As personal lines become more commoditized, identifying newopportunities and rounding out accounts is critical for agencygrowth. The pace of change has been relentless and even innovativeagencies are struggling to remain competitive. In the smallindependent agency sector, sales and customer relationship management (CRM)systems are quickly becoming one of the most essentialtechnologies that directly impact the success of the business.

Related: 5 high-tech challenges (and solutions) for today'sindependent agents

Independent market squeeze

In a commoditized market where consumers view all insurance products as thesame, cost of coverage all too often becomes the determiningfactor in selecting an insurance carrier. The continued pressure ofdecreasing margins on personal lines is forcing carriers tore-examine commissions paid out to the independent agent. As aresult of this domino effect, top-line margins for some independentagents — particularly those in personal lines— are getting squeezed.

Smaller agencies are perhaps most at risk, effectively stuckbetween a rock and a hard place. They have the least amount ofleverage to negotiate terms with carriers, and they have the lowestlevel of capabilities and capital to invest in technologicalefficiencies that would lead to growth.

Related: 5 hallmarks of insurance industry digitalleaders

Operational inefficiencies

Pressed for growth, independent agents today have to run anextremely efficient organization while maintaining top-linetrajectory to offset some of that commission pressure. The agencyactivities that drive the greatest inefficiency are connectionswith carriers (comparative rating), back-office accounting, andgenerating new customer leads.

Typically, smaller agencies do not have the scale and capital toinvest in solutions that address these particular issues. On top ofthese challenges, solutions at the smaller end of the market thatdrive operational efficiency are few and far between. To solve forthis issue, independent agencies should implement one best-of-breedsolution that does the best job across all inefficient areas.

Path to success

It should come as no surprise that investments in keytechnologies drive long-term efficiency and effectiveness. With theinsurance technology solutions sector growing at an unprecedentedrate, the choice can be overwhelming. The profile of a successfulagency is one that has implemented a core agency management systemto streamline business processes in order to allow brokers to focuson current and prospective clients. However, implementation is notenough. Core end-to-end functionality must be leveraged on thecarrier side, with comparative ratings tools, and on the insuredside with policy renewals and advanced reporting.

To further accelerate growth, agencies must also consider asales or customer relationship management platform that links tothe agency management platform. With CRM, agents can storecustomer and prospect contact information, accounts, leads, andsales opportunities in one central location, ideally in the cloud,so the information is accessible by many, in real time.

According to The State of Techsurance report,agencies that incorporate CRM tools are twice as likely to have amore effective sales process than those that don't, resulting in anincrease of 43 percent more policies sold per producer. Moreaccessible than ever, CRM tools manage internal sales workflows ata much higher level of rigor, mapping current and new opportunitiesand pushing action items through the pipeline. This assistultimately impacts conversion rates and the conversion turnaroundtime, increasing customer lifetime value and leading to closingmore deals, more quickly.

Related: Insurance customer relationship management in thedigital age

Harsh realities of insurance

One of the harsh realities of insurance is that a continualtension persists between agents and carriers. Carriers view agentsas independent businesses that are hard to control and are alwayseager to pass on costs or increased commission rates. Agents,by 

Invest in relationships

While it's true that customers demand lower prices, it'simportant to remember the vital role agents play in the process— and the advantages they have over direct-to-consumerproducts. Recent data from Vertafore shows that consumers do notwant technology to completely replace insurance agents, even ifthat means lower rates. For small agencies to capitalize on thisopportunity, it is more critical than ever to invest in technologythat supports customer relationship management. Investment intechnology is no small task; however not investing in tech couldcost an agency even more.

Sharmila Ray is senior vice president of Product &Strategy at Vertafore.

See also:

CRM becomes insurance focused

3 wise cybersecurity solutions for2017