Over the last three decades, technology developments have dramatically influenced our business climate. Today, companies of every size increasingly rely on technology to enhance customer experience, improve marketing performance, and stimulate ongoing revenue growth.

The changes have been nothing short of dramatic. Many of us recall a typical 1980s insurance company. Contact was mostly through agents who met clients face-to-face or by phone. Snail mail campaigns, family and friends, and client prospecting at the Rotary Club, Chamber of Commerce, or local community events were (and some believe still are) the most effective ways to generate business.

Insurance company offices had a large open floor plan. Desks were lined up in parallel rows with the manager in the back overseeing the business unit. Decision-makers were arranged along the wall in tiny offices. Metal file cabinets were stuffed with disorganized claim files. Files were lost or misplaced — sometimes for weeks at a time — making it impossible to resolve immediate customer business problems.

In the early part of the decade, computers were more of a novelty than a mechanism to help grow the business. Most insurance executives did not have computer access until the mid-1980s. Monitors seemed larger than the desks. Keyboards weighed more than some laptops do today. The monochrome "green screen" monitor displayed texts and graphics in the same color. If you were lucky, you had a monitor that allowed you to adjust the brightness.

Outside adjusters were equipped with pad and pen to document witness statements, Polaroid(R) cameras for accident site photos and property damage estimates, and carbon copy ACORD forms with four or five copies for the original office file, home office file, agent file, underwriting file, and adjuster's skeleton file.

Field adjusters stopped at pay phones to check for messages; cell phones were still an expensive novelty. The first real, portable, battery-operated handheld cell phone was called the DynaTAC and cost $4,000. It was big and bulky, and the cost per minute was a dollar or more. It was not until the 1990s that cell phones became the norm in the insurance industry.

The fax machine entered the business mainstream in the 1980s. Although this technology had been around for some time, it became cheap in the 1980s with the development of the microprocessor, inexpensive heat-transfer print heads, and cheap optical sensors that could read a page of text. With a fax machine, you could send a sheet of paper to someone anywhere in the country, complete with a signature, in seconds. E-mail really did not exist yet (except in military and university environments), so the fax machine was extraordinary useful for agencies. Fax machines expedited the policy application process — papers needed to bind or renew coverage were received in seconds rather than days. During the golden age of the fax machine in the late 1980s, people faxed everything. Nearly every legal document got faxed once it was signed.

The answering machine was a fabulous advancement that improved communication between home and field office decision-makers, account executives and field adjusters. Today, both the answering machine and fax have largely been replaced by e-mail and e-mail attachments. But those machines gave us an early taste of how technology helps reach buyers and generate sales.

The 1990s Office

In 1991, when the World Wide Web first became available for the public, it grew dramatically, with users multiplying by 3,500 times annually. This resulted in a continuing paradigm shift in communication and business practices. The biggest developments in the 1990s were improvements in communication, including Internet access, which allowed for a global sharing of information, and mobile communications. By the end of the 1990s, owning a mobile phone was a fact of life, and these devices, which today handle much more than voice communications, are now a necessary business tool.

2000s and Beyond

As we near the end of this decade, merger, acquisition, and divestiture activity is prevalent, and companies are becoming increasingly global. The merits of offshoring and outsourcing key business processes and establishing virtual office locations are proving to be effective business strategies. Project teams are effectively executing deliverables in remote locations and in multiple time zones.

To compete in today's marketplace, decision-makers must keep current with advancing technology trends. This includes identifying where their customers are "shopping," and ensuring that they have a presence in those worlds. There are a number of noteworthy advances that have impacted today's business strategy and how we interact with our customers:

  • Broadband Internet usage in the United States has increased drastically, from six percent of domestic Internet users in June 2000 to projections of well over 90 percent by 2010.
  • Cloud computing gives companies access to pay-per-use Internet technology services without requiring knowledge of, expertise with, or control over the infrastructure that supports them, yielding significant economies of scale.
  • PDAs and enhanced cell phones accommodate e-mail, mobile phone, text messaging, Internet faxing, web browsing, and related wireless information services.
  • Search engines such as Google, Yahoo, and more recently, Bing, increase potential company revenue generation; "to Google" is now a verb. We can instantly identify customer market demographics, competitive intelligence, and market trends.
  • Open source and free software continue to gain momentum.
  • Green IT initiatives are generating greater interest in both the consumer and regulatory arenas due to global-warming theory and the potential exhaustion of crude oil.
  • Blogs, portals and wikis have become electronic necessities for businesses to promote their knowledge management and customer interaction, and to sustain revenue growth.
  • Social networking allows customers to instantly "tweet" or "Facebook" friends and colleagues for the best deals in all products, including insurance. Agents are no longer the only source for insurance information. Agencies are fighting back by building information-rich web sites that provide industry knowledge and rapid customer response that enhance customer retention and capture new business.
  • Global Positioning System (GPS) is increasingly popular, especially in tracking items or people, and for use in cars. Some insurers are offering auto coverage based upon actual miles driven to determine premium rates.
  • Peer-to-peer technology use and Internet telephony and file-sharing enable real-time communication with buyers to share products and services.

Benefits of New Technology

Top-performing agents are leveraging these new and enhanced technologies to increase retention and reach new clients. Social networking is particularly suited to these missions. Agents can utilize social networks to assist customers involved in catastrophic flood, hurricane, and tornado losses. To expedite claim handling and customer goodwill, these networks allow customers and agents to communicate instantly. Loss information can be submitted over Facebook. Twitter can be used to provide quick updates.

Blogs, forums, LinkedIn, and similar resources can facilitate discussion around key industry issues. They also may be used to introduce new services and to increase market penetration, especially in the more technology-savvy policy-buying market demographic of people in their late-teens, 20s and 30s.

Current technology and social networking can be used to confirm customer characteristics and purchasing actions. Customer intelligence provides data about purchasing attitudes, behavior patterns, demographics, and geographic traits to help agents more accurately predict behavior and create more effective product communications, products and services. Segmenting customers according to their potential revenue generation and behavioral traits helps companies create targeted marketing and underwriting campaigns and set measurable goals for each objective.

Mobile platform applications enhance customer self-service and reach a broader customer base, benefitting both agents and customers. Policy administration, claim uploads and analytical dashboards for executives display critical business information anytime, anywhere.

Into the Future

Strategic focus areas such as growth and profitability, client retention, regulatory compliance, and operational alignment have been and continue to be priorities for P&C and life insurers. However, the ways in which we conduct business have changed dramatically in the last three decades.

Agency systems are growing in importance, as is the ability for agents to transact business in real time. Interacting with carriers using industry standards yields time savings that can be redirected to marketing, and increases customer retention and service. Agents seeking technology assistance have access to industry groups such as the ACORD User Groups Information Exchange (AUGIE), the Florida Association of Insurance Agents (www.faia.com), and the Agents Council for Technology (www.acttech.org), which is affiliated with the Independent Insurance Agents and Brokers of America.

To earn and retain insurance customers, carriers and agents must tap the best available resources and embrace technology advancements to optimize growth, minimize risk, and sustain profitable business operations. They must ask themselves several key questions:

  • What is the progression of technology and how do we identify where the customers are?
  • How do we decide the most effective method to reach new customers, now and in the future?
  • How do we narrow this down to reach the buyers and generate sales?

Agents and companies who maximize the power of technology to enhance customer service and data processing, while balancing that power with effective "old-school" client-facing practices, will have found the right answers.

Tom Filep, CPCU, is a partner/insurance industry expert in the financial services practice of CSC (www.csc.com). He may be reached at tfilep@csc.com or 908-392-6511.

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