Choosing an Insurance Agency Management System

By Jonathan Decker

If you’re running your agency using paper forms and manual procedures, it’s time to consider the benefits of using a computerized insurance agency management system (IAMS).

For the right person, selling insurance may be one of the world’s best jobs.   It gives agents the ability to define their job duties, work setting and hours while making as much money as they need (assuming they do the hard work required). There are multiple ways to become an insurance agent—working as an insurance company employee, joining an insurance agency or becoming a broker. But here’s the crux: the job of an insurance salesperson is highly satisfying, from both a financial and emotional perspective.

What are some of the tasks involved in being an insurance agent? The core activities consist of market identification and development, prospecting, selling, submitting new business, administering the book of business and overall business planning. For an agent, these tasks are not a walk on the beach. Done properly, they demand a high level of precision, continuous monitoring and assessment. Ultimately, insurance agents aren’t just salespeople; they own and operate sophisticated financial enterprises.

Take these challenges and magnify them by dozens or hundreds of agents. Welcome to the world of insurance agencies, which employ or contract with multiple agents while managing relationships with dozens or more insurance companies, not to mention hundreds to thousands of clients. Is it any wonder agencies—as well as agents—need technology to help them perform their duties? That technology is typically called an insurance agency management system (IAMS).

What is an IAMS?

An IAMS is a software application that allows insurance agents and agencies to manage their books of business, as well as run their businesses. It’s similar to a customer relationship management (CRM) system but designed specifically for insurance agencies. Agents with large firms can use them, but they would more likely need a CRM rather than an IAMS.

IAMS software handles the major functions of a contemporary insurance agency...from managing the book of business to handling customer communications, commission payments and workflow automation.

Here are some of the major tasks an IAMS can help you perform:

• Manage agency processes
• Track client insurance policies
• Manage and pay agent commissions
• Develop and schedule client communications
• Deliver and track client marketing touchpoints
• Automate process tasks
• Analyze agency performance, overall and by specific segments

At its most basic level, an IAMS can free you of the drudgery involved in tasks such as:

• Generating client birthday emails
• Reminding policy owners their premiums are due
• Notifying and transmitting new leads to specific agents
• Helping agents manage their carrier appointments, including the filing of E&O certificates of insurance
• Giving agents underwriting updates on their new-business submissions
• Sending out news alerts to agents and agency staff

To give you a sense of the power of a typical IAMS, consider some of the key things it can do:

• Create a smooth customer journey. The insurance-product sales process is inherently complicated. From the agency’s perspective, it wants each prospect to move efficiently down the sales funnel, from first contact to the annual review meeting. An IAMS plots out these journeys, making sure teams hand-off prospects and clients so leads and new-business applications aren’t bungled or lost. Result: Prospects receive a customized consumer journey with guaranteed touchpoints customized for their situation.
• Increase agent productivity through sales automation. Rather than assume agents will perform key sales tasks, an IAMS schedules them automatically, so nothing is left to chance. For example, it assigns leads to agents automatically depending on the type of prospect, product interest, geographic location and other factors. It also alerts agents when something happens regarding their assigned prospects while tracking lead activity by agent. By more closely managing leads and subsequent activity, an IAMS maximizes sales productivity, closing ratios and submitted business. This has a direct positive impact on an agency’s top line and ultimately improves its bottom line, as well.
• Make business processes more efficient. Tracking new-business submissions and the payment of agent commissions can have an immediate impact on agency financial performance. The last thing you want as an agency owner or executive is to lose track of submitted business or to pay out commissions incorrectly or late. Furthermore, making a mistake in the calculation of agent incentive payments can have a devastating impact on agent morale and retention. Having an IAMS means you will stay on top of this key function, preventing screw-ups that may infuriate your top producers.
• Leverage up-sell and cross-sell opportunities. Too many insurance agents focus most of their attention on bringing in new clients rather than on up-selling or cross-selling existing clients. It’s important to remember it’s much easier to generate revenue through up-selling or cross-selling than it is to convert a prospect into a customer. Having an IAMS for your agency means you can easily schedule in-force sales activities using factors like policy issue date, type of policy and family details. Rather than leave such activities to the discretion of agents, who might neglect to follow up, your IAMS will automatically place them on agent calendars and prompt them to actually perform them.
• Keeping tabs on sales performance. Insurance agencies are sales and service organizations. As such, they need up-to-date metrics in order to determine whether they are making progress toward their goals. An IAMS monitors leads, new-business and booked-business results on an ongoing basis so you can quickly determine if trouble is brewing. For example, if submitted applications fall behind target, an IMS will notify you so you can intervene before there’s a negative impact on revenue, commissions and profits.

This is just a quick snapshot of a few ways an IAMS can help improve your business. At a cost ranging from $60 to $300 per user per month, it’s hard to deny the appeal of such software. If their features and cost don’t persuade you to begin using one, consider the benefits you’ll be missing out on if you continue operating your business manually.

The Main Benefits of an IAMS

The entire business world has become digitized over the past decade. Insurance carriers initially lagged behind, but over the last few years, they have begun to aggressively digitize their workflow. As an insurance agency owner or executive, the time to adopt an IAMS is now. Here are three of the top benefits you’ll immediately experience after installing such a system:

• Increased efficiency and productivity. Rather than handling key functions manually and with paper, your IAMS will automatically schedule them and facilitate their performance using digital forms. The financial benefits of this approach are significant.
• Enhance communications with clients. Having an agency-wide client-communications system means all clients will hear from you in an appropriate way, frequently and on time. Gone will be the days of agents forgetting about their customers, which creates bad blood and jeopardizes customer retention. With an IAMS, even lower-tier customers can receive appropriate messaging based on their financial contribution to the agency rather than become an afterthought.
• Enhance communications with insurers. Staying on top of carrier insurance portfolio and service changes can be challenging without automation. Using an IAMS, you can tap into insurer changes automatically so you’ll never communicate incorrect information to your agents or policy owners.

Of course, there are many other benefits, too. But the financial return on investment for just these three can generate cost savings and new revenue opportunities that cover your IAMS seat fees in a relatively short period of time.

The E&O Insurance Connection

As you know, making a mistake while selling insurance or servicing a client can produce aggravation and financial losses for your customers. When those get large enough, unhappy customers can file complaints and E&O claims against you. Coming out on the losing end of a client dispute can be a financial calamity if you don’t have E&O insurance. But with it, you’ll be protected against the financial impact of losing your case in court.

Against what types of losses does an E&O insurance policy protect you? Here are some of the major possibilities. For life and health agents, possible claims include:

• Failing to provide insurance
• Not explaining product features and benefits effectively, resulting in misplaced expectations
• Making an administrative error that costs a client money
• Failing to make a requested policy change correctly or on time
• Not correctly calculating a policy premium

For P&C insurance agents, common allegations include:

• Not carefully explaining policy provisions
• Failing to adequately identify risk exposures
• Failing to recommend needed insurance coverage
• Communicating inaccurate or incomplete client information to an insurer
• Failing to provide timely notice of a claim

In short, having insurance and doing business defensively will be your best defense against client disputes. Whatever your insurance license, the possibility of getting sued is ever-present. Transferring the financial impact of these risks to an insurer will preserve your assets, greatly reduce stress and let you sleep well at night.

Also important is taking steps to prevent mistakes from happening in the first place. Using an insurance agency management system will not only enhance your agency productivity and revenue, it will also prevent mistakes that can land you in court. If you’re not using an IAMS application today, consider this your sign to start.

Having E&O insurance is an essential element of an insurance agent or broker risk-management program. Learn more about the AIP Errors and Omissions (E&O) insurance program exclusively for agents and brokers of Colonial Life.