4 ways insurance agencies sabotage success

Today’s insurance agencies are challenged as never before to keep pace with highly dynamic markets. Swiftly changing industry rules and a constant stream of new products and services mean that agencies have to be agile and responsive. Intense competition, much of it from new online channels, means costs must be continually lowered and service standards and offerings constantly improved. Yet despite the need for rapid ongoing improvement, many agencies unwittingly sabotage their improvement efforts every day. In this article we outline four ways that this happens. 

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First, they do not systematically capture and address their problems. Some may be handled in an ad hoc manner, but many fall through the cracks and are never solved, building in extra costs and permanent headaches. A simple way to capture and address problems is to set up a idea board in your office and ask individual staff members to post problems as they encounter them, together with any ideas they can think of to resolve them. Once a week, meet for a half-hour around the board, review the posted problems and ideas, and brainstorm new or better ideas. Then assign actions to be taken, which might involve collecting data to better understand problems, or implementing ideas. Begin the next week’s meeting by reviewing progress on the assigned actions. Keep doing this for a few months, and neither you nor your staff will ever want to stop.

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Second, most companies do not teach and emphasize the importance of digging out and eliminating the root cause of a problem. When problems arise, they are solved with quick fixes or workarounds. One of our personal favorite cop-outs is the FAQ (Frequently Asked Question). Think about what an FAQ says: “We are aware that customers are constantly confused by this issue, but rather than improving our information/product/service/process to eliminate the confusion in the first place, here is our attempt to clarify after the fact.” Companies that focus on finding and eliminating the root causes of their problems do a lot less firefighting because they are much less likely to encounter the same problem more than once.

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Third, many organizations don’t provide their staff with even rudimentary training in idea-generation skills. In its most basic form, creativity can be divided into two parts: problem-finding and problem-solving. While problem-solving skills are important, and can always be improved, most people have already developed reasonably good problem-solving skills through their experiences of daily life. Consequently, the biggest up-front leverage for getting more and better ideas comes from enhancing people’s problem-finding skills. There are a lot of quick and easy-to-learn techniques to enhance observational skills that will help people identify problems that they would otherwise let slide. For example, when a customer is confused, find out why, and then come up with ideas to permanently eliminate what caused the confusion. Employees at Health New England took this one step further. Now, every time a customer calls, employees are expected to think about why they called. After all, they are generally not calling to wish the company a Merry Christmas; they are calling because they have a question or a problem. Can something be done to improve the company’s systems so the questions or problems don’t arise in the first place? Another company, tired of firefighting, created a new rule: anytime something goes through the office with a red “RUSH” sticker attached to it, ask why and come up with ideas that could avoid the need for similar rushes in the future. From simple rules to sophisticated techniques like idea activators and idea mining, there is a lot you can teach your people so they can spot more problems that could be fixed. It is hard to put a price on a workforce good at problem-finding.

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Fourth, companies become very skilled at building thick “defensive crusts” that isolate them from customer complaints. Companies that want to be truly customer-focused need to make sure they put systems in place that cut through this crust by making sure that customers voice their problems and that employees hear and act upon them. Take, for example, what CEO Bruce Woolpert did at Graniterock, a small business winner of the Malcolm Baldrige National Quality Award. The company supplies rock, sand, gravel, concrete, asphalt, and other materials to the construction industry south of San Francisco, California. In 1989, Woolpert introduced “short-pay”, which states that “If you [the customer] are not satisfied … don’t pay us.” If a customer is not satisfied with some aspect of the products or services he or she receives from Graniterock, he or she simply deletes the relevant charge on the invoice and pays the rest.

In the first year some six hundred short-pays cost the company the equivalent of 2.3 percent of its sales. Today, with a lot of problem-solving under its belt, the cost of Graniterock’s short-pay policy is less than 0.2 percent of sales, and the policy continues to force its employees to dig deeper and identify subtler and subtler issues for Graniterock to tackle, making the company more innovative and giving it capabilities that its competitors lack.

While short-pay would probably not work for most insurance agencies, think about systems you could put in place — systems with real teeth like those the short-pay policy provides – to assure that your customers speak up when they have problems, and that your employees are eager to solve those problems.

It is surprising how so many agencies, operating in fiercely competitive environments, leave so much improvement power untouched. When they gain the ability to implement twenty, fifty, or even a hundred ideas per person per year, everything will change for them.

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