Recently during the 2021 Annual Meeting, Jack Hertvik referenced studies indicating that highly digitalized agencies are growing significantly faster (one study showing +60%) than their competition. Many agencies are embracing new technology for growth at a rapid pace and the gaps between those that do versus those that do not are increasing significantly.
Most agencies have adopted some type of technology (i.e. management system, website) that is currently in use. However, many agencies are not utilizing all of the other tools that are available to them to more efficiently run their agency. Regardless of an agency’s current setup, it is worthwhile to develop an agency technology plan.
For a typical agency, walking through the following steps may be a good place to start:
Understand the Agency’s Current Situation
Traditional SWOT (Strengths-Weaknesses-Opportunities-Threats) analysis on the role technology plays in the agency can be an effective way to start. The agency owner will want to consider how technology may be working or lacking in terms of marketing, sales, operations, management, and decision-making. Understanding where it may benefit the agency and the lack of technology may limit agency advancement. Alternatively, industry experts may have evaluation/assessment tools available. SIAA members can access SIAA’s Digital Agency Scorecard to help (email email@example.com to request a copy).
Consider an Appropriate Budget
It is not unreasonable for a $2 million (P&C Volume) agency to spend $10,000 or more per year on technology. Industry best practice studies show that larger agencies with over $1 million gross commission revenue will budget nearly 3% for IT expenses. Technology expenses may include the costs for an agency management system, website, comparative rater, mobile app, sales automation, client relationship management, digital (i.e. email) marketing tools, digital content resources, video/screen sharing, software integration, and data analytic tools. Looking at these costs in terms of an investment that will yield returns of improved presence, efficiency, growth, or profit, as opposed to just a cost of doing business, is what separates successful digital agencies from their peers.
Build a Tech Stack That Solves Problems and Works Together
Essentially the primary role of an insurance agent is to advise clients through the purchase of a new policy (sale) and maintenance of an in-force policy (service). Part of the tech stack will work to help the sales process (i.e. website, rater), part will work to help the service process (i.e. management system, payment systems) and some will handle both (i.e. email marketing, data analytics, CRM). Some vendors may offer solutions that contain multiple components that are integrated into one platform. However, with new tools coming to market more frequently today, technology providers that can integrate with other web-based applications become valuable as agencies add to their tech stack. Knowing how an individual application integrates with other applications is essential when making a technology decision.
Find the Right People or Groups to Support Your Technology Objectives
Considering the number of technology options available, having the right internal or external support plays a vital role. Most insurance agencies do not have a full-time dedicated IT person in-house. These agencies typically rely on one individual (who is also either managing, selling, or servicing) to “quarterback” or run “point” on how technology is used within an agency. Providing this person with adequate time and resources to develop a cohesive technology plan for the agency will pay off in the long term. Outside of the agency, knowing the initial and ongoing support provided by the vendor should be factored into the cost. A solution that does not provide adequate support may cost less in dollars paid out but could cost more in time and frustration if an agency cannot figure out how to use it effectively. And finally, agency owners continue to find increased value in connecting with other agents through various user groups where best practice and idea-sharing can add value. Lesser-known technologies limit these opportunities.
Adopting new technology solutions and effectively using technology already in place will be a key factor defining an insurance agency’s ability to grow and be profitable. Developing an effective and cohesive technology strategy is a critical step that agency owners should not overlook.
SIA of Northern Ohio members can reach out to Russ Durst at firstname.lastname@example.org to schedule some time to talk through their current technology setting and putting together a cohesive tech stack to help better digitalize their agency.