When it comes to technology implementation, the independent insurance agency channel lags behind the financial services industry, according to the results of Applied System’s inaugural digital agency survey.
Most outfits are using an agency management system, download technologies and cloud applications to automate their business processes. Where they come up short is in the areas of business intelligence, mobility and self-service.
At a time when the insurance consumer expects real-time customer service from their computer, tablet or smartphone, there is an opportunity for the independent agency channel to enable digitization across their businesses, Applied Systems says in its report.
More than 1,000 independent agencies across the U.S. participated in the 2016 Applied Digital Agency Survey, and answered 15 questions concerning agency management system capabilities, business intelligence, insurer download adoption, cloud software and mobility. The survey calculated a digital score for each respondent, based on its technology adoption.
According to the survey, the national average for digital adoption at an independent agency is 42 percent, with Montana, New Mexico and Nebraska ranking the highest at more than 60 percent. Rhode Island ranked the lowest at 26 percent.
Continue reading to learn about the five pillars of a digital agency system implementation.
Only 38 percent of agencies offer electronic signature capabilities through their agency management system. (Photo: iStock)
1. Foundational agency management systems
The center of the digital agency is the agency management system (AMS), which manages customer relationships, policy and benefits administration, sales automation, financial accounting processes and document management. The system must be scalable with standardized data that enables agencies to add new customers, lines of business and multiple locations.
In relation to size and revenue, independent agencies that identified themselves within the lowest revenue threshold were less likely to have adopted a foundational management system approach, one in which all lines of business, accounting and reporting are managed within a single system, Applied Systems says.
According to survey results, 98 percent of agencies use an AMS, and of those, 75 percent say they have visibility across all departments, including property and casualty, benefits and sales.
The AMS provides electronic document management capabilities, and 92 percent of the respondents use their AMS for this purpose. Going paperless can pay for itself within a matter of months, says Applied Systems.
On the other hand, independent agencies fall short when it comes to offering electronic signature functionality, as only 38 percent of agencies do so through their AMS. “Today, 64 percent of American adults own a smartphone of some kind and many are transacting business online, making it essential to modernize the last step in business operations — the signature,” the report says.
Sales automation can drive success at an agency, and an automated process measures new and renewal business across all books of business. According to survey results, 63 percent of businesses are tracking prospective sales and renewal opportunities within their AMS.
The insurance industry uses data-mining applications far less than those in financial services. (Photo: iStock)
2. Business intelligence
More than three-quarters (76 percent) of those surveyed do not use business intelligence software to gain insights from their AMS data, which puts them at a disadvantage, as business intelligence applications enable agents to uncover insights that inform strategic decision making.
“With more insights into client policy details, preferences and geography, agencies can deliver a higher level of customer service” the report says.
Compared to other financial services industries, the independent agency channel is adopting business intelligence solutions at a slow pace. According to PricewaterhouseCoopers, 60 percent of financial services companies say that business intelligence software has potential to create a competitive advantage, and 80 percent of global CEOs say data mining and analysis are strategically important to their organizations.
Related: 5 key ideas for new insurance agents
Whether through download or real-time, insurer connectivity is critical to accessing products and programs for agency clients and for delivering an enhanced customer experience. (Photo: iStock)
3. Insurer connectivity
A key component of digital agencies is the ability to communicate and exchange data securely and seamlessly from insurer systems directly to an AMS. This reduces manual processes and allows agencies to deliver faster, more complete serviced to their insureds.
Today, 94 percent of agencies use at least one type of download processing technology to receive policy-related information from their insurers. In fact, claims download transactions have grown 63 percent since 2013, with take-up of the Association for Cooperative Operations Research and Development’s electronic documents and message systems growing by an astounding 576 percent.
Applied Systems’s analysis says that there is more than 1 million available agency-MGA-carrier connections, but 59 percent of those have not been activated by agencies. This presents an opportunity to maximize agency efficiencies and add automation, while reducing the time spent performing administrative tasks, Applied Systems says. Agencies that use real-time can save, on average, 53 minutes per employee, per day.
See also: Fiduciary rule could spur innovation
When an agency implements cloud technology, revenue per employee increases 16 percent. (Photo: iStock)
4. The cloud
Cloud technologies allow digital agencies to move core software applications to offsite data centers for improved performance, flexibility and security. According to Applied Systems, “agencies that invest in cloud technology are considerably more profitable and better at managing costs and streamlining IT maintenance.”
More than 60 percent of those surveyed rely on the cloud to host AMS capabilities. Additionally, the survey found agencies that use cloud technology have 16 percent higher revenue per employee than those that don’t.
When an agency offers a client self-service portal, revenue goes up 9 percent per employee. (Photo: )
5. Mobile applications
Despite the ubiquity of mobility in business and personal life, just 17 percent of agencies surveyed provide either clients or employees with a mobile app. When broken out by size, 45 percent of the larger agencies provide staff with access to AMS data via a mobile device.
This area especially shows where the insurance sector lags compared to financial services. Today, almost all major banks and investment firms have mobile apps, with 72 percent deploying digitally enabled self-service capabilities. In fact, digital interactions with financial service organizations are expected to grow 46 percent annually through 2020.
In addition, the survey reports that just 25 percent of agencies use a client self-service portal. These allow the insured to gain access to their insurance information via password-protected site or app under the agency’s unique brand. This feature comes with additional benefits: Those agencies that provide client-service portal take in an extra 9 percent in revenue per employee.
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