Editor's note: William Heitman is managing director, The Lab Consulting.

Almost anyone who's spent time in an independent agency will agree that operations can be plagued by inefficient, unproductive work activities. Meaningful changes that enhance efficiency and increase productivity have proven difficult to make.

It doesn't have to be this way. In fact, insurance firms and their agencies only need to look at their knowledge workers, those who “toil with their minds” in sales, quotes, claims processing and premium collection, to find vast, untapped sources of economic value hiding in plain sight.

When managers of P&C branch offices have been surveyed, most said that they perceive 30% to 40% of their revenue producers' time is spent on “prospecting and selling activity.” This figure is broadly consistent for both captive and independent branches. While this general perception is true in a literal sense, closer scrutiny and observation of knowledge workers' underlying activities within this broad category reveals an environment rich with untapped opportunity for improvement.

When prospecting and selling workflows and business processes are mapped at detailed levels–10- to 15-minute tasks–only 20% of producer time is devoted to “true” prospecting, selling, and cross-selling tasks. The other 80% is spent developing, preparing and submitting quotes and “re-quotes,” and includes time spent re-keying and consolidating application submission data, ensuring version control and basic policy preparation–in other words, administration. After viewing these maps and findings, one is tempted to question the basic job position titles and descriptions: Are these revenue producers who administrate, or administrators that produce revenue?

The first impulse of everyone involved is to conclude that this is simply “the unavoidable cost of doing business,” or that “better technology is needed.” However, if you stop and think of the agency as a “factory” instead of an office, a wide range of simple, non-technological improvements will appear.

For example, most prospective customers want quick, approximate quotes. They are satisfied to receive “preliminary” figures. Instead, many receive arduously calculated, exact quotes–after a maddening delay that can drive the frustrated prospect to search for swifter competitors. Sure, the underwriters will minimize the insurer's risk with an “exact” quote–but they will do so at the cost of higher administrative costs and the risk of losing a prospective sale.

Additionally, in the drive to collect all the information that underwriters need to produce an “exact” quote, the probability that the applications submitted from prospects will include errors and missing data is very high. Multiple call backs to the prospect may be required, degrading the “customer experience” even before the prospect is officially a customer. These application remediation efforts can increase a quote's cycle time by several days. In their attempts to generate a sale, producers will intervene, attempting to master and manage this process as best they can. Along the way, producers begin to be converted into administrators. Nobody will notice, except perhaps the customer.

And that's the best-case scenario! It can get much worse. Since this process can easily yield a “no sale” rate of 70% to 80% for all applications submitted, producers will be desperate to generate as many applications as possible and toss these over the wall to underwriting. Producers will have neither the time nor the interest to spend “quality time” with prospects to understand their nuanced needs. They will be lucky if they have the time and presence of mind to conduct follow-up calls to close deals. It should come as no surprise that corporate directives from sales management and marketing will go unread. “Strategy” is out the window because there's no time for discretion, caution or selection. “Churn” takes over and the poorest sales prospects are treated identically to the most valuable.

What to do? There is no easy fix. It is however, straightforward. It is also a time-consuming and meticulous undertaking. But then so is the planning for any factory–and every insurance agency, along with its home office, is a factory. Looking your agency as a factory is the first step toward improving effectiveness and value.

Map the process flows just as you would an assembly line. Then conduct observations: of root causes, error rates, throughput and bottlenecks. Use the time-tested tools from the Industrial Revolution: standardization and division of labor. After hundreds of activity-level, non-technology improvements, you will have administrators who administrate and producers who produce.

Special Reports /

Agency productivity solutions? They're hiding in plain sight

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