and employeeexpectations. In fact, technology has reimagined nearly allcustomer experiences and at a pace never before seen in our world.All of us are experiencing a more connected life in a moreconnected world. And those connected experiences are impacting theexpectations of insurance consumers across our industry.

To meet these expectations, our industry must deliver aconnected experience between all participants in the insuranceecosystem. This means greater connectivity within an agency, withinsurer partners, and to the insured. It also means a simulatenousexchange of information between all key stakeholders across theinsurance lifecycle. When the business of insurance is digitallyconnected, we all benefit from superior experiences across theentire insurance lifecycle.

The "connected" business of insurance comprises three keycomponents: the connected agency, the connected insured and theconnected insurer.

The connected agency

Using multiple systems for different lines of business inhibitsan agency's ability to cross-sell products, which is the mainreason agencies diversified into multiple lines in the first place.In fact, in a study completed by ACORD'sUser Group Information Exchange (AUGIE), 98 percent of agenciesresponded that having a complete view of client business in asingle agency management system was either important, veryimportant or extremely important. Using a market-leading agencymanagement system is undoubtedly the first step to creating aconnected agency.

A connected agency allows each employee to have the rightinformation and products available anytime, anywhere to betterserve clients via a single, integrated system. With many agenciesexpanding their focus to more lines of business, having the abilityto efficiently access and act upon a complete view of the customeris becoming more and more important, regardless of whether theproduct is personal lines, commercials lines or benefits.

A connected agency also requires the ability to provide acomplete view of the customer to your staff regardless of role,time or location – meaning at home, on the road, or on a plane viasmartphone or tablet app.

The connected insured

Today's consumer expects an omnichannel delivery model. A studyby Bain &Co. found that over time, insureds will use online,self-service transactions more and more. They expect real-timeaccess to information via multiple digital channels likeself-service portals and mobile applications. They demandconvenient, digital services such as online bill pay andeSignature. Agencies that cater to these demands, are the ones thatexperience the most growth. In fact, according to research fromCelent, whenconsumers were asked why they chose a particular provider whenlooking for financial services, 52 percent indicated that theirselection was based on convenience or ease of service.

The connected insurer

Customers demand product choice and effective interactions withtheir insurance agents. A connected insurer relationship enablesprofitable growth through access to the right markets and automatedservicing. A recent IVANS survey found that 79 percent of agents save atleast one hour per day using eDocs & Messages, while 43 percentof agents save at least one hour per day with Claims download. Aconnected insurer relationship provides ease of doing business andgreater productivity with automated download.

In today's connected world, it has become more critical thanever to adapt with the changing landscape of the industry. Thosewho fall behind will become less competitive and lessprofitable.

Reid French is chief executive officer of Applied Systems,based in Atlanta, Ga. He can be contacted at404.842.0055. Opinionsexpressed in this article are the author'sown.