The Process

Today, more than ever before, the independent agent needs to reduce expenses and increase income.

In order to accomplish this, an agency needs to establish processes that incorporate four cornerstones to effective procedures. They are: Efficiency, E & O Protection, Perceptible Customer Service and Ancillary Sales Opportunities. In most agencies that I visit, this is not being accomplished, because the emphasis is placed on processing the paper. A high level of agency profitability is achieved only when focus returns to the customer and agency profitability.

The steps necessary to achieve this level of success are: Analysis, Structure, Written and Enforced Procedures, Full Implementation and Full Utilization of Available Technology, and Accountability.

In order to devise a plan of action, the agent must first determine where the agency is. A first step could be to determine where you rank with other agencies your size and in your geographic area. You can find excellent peer group comparisons in the Best Practices Study published by the IIABA and the Growth and Performance Standards published by the Academy of Producer Insurance Studies.

Next, audit your existing systems and procedures. This requires a systematic analysis of all agency operations. Occasionally the agency personnel can accomplish this, but many times outside assistance is required. I’ve seen many agencies in which the owner and personnel have never worked for another agency. The old adage, “You don’t know what you don’t know” applies. Many time and money wasters exist because “we’ve always done it that way.” Why? Because the agency personnel have never seen another way.

It’s necessary that every activity of the agency be analyzed to answer the following questions: 1) Is this necessary? 2) Does it provide perceptible customer service? 3) Is it so time consuming that it penalizes a majority of the customers? 4) Is it profitable for the agency? 5) Can the process or procedure be simplified or automated? Once this is accomplished, we can move on to the next issue, the agency structure.

When I interview CSRs, I will usually ask them questions regarding account development, cross selling and up-selling. The usual response is, “I know that I should do more, but I just don’t have the time.” In most offices the CSR spends 82 percent of their time processing paper. As a matter of fact, when I ask a CSR what is their number one interruption, they’ll tell me, “the phone.” My response is, “No, dealing with the customer on the phone is the reason that you’re called a customer service representative.” Processing has grown to be so burdensome to the CSR that it has become synonymous with Customer Service. Most CSRs can’t wait to get off the phone in order for them to get back to, what they perceive to be, customer service.

There is one more step that one must take to fully understand the problem and how to fix it. I will ask the CSR, “Have you ever worked a Saturday or Sunday, when there was no one around and the phones were off?” They will answer, “Yes.” I then ask, “How many days of paperwork can you get done in one day under these circumstances?” The response is usually 4-5 days. If that’s the case, then shouldn’t one qualified CSR be able to do the paperwork of 4-5 CSRs in one day, if they are removed from contact with the phones, producers and customers? The answer is yes.

Now that we have recognized the problem, how can it be corrected? We don’t need to throw money at the problem; all we need to do is to look at reallocating our personnel. I dare to say that many agencies have CSRs that are great technically and really move the paper, but are not very good with the customers on the phone. Because their job is still very important to the agency, I see no need in reducing their position or salary. These individuals should have the title of Quality Control Representatives (QCR).

I recently assisted an agency in Ohio to split the service and processing function. On my last visit they told me of their initial skepticism regarding the number of personnel required to handle the paper processing for all the customer service representatives. Within two weeks they were pleasantly surprised to find out that not only could they handle all the paper processing, they were able to attain zero backlog, a status that the departments had not seen in years. The CSRs were then able to actually make proactive service and “goodwill” calls to the customers. The personal lines CSRs will shortly begin calling customers to do annual exposure reviews. This hasn’t been accomplished in over 10 years. The beauty of this redeployment is that it requires no additional personnel and in some cases provides the opportunity for staff reduction.

Our next consideration is the establishment of written procedures. The manual should incorporate the proper procedures and accountability. In most agencies I have found “Folk Lore” procedures. Those are procedures that are not written, but are passed down from employee to employee with different emphasis and interpretations. The procedures must be in writing. All procedures and other manuals should be stored in the agency’s computer system. This gives instant access by all employees. No employee can say, “I couldn’t find my manual.” Also, if the manual is published in Microsoft Word, the user can use the “Find” function to locate the exact procedure that is required for the indicated process.

The manual should also include forms and form letters to be used by the agency personnel. The completion and use of these documents should be a “Non-Negotiable” activity in the agency. All procedures should incorporate the main objectives that were stated initially: Efficiency, E & O Protection, Perceptible Customer Service and Ancillary Sales Opportunities.

The procedures should incorporate all time-saving programs and technologies available to the agency and the agency management system being used. It should also contain procedures for each separate process performed by the staff from quoting a personal lines policy, to the reporting of a commercial lines claim. If the agency produces financial services business, procedures should address all those activities also.

The agency has to now address the actual customer contact, with the idea that they will be performing proactive customer service and sales. But, how can an agency staff spend more time with the customer when they are still bogged down with processing paper? The answer is imaging. Transactional Filing has been touted as the answer to the paperless office. While it was a great interim step, it continues to require paper. There are also problems with reconstructing files, misfiled items, and more.

T-Filing touches only one aspect of the paper problem—the filing. It has not solved the problems of searching, handling and the day-to-day processing faced by the CSR. T-Filing has also presented a challenge to producers who are not typically as computer friendly as the CSR. They have resented being forced to lookup dates, and then search through T-Files only to be told they cannot remove anything from the file.

We suggest a move directly to imaging. The Imaging System allows a CSR to eliminate handling paper, and focus on what is truly important—the customer. Imaging impacts not only the paper, but also the entire mindset of the CSR and agency. It encompasses filing, distribution of information, and the entirety of customer service. Imaging gives the CSR the ability to do virtually everything from their desk, with little or no interruptions. This ability will save the average CSR over two hours per day currently spent faxing, filing, copying, printing and mailing. Imaging allows the CSR to use their knowledge to actually help clients protect their assets, which is certainly more satisfying than processing paper. Imaging is a mindset and a way of life, with the objective to eliminate the problems with paper, not simply the paper itself. Imaging will result in an immediate hard cost savings for the agency, something T-Filing could never do.

Postage and supply costs have escalated to the point they represent a substantial percentage of an agency’s expenses and postage costs are only a part of the picture, and does not include the tremendous cost in personnel, toner, paper, etc. Studies show that the average cost for mailing an envelope is not thirty-five cents but two dollars and fifty cents. When you multiply this times the number of items mailed every day, you arrive at a staggering figure.

Agencies are beginning to think electronically and communicate electronically as well. In a perfect world, no one would print or mail anything ever again. Why mail something when it can be sent electronically? With the available software we propose, a CSR is able to combine a scanned document with any other document from a Windows-based program like the agency management system, and fax or e-mail them to a company or even a client.

Let’s say that your claims person wants to send a Loss Notice along with an imaged copy of a Dec Page plus a scanned copy of a police report. The Loss Notice and the Dec Page can be printed directly to some scanning software, stacked on top of the Police Report and sent directly to the company without the CSR ever leaving their desk. Individual supporting documents such as receipts, doctor’s bills, etc. can be filed in certain software, until the claim is settled and then archived to disk for future reference.

Likewise, the CSR can scan a copy of a commercial endorsement, copy the invoice and cover letter to the scanning software and send all three documents to the customer in one step. Both the agency and the customer copy can then be tossed.

Another benefit of electronic communication is that most fax/e-mail systems keep a log of all items sent and received. This provides proof that a customer received their document. Logs can be printed and stored on paper, or they can be copied to the software and stored electronically.

Not only will the Imaging System cut costs, productivity will increase dramatically for your CSRs, marketers and claims people. Increased productivity estimates range from 25 percent to 48 percent. The new available time can be spent providing the perceptible customer service that will overcome some of the price differentials of your competitors. Also, this new concept can show you how to integrate technology to match, and even exceed, the benchmarks in the Best Practices Study.

The final piece to the puzzle is accountability. There is an old saying that states, “People don’t do what’s expected. They do what’s inspected.” Not only should agency owners develop job descriptions, they should develop job standards. In other words, what are the minimum measurable expectations of each person in each position? This could include the solicitation of referrals; the amount of acceptable back-log; when renewals must be ordered; account retention; etc. An agency that has established and measured the minimum standards of each employee can then accurately reward those that exceed the standard and provide additional training or supervision to those that don’t.

Jack Fries is recognized as one of the nation’s top agency operations experts. If you wish to contact him, you may e-mail him at jfries@jackfries.com or call him (859) 694-1580. You can also find additional articles and services he provides at his Web site: http://www.jackfries.com.

Topics Agencies