Staying ahead of the curve technologically is easier said than done if you happen to be an independent insurance agency. Indeed, if not managed properly, many producers and staff members might resent the introduction of new systems as just one more task to do or yet another hoop to jump through to get their work done.

However, by consulting an agency's sales and service personnel throughout the tech planning and implementation process, and demonstrating how new tech tools can actually help everyone become more productive while making their jobs easier, agency principals and chief information officers can set the stage for a successful transition.

That was the major piece of advice offered by all three winners in this year's second annual “National Underwriter Agency Technology Achievement Award” program, run in partnership with the ACORD LOMA Insurance Systems Forum.

The winning trio of multiline agencies took the stage at the Forum in Orlando last month to share the secrets of their tech success during a panel discussion. An edited transcript appears here this week, along with snapshot profiles of the speakers and their agencies.

In addition, the three winning agencies are individually profiled in the May 18 edition of NU. I also interview a representative of each firm on ACORD TV, available by going to http://video.acord.org/, clicking on “ACORD Events,” going to Forum 2009, and paging down to “2009 Agency Tech Winner” interviews.

In summary, however, the trio–who serve as role models for their peers–agreed that technology is definitely a journey, rather than a destination. As soon as you think you've got the agency's tech infrastructure nailed down, there's that next step you have to take or new product you must incorporate because the rate of obsolescence is accelerating dramatically.

In fact, what you thought was “cutting-edge” tech gets dull pretty quickly, so you constantly need to be on the lookout for the next big thing, the winners advised.

Read on for the panel's valuable insights, and feel free to offer your own advice and share war stories on the Web version of this article at www.property-casualty.com (Go to the June 22 edition).

o SAM FRIEDMAN

Editor In Chief

National Underwriter

Would each of you please share with us the biggest challenges your agency faced from a technology standpoint over the past few years, and what steps were taken to overcome them?

o DAVID SCHAEFER

Executive V.P.

AH&T Insurance

2009 CHAMPION

Our agency is headquartered in a historic district [in Leesburg, Va.]. We had a number of infrastructure issues. In the last five years, we've worked hard to deal with everything from having stable and reliable power to our broadband connection and relationship with our Seattle office.

We overhauled our power situation internally and got a standby generator that could power our IT operations as well as our critical functions internally.

We have spent a fair bit of resources making certain that our telephone system is as up to date and current as it can be. Seattle and Leesburg use the same system and essentially, it's almost like walking down the hall to talk to someone in Seattle.

If you need to see them as well, last year we invested in a high-definition videoconferencing system that has multiple points of access in our facility, so that we can actually walk into what we call a quiet room and have a meeting with someone across the country in real time. That's actually proven to be a pretty effective human touch in keeping us closer together.

o SAM FRIEDMAN:

But you don't have any holograms at this point?

o DAVID SCHAEFER:

We're not quite there yet. The HD signal is about as far as we've gone.

o SAM FRIEDMAN:

That's pretty cool. How about over at Daly Merritt?

o MELISSA ARMATIS

Information Technology Director

Daly Merritt Insurance Agency

HONORABLE MENTION

At this time we just have one location, so we're not facing any problem trying to connect multiple offices, but the biggest challenge has been getting all of our users 100 percent onboard with new technology.

The way we have solved that issue is to have all of our users participate in a committee or a team so they can get advance training on particular systems. Then they can feel confident and comfortable, and be ready to train other users in our agency. That really gives them a sense that they know the system and they're not afraid to use it.

Some of the other challenges that we've had is informing our clients of all of our great technology. It's easy to have that in-house, but it's really sometimes challenging to express what that means to our clients, so that what we offer from a tech standpoint can be seen as a competitive edge.

There are always financial challenges when it comes to new technology, so we have a budget plan for that.

o SAM FRIEDMAN:

What kind of a spending plan do you have for technology? Is there a set amount or a percentage of revenue spent each year for tech?

o MELISSA ARMATIS:

We devote four percent of annual revenue to technology–two percent for day-to-day expenses, and then another two percent for capital investments.

o SAM FRIEDMAN:

Let's talk about our third winner's latest tech upgrade. I believe you refer to the approach as “Commercial Insurance 2.0.”

KEN RUNNE

Chief Information Officer

RCM&D

HONROABLE MENTION

Yes, that was the name we gave to our project. We were looking for something to give us a competitive advantage, so we embarked on a total refresh of our data center, our desktop capabilities, all our mobile technology, as well as our agency management system.

During this process, we noticed a disconnect between our producers and the rest of the corporation. 'Just out of curiosity, how many of your producers love technology?' I didn't see one hand go up, and that's what I expected to see.

Our producers were disconnected because basically they would come back and say we don't have time for this. Time is critical for producers. They're the people who go out and sell. They're the ones who make the income that allow us to exist.

(By the way, I don't consider my IT department to be a cost center–I consider IT to be a profit enabler. I keep telling our president that so he is willing to invest in technology.)

We looked for a true sales management system–something that our producers were able to buy into because they saw the benefits…especially the collaborative portion of the prospect system, which allows our senior producers to really mentor and share information with the new people coming in.

SAM FRIEDMAN:

Was that tough, getting competitive sales people to work together and help one another?

KEN RUNNE:

Producers are very secretive about their contacts and where they've been, but it's amazing when you have a system where they really see the need to share some of that information.

The system protects the privacy of some of that data, but allows the younger producers to go out there and see who has a relationship with a contact–whether it's a brand new client, or someone that we want to cross-sell to. The system allows them to see who's got some experience with them.

Have we made that call before? If so, what was the result? Do we have some debriefing that went on after that call so we know what to expect in the future? Should we not bother calling this person again, or if we failed to get the sale the first time, what did we miss? What intelligence have we gathered to make that next call successful?

o SAM FRIEDMAN:

How do each of your agencies distinguish themselves from a technology standpoint?

o MELISSA ARMATIS:

Our technology has always been a big part of the value-added services to our clients. We let them know we are involved in real-time processing and electronic files. We have online submission programs through a secured Web site and customer portals for our benefits clients.

We try to incorporate that in our sales pitches to prospects and even our current clients just to remind them as much as we can. Sometimes it's difficult to let them know exactly how our technology is working for them because a lot of the systems run behind the scenes within our agency, which is instrumental in the efficiency of our workflow.

So it's not always easy to tell them we have a new server that's backing up our system every 15 minutes. They may not realize that's important until our system goes down and they need information right away.

o KEN RUNNE:

This is the paradigm shift about the sharing of information that we've all faced over the last several years.

Most agencies keep everything tightly locked down because we know the value of our information, and sharing it is always the challenge. We've been trying to become more open to sharing…everybody wants to share information, but we just haven't gotten that Holy Grail of being able to share it easily with everyone.

We allow client access to a degree. We'll almost treat clients as if they were a staff member. We'll give them that much access if it's warranted, so that they can look up their own policy information and be able to generate their own certificates of insurance if they choose to, but we're trying to push that down even further and that's when it starts to become difficult.

How much access do you give to a small client, and how do you give them that access? We do some basics through the Web site. We're starting to look at some of the social networking options that are out there, but we're still scratching our heads because I don't know how many of our clients really want to Tweet us via Twitter.

As for Facebook, I use it all the time when I do hiring because I want to know what my technicians have been up to.

o SAM FRIEDMAN:

How does AH&T integrate its tech approach with its client base–an important consideration since a good chunk of your agency's business involves high-tech clientele.

o DAVID SCHAEFER:

When you look at the role of the insurance broker and the process of insurance procurement and placement, ultimately our job is communicating on a multilevel platform, where we're taking information from the client, processing it and putting it into a format that works for our insurance partners.

Then we take that feedback and provide it back to the client in a format that is easy for them to understand.

What we're trying to get to is more single-entry applications, and also making the process as transparent as possible, while putting the information in a context that's easy for everybody to understand.

Ultimately what we're trying to do with technology is to deploy it in such a way that it facilitates our role as the communicator or the intermediary between the party that is seeking coverage and the party that ultimately provides that coverage.

o SAM FRIEDMAN:

What are the biggest tech challenges for agencies going to be in the next few years?

o KEN RUNNE:

There are a number of initiatives out there, and it's always difficult to pick and choose which one we think is going to get us the most bang for the buck.

We started a new focus on mobility, expanding our ability to work in different environments. We're taking a hard look at enabling our staff to be able to work from home, which presents a number of challenges–more than just giving people access to applications and systems, but having the same experience as if they were in the office.

That's not an easy thing to accomplish, depending on where they live and what kind of Internet access they have. And then we get into the whole realm of security–how do we secure that information to make sure that people working from home have a secure link to our system so we can protect our information.

We also want to provide as much access as possible to our producers on their Blackberry or laptop so they can look up policy information, contact information–whatever they need on the road, so they don't have to worry about wasting time getting back to the office to find this information or make a phone call. We want it to be at their fingertips.

In the same vein, when they go out and visit a client, we want them to be able to sit down and pop open their laptop and answer any question. We don't want to say we will get back to them with that information tomorrow or next week or whatever the case may be. We're trying to gain as many efficiencies as possible without losing the quality we like to provide when we're on a one-to-one basis with a client over the phone.

But getting that out by mobile technology presents a number of technical challenges that we're trying to address. We think we've got a good handle on what we want to do. Now it's the implementation of it that becomes a little more difficult.

o DAVID SCHAEFER:

I think the biggest challenge is not going down blind alleys or doing expensive experiments that turn out not to have a good result.

Back in the early 1990s, I insured a company that kept their payroll on the Web–which we know today is probably not a great idea because of the security concerns. So I would say security is certainly an issue for us going forward, because as we work towards providing more access to information, the question is how to discreetly tag things and keep track of where it's going and how to protect it.

o MELISSA ARMATIS:

Technology is always changing, so I think one of the biggest challenges is keeping up with tech advances, how they could help your agency and where it's best to invest.

There is so much out there. If you just walk through the exhibit hall at this conference, you can see so many different vendors trying to get you to buy their products to help your system. You can't buy it all, so picking and choosing what systems and tools to adopt is critical. You don't want to miss the boat on some keen new technology, but you don't want to jump on every ship that passes you by, either.

I agree that mobility and security are two key challenges going forward. To have everybody in the sales force armed with laptops and able to provide information immediately to our clients would be a definite benefit, as long as our data remains secure wherever it goes.

o SAM FRIEDMAN:

In case anybody hasn't noticed, these are tough economic times, and it's still a fairly soft market. How do you go about determining how much money to set aside for technology development, and how do you determine whether you're getting what you pay for?

o DAVID SCHAEFER:

We have a budgetary process we work through that looks at the following year as well as a couple of years out for technology purposes, because there's a strategy behind what we're deploying–and it's tough to have an IT strategy and just look one year out. So we have a harder budget for one year and then a softer, fuzzier look at years two, three and four.

Beyond that, with some specific investments earmarked for each of those years, maybe we don't even know at this point exactly how much it's going to cost, but we'll establish some ranges.

When we look at current spending, we try to benchmark relative to best practices for firms our size, and typically we find that our spending is about one-and-a-half-to-two-times best practices, and we're comfortable with that range.

After all, our tech capabilities is one of the points by which we differentiate ourselves, so we're absolutely willing to spend more than the comparative analysis would necessarily suggest we do.

o SAM FRIEDMAN:

Melissa, I know you said you budget four percent of revenue for tech. How did your agency come up with that number?

o MELISSA ARMATIS:

The principals saw our spending for the last five years, and then decided that was a good percentage to go with. Some years we don't use all of the capital investment, but it always carries over into the next year.

For example, last year we didn't do a lot of upgrades. This year we've upgraded our agency management system, and upgraded workstations to comply with all of the requirements of the new server.

o KEN RUNNE:

We set the budget through a formal process. Typically we need to make a good business case for any new expenditure. We know what our basic costs are to keep everything up and running, and then we take a long, hard look at new projects. What new technologies are out there? What new initiatives do we want to start out with?

If you take a good look at your budget, there are a lot of opportunities to eliminate waste. For instance, you can outsource some functionality. I was maintaining a full-time Web developer, when at half the cost I could outsource it and they'd do a much nicer job.

We also took a look at our maintenance costs and found we were wasting a lot of money for 24/7 coverage, when for the most part we're only up from 7:00 a.m. to 6:00 p.m. So by cutting that in half, we still have the coverage we need for our critical systems, and while we make some exceptions, for the most part we are able to save quite a bit on the maintenance side.

Then there are transition costs, including getting rid of legacy systems. We have a new messaging system that we brought online, but the old one stayed up for two-and-a-half years and had to be supported. It's wasteful.

It's kind of a cultural shift to get people onboard using the new systems. But you have to plan into your transition and migration a cutoff date to say once we're up on a new system we're going to let the old one sit around for this amount of time, and then it needs to be gone.

Everything that we buy we consider an investment, and we want to know what the return is on that investment. If it doesn't make sense, we just don't do it.

o SAM FRIEDMAN:

How are efforts coming at your agency to do business with your carriers in real time?

o MELISSA ARMATIS:

We incorporate real-time solutions in our day-to-day work process, which has provided our agency with increased efficiency and improved customer service.

At our agency, we have a good base of carriers that have incorporated real time into their processes. There are still some carriers out there that aren't participating to a certain level in real time, and if they are going to stay competitive in the market, they are going to need to offer those options.

o KEN RUNNE:

I think I called it the “Holy Grail” before. We do business with over 300 carriers, so you can imagine the challenges we face in trying to have a standard way of interacting with all of those folks.

It would be wonderful if there was one service that existed, maybe something that said, here is the standard, here is the process, here is the ability for you to interact with the carriers and vice versa that everyone could follow, and that would be the Holy Grail. We're not there yet.

I think we do a good job on the personal lines side. There seems to be a bigger focus on having a real-time transaction taking place there, but on some of the other business units we still have a ways to go.

There are some good initiatives underway and there are some capabilities out there, but there is nothing that brings it all together yet, and I think that's what everyone is hoping for.

o DAVID SCHAEFER:

Those carriers that are most easy to do business with are those you can efficiently achieve a transaction with, and those are likely the ones that are going to generate most of your business opportunities.

When we get to real time, I think again of the personal lines unit, where it's a little bit more of a commodity world, but when you get into the more customized, commercial products it tends to create more difficulty in quickly processing information that goes either way.

One of the challenges that I continue to point out to many of our carrier partners is the fact that in our complex commercial accounts, we order an insurance policy and I am quite certain that policy is rendered in electronic format. It gets sent to a printer, which prints it, and eventually it makes it into the mail to us. We then scan it and throw it away, and send it on to our client electronically.

There are many, many opportunities like that to achieve efficiency that we have not yet realized, and we're looking forward to the day when we're not getting any more policies in the mail.

o SAM FRIEDMAN:

Do you measure the cost of doing business with carriers that you do real-time transactions with, versus the ones that are not offering that capability?

o DAVID SCHAEFER:

The metrics for such a measurement would be of interest to me, if you've got an idea on how to do it. It's something that we obviously are sensitive to when we are working on a fee-based approach with the client, and certainly in general we just refer to it as “service.”

If we have a higher-performing carrier relative to the service that we're able to get from the insurer, we feel more comfortable with a thinner fee than if we know we're going to have to do a lot of backbreaking work for the client to have a good experience. So we look at it in a larger context than just the IT that's deployed.

Maybe we do too much on a “seat of the pants basis,” but the metrics on that elude me a little bit.

o KEN RUNNE:

I would say we don't measure that difference yet, but it's something we also have a great interest in. We're looking at some dash-boarding and data warehousing solutions that will allow us to collect that information and analyze it a little better and make those determinations.

Obviously, determining what the right metrics will be for that may be a little challenging, but we do have an interest because it's important to be able to measure that and some other key performance indicators to make sure we're getting the best value for what we're doing.

o MELISSA ARMATIS:

We don't measure that at this point, and I find it interesting that here we are, three award-winning agencies, and none of us have a tried-and-true system of quantifying such differences in processing costs.

That says something about how far we all have to go when it comes to improving the industry's efficiency.

o SAM FRIEDMAN:

When adopting new technology, beyond the technical challenges, how do you get your people to collaborate on implementation?

o KEN RUNNE:

That's a big part of our philosophy. We do not dictate the technology to the business units. We want it to be a collaborative effort. In fact, we typically prefer that the business unit be the champion of whatever technology initiative we're looking at.

We usually put together a team that's comprised of the business unit, the IT group, and the financial group, if it warrants it. But typically we do tech projects in a collaborative team environment to make sure we've got everyone's concerns addressed and that we're not pushing out something that is not going to be used.

o DAVID SCHAEFER:

Given our high-tech client base, we've adopted a new definition of “push” technology. We have clients that frequently push us in ways and places that you might not anticipate, and they drive us to innovate in what we're delivering from a technology platform perspective.

We have a couple of systems where clients have actually invested with us to develop something they really wanted, and where we could apply our insurance expertise and help them design something that met a specific need.

In some circumstances they permitted us to roll that custom solution out to a broader group, and thereby provide additional differentiation for our agency.

o MELISSA ARMATIS:

Every new system we put into place at Daly Merritt has a committee attached to it. They become power users for that particular system so that they can, in turn, train others in the agency, so the users have more than one place to go to get information and be trained and have follow-up questions answered. They are incorporated at the ground level of our implementation.

We also have [a content management system] at the office, which we use to post answers to frequently-asked-questions so that people can feel they are part of the entire team, versus trying to independently figure things out on a system.

We also have user group meetings as well as training sessions just so we make sure everybody is up to date on all of our programs.

SAM FRIEDMAN:

One of our audience members would like to know where the line should be drawn as to what the carrier should be providing for the insured in terms of directly accessing information–perhaps from the insurer's Web site–versus going to the agency for that information.

o DAVID SCHAEFER:

If you're providing something directly to the client, then they should go to your site. But if you've got a relationship with a broker, and the broker is an effective intermediary, I think what you want for your client is a single place to go to find information, so you should work with your broker partner to develop a portal that is commensurate with the needs of the client.

When the Internet first became widely used, there was a lot of screaming about the disintermediation of the insurance broker, and what's turned out is that the more of a commodity they supply, the more likely there is to be some disintermediation. When your only role is that you stand between the customer and the insurance company, then you probably deserve to be disintermediated.

However, if you're providing other services and collecting and accruing greater value to both your carrier partner and your ultimate end user–the client–you deserve to stick around.

Long-term, the broker and insurer need to work together to have a single point of access, rather than have two or three different places where a client may have to go to find information.

o KEN RUNNE:

We know we provide value-added service, so now the question becomes, how does the customer or client get the information that they're looking for? We like to think that we're a good resource for them.

There are some instances where carriers will allow us to build a portal to that information, so that the client can go to our site and look up their claim information. But many carriers don't have that capability.

We'd love to do that with every carrier we do business with, but again we need that cloud technology where information flows freely, and it just doesn't exist yet. I think we all would love to see that.

o MELISSA ARMATIS:

I would echo my fellow panelists in that it would be great to have a carrier portal within our own Web site for our individual policyholders to go to.

o SAM FRIEDMAN:

If you only had time to give a few words of advice for those looking to take their agencies to the next level from a tech standpoint–either words of wisdom or a cautionary tale–what would you say to agents out there about how best to move forward, from both a technology and cultural standpoint?

o DAVID SCHAEFER:

It sounds old and tired, but it really is tried and true–and that is, know who your customer is, understand your role, and look to technology solutions as a means to achieve a better resolution for your client.

If you can stay focused on that and continue to look at what's new, what's coming and listen very closely to your customer's needs, you have a reasonable chance at succeeding.

oMELISSA ARMATIS:

Just make sure you do your research when you're looking into any new technology.

You can add one system into your organization and it's not actually talking to another system, so definitely do your due diligence there and make sure you have everything you need in place.

Then you can focus on your ultimate goal, which is over-serving your clients.

o KEN RUNNE:

My words of wisdom would be, learn to listen. Too often, especially in IT, we think we know everything. We know what the technology is, we know what it can do, and we have a great idea of how it's going to help make more sales or service our clients better. But if you're not listening to either your clients or your business units, you're more likely destined to fail than to succeed.

I think that whole collaborative team effort that you've heard mentioned across the board here is important to ensure the success of any initiative you undertake as an IT department, and to ensure your ongoing success within your agency.

Special Reports /

Winning Agencies See Tech Progress As Unending Journey, Not A Destination

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