Technology may not always be easy for small businesses, particularly in the complicated world of insurance agencies. That's why Deb Smallwood, founder of Strategy Meets Action (SMA, an insurance research and consulting firm), believes independent agents are facing real-time issues in dealing with carriers.
Smallwood and her partner, Karen Furtado, recently published their report "Agency Management Systems: Mar-ketplace and Vendor Analysis" and learned firsthand of the struggles agencies face.
"What surprised Karen and me was a lack of modern and current technology in the agencies and a lack of understanding of the power of that technology," says Smallwood. "Many of them have agency management systems, but a lot of those systems are outdated. They can't do the TransactNOW or Transformation Station, which would give them real-time capability."
Furtado sees the problem from the standpoint of agencies viewing technology as an expense rather than an investment that can streamline the business operation. Agents are primarily sales people, she adds, and they have developed a particular style of running their business over a long period of time.
But communication has changed. "There are many new ways to network today, and many rely on technology," says Furtado. "There are agencies that have adapted [to these changes], but there are a good number that continue to use their tried-and-true methods of developing business."
The problem for agencies that are slow to adapt to technology is they also are slow to adapt to a very changed market. "The buying market is changing, so how are [agents] changing their selling pattern?" asks Furtado.
Smallwood isn't amazed by the slower pace of technology in the agencies. After all, it took a while for carriers to have a real appreciation for technology, she points out.
However, what Smallwood heard from agents was they can't afford to spend any money on technology right now because of the soft market and lack of profits–and she was discouraged by those views.
"What we have to do is get [agencies] to understand they can make more money if they invest," she says. "When we interviewed the agents that were market leaders, they have customer portals and they are paperless. They key in data only once. Their agency management systems are the most current. It's almost like a paradigm shift has to happen."
Many insurance carriers are directing independent agencies to use the carrier portals, but Smallwood recommends agencies work through agency management systems instead in order not to lose their brand identity with policyholders.
"Agency management systems have connectivity to carriers and the ability to do real time," says Smallwood. "At a minimum, every agency should have a current agency management system solution."
Agencies with current versions then can push things to an even higher level by adding programs such as marketing, workflow, scanning and imaging, and managing licensing and commissions, notes Smallwood.
One revelation Smallwood learned from her research is agents believe carriers build systems from the carrier viewpoint and don't think about agency management systems when they institute their strategies. "It's not that they are not supportive; I just don't think there is an appreciation this is the technology that runs an agency office," says Smallwood. "What we hear about ease of doing business is only through the carrier's eyes. Rarely do we look at an agency and where the information starts."
Every part of the insurance process starts with the customer. "The data has to get into an agency management system," says Smallwood. "If it's all keyed into a system, it can connect to any carrier through TransactNOW or Transformation Station, and then you have real-time capability."
When most carriers talk about their strategies and goals for distribution, Smallwood feels the discussion generally centers on creating technology and pushing it down to the agents. "[Carriers] truly believe they are doing ease of doing business," she says. "It's not all of them, but I think there is a lack of appreciation [of agencies] among many carriers."
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