Agents Fight Against Carrier Inefficiencies

Insurer data practices create extra work for agents whilecutting competition

Fifteen years ago, our agency had a commercial lines customerthat owned more than 30 properties. The client bought and soldproperties regularly, and financed–and often re-financed–eachlocation. This generated a constant flow of endorsement requests,second requests, endorsements, correction requests, and so on,between our agency and the carrier.

This account still sticks in my mind, not so much because of itsconstant changes but because of how the carrier handled them.Rather than issue an endorsement specific to a particular location,the carrier would issue a complete policy, showing all locations,including any addition or deletion.

The customer seemed to appreciate receiving a policy thatincluded all changes. I, on the other hand, had a problem with it.Besides issuing a new policy, the carrier generated a separate copyof the policy for each lienholder named, even though the changesdid not impact any of the 29 other lienholders.

The first time I received a box full of policies from thecarrier after a simple change, I thought it was pretty funny. Ishook my head and laughed at how inefficient the carrier was. In anera before heightened privacy concerns, those copies went in thetrash.

After the third box arrived, I started getting disgusted. Thiscarrier clearly was wasting money, and, at the same time,tightening the terms of our contingency agreement, reducing ourcommissions and transferring to us the cost of new businessMVRs.

Never one to mince words, I challenged the carrier about thesechanges, which turned out to be the start of a dramatic costshifting that continues today. I was told that operating costs wereincreasing, and they had to balance the cost shift betweenpolicyholders and agents.

Needless to say, this did not sit well with our agency. The nextfew boxes of policies weren't trashed but were sent to ourmarketing representative instead. I'd love to say the endorsementpractice immediately was resolved, but it wasn't.

After discussing it with the marketing representative,underwriting manager and, finally, branch manager, I gave up. Asone little agency in Kansas, we could not shape how an insureroperated, even though I could see and prove that its inefficiencieswere costing both of us money.

Today, the battle rages on. Most carriers seem to believe thepath to internal efficiency requires shifting tasks to agents. So,agents are responsible for much more of the work necessary toservice and maintain accounts. In an era when agencies are morehighly automated and efficient, carriers think this isreasonable.

The problem is that carriers have not only shifted work, butthey have, at the same time, made agency efficiency more elusive byrequiring us to enter new business, changes and claims into theircomputer systems for them. We must enter data into our own systems,and then turn around and do it again, using their Web sites.

Why do they insist on creating this extra work for us? I thinkmany carriers mistakenly believe that if we make the effort toenter data into their Web sites, especially for new business, wewon't take the time to enter it again into another carrier's. Thinkabout it.

How would you make independent agents think like a captiveagent? You can't. But you can make them work like one, by forcingthem to allocate time and effort.

Carriers are making agents choose between writing more businesswith one carrier and providing multi-carrier quotes to fewerprospects. Requiring that business flow via Web sites effectivelyhas taken away our ability to do comparative rating.

If this is news to you as an agency principal or manager, thenperhaps you should spend more time with your customer servicerepresentatives to see which they're choosing–quotes for moreprospects or more quotes for each. Whether they, or you, realizeit, they make this choice every day, all day long.

Now the Good News

The good news is that the fight to operate both efficiently andas a true independent agent, fulfilling the promise to quotemultiple carriers and coverages, doesn't need to be waged alone,and it does not involve every carrier in the market. Moreenlightened carriers already provide agents with what we call“real-time interface.”

A real-time transaction is defined by agency technologyadvocates as one that begins and ends in the agent's managementsystem, and returns the desired information–a quotation,endorsement, billing or claim inquiry, for instance–directly backto the agency system. Agents need not access a carrier's Web siteas a separate step, nor wait for a download to populate the agencymanagement system with the new data.

What causes some carriers to see value in real time, whileothers can't? One key factor, I believe, shows up in an experiencerelated to me by a fellow agent. The agent asked his largestcarrier why it wasn't offering real-time quote and issue. Thecarrier responded, “We don't want to be spreadsheeted.”

Spreadsheets Happen

I suspect carriers that fear comparative rating–orspreadsheeting, as they call it–believe they have little or nothingmore to offer than price. They have failed to create an identity,both internally and externally, that differentiates them from thecompetition. So, they fear competition.

The irony is that carriers should know that, as independentagents, we already spreadsheet quotes for our prospects. In anycase, this agent's response to the carrier was right on target. Hesaid, “Fine, if you do not want to be spreadsheeted, I canguarantee you won't be on any of the coverage and pricespreadsheets I present to my prospects and customers.”

Until all carriers hear this kind of response, agents will beburdened with some companies pushing their operationalinefficiencies back onto us. It's time for all agents to askcarrier representatives, at every level and at every opportunity,when they're going to treat you like an independent agent and helpyou write more business, not less.

Robert “Robby” E. Dunn, III is vice president and agency managerof Hotchkiss Insurance Agency, Houston, and president of theApplied Systems Client Network (ASCnet) agency management systemusers group, based in Altamonte Springs, Fla. He can be reached [email protected].

“It's time for all agents to ask carrier representatives, atevery level and at every opportunity, when they're going to treatyou like an independent agent and help you write more business, notless.”

Robby Dunn, ASCnet