In the second part of this three-part series on CRM, John Sarich looks at the shift of CRM systems from broad sales tool to finely tuned insurance IT systems. Read part one, "CRM challenges in insurance — agents vs. carriers."
As we discussed earlier, carriers that subscribe to the independent agency system are akin to wholesalers, where a third party is responsible for the sale to the customer. However, insurance carriers also have a sales force. This sales force isn't there to sell an insurance policy to a customer, but to build relationships with the carriers' agents and agency personnel.
The field organization of a typical carrier is responsible for building and enhancing the business relationship with the agency or agencies with whom the carrier works. Field agents also help agents increase sales through sales training and work with agencies to improve their loss ratio, earn a higher level of commissions and provide feedback to the carrier's management team in underwriting or policyholder services.
Eyes & ears of the carriers
Carrier field organizations are the eyes and ears of the carrier. They are in daily contact with agencies and agents. The field organizations know the territory, who the competing agents are, who represents which carrier, current pricing, new product information, and hundreds of other tidbits of knowledge that are useful for carrier management to know. In essence, the carrier's field organization is a sales organization, and they need the same tools that a CRM system can provide, but in a system designed for the particular way they do business.
The typical CRM system is not built to manage the interactions that are part and parcel of the relationships between the carrier and the agent. The typical CRM application can be customized to eventually become useful for managing certain aspects of agent interaction, but at what cost?
As we noted in the first article in this series, hundreds of CRM applications exist — but very few are specifically designed and built for insurance distribution. CRM for insurance is a technology that's tuned specifically to address the unique nature of insurance distribution — compliance, contracting, hierarchy management and compensation. It also brings sales and marketing technologies to field representatives, enabling them to increase revenue from their territory and deliver customer service to their agencies and agents.
For example, with CRM for insurance, a field marketing manager can identify potential agencies, much as a retail agent would identify potential customers. Let's say the field marketing organization is tasked by management to move into two new states and contract with 100 agencies in those two states.
The challenge is no different from what any sales person would face: set up a marketing campaign, obtain a list of agencies, begin contacting agency principals, set meetings, travel to see various prospects, initiate sales presentations, negotiate contract terms and conditions, build relationships — and ultimately, obtain a contract. All of the rich features of a common CRM system are now available to the field organization.
The CRM for insurance application is designed to meet the needs of the insurance industry, and to deliver marketing, lead, and opportunity management not only for a field organization to contract with higher volume agencies, but to help those agencies grow their books of business. (Photo: iStock)
Annual contract renewal
One unique aspect of insurance distribution is that agencies and agents have to go through an annual contract renewal. Just as insurance policies renew, so do agency agreements. Perhaps one of most powerful aspects of CRM for insurance is the ability for the field organization to have a view of which agencies need to be contacted and when they need to have that task completed.
And more importantly, the information from claims, underwriting, commissions and operations should be easily accessible to the field marketing organization. Also, task management such as for renewals, provides a highly effective system that keeps field management and field representatives aware of the status of contract renewals.
But CRM for insurance isn't just a cosmetic makeover of a sales-contact management or CRM system. There's a key difference — the CRM for insurance application is designed to meet the needs of the insurance industry, and to deliver marketing, lead, and opportunity management not only for a field organization to contract with higher volume agencies, but to help those agencies grow their books of business.
Manages many functions & responsibilities
A second key differentiator is that with CRM for insurance you are not creating another silo of data that can only be consumed by sales. A modern distribution-management system is much more than simply keeping track of a sales pipeline. It is designed to manage many of the disparate functions and responsibilities typically carried by field representatives.
For example, many insurance carriers provide assistance to independent agencies so that they can bring on new agents. Often they offer a financial incentive or growth incentive that agencies must meet in order to continue to receive financial support. With CRM, the checkpoints are established and are automatically scheduled so the field organization is aware of them.
With hundreds of incentive/growth plans in place, automating these tasks ensures improved communication and eases the workload of the field representative. Carriers must manage many other incentive and financial programs that are the responsibility of the field organization, such as plans for growth in policy count, premium, cross-selling, financial attainment of milestones, client growth, contingent commissions, sales contests and rankings, and basic sales compensation.
Fostors improved communication & growth
With the myriad of plans and programs that must be managed, it's easy to see why CRM for insurance (with the focus on the agency–agent relationship) is a way to foster improved communication as well as topline and bottom-line growth.
In our final article in this series we'll discuss the pros and cons of CRM's flexibility for the insurance industry — starting with cost.
John Sarich is an industry analyst and VP of Strategy at VUE Software. He is a senior solutions architect, strategic consultant and business advisor with over 25 years of insurance industry experience. He can be reached at John.Sarich@VUESoftware.com.
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