Technology: A Brave New World

Agents Must Expand Their Technology Horizon to Exploit the ‘Value Gap’

MarketScout presented its second eInsurance Symposium in Dallas, Texas, in September 2008. The symposium was preceded by hurricane Ike by a day and then the conference was held during “hurricane AIG.” Bill Schoeffler attended the event and found that the insurance industry has still not “grasped the brass ring that is automation.”

Richard Kerr, the founder and CEO of MarketScout, welcomed the crowd. He explained that the “e” in eInsurance stood for creativity, innovation and entrepreneurialism. His intent for the conference was to facilitate innovation and “shake up a sleepy industry.”

Kerr pointed out that ideas are plentiful and good ideas are rare. However, the key is that any idea must be executed otherwise it is useless.

The opening speaker was Joe Plumeri, chairman and CEO of Willis, who set the pace for the event. Plumeri took over the job in the first half of 2001. His initiation as the CEO was related to 9/11. Willis was the broker of record for Larry Silverstein and the World Trade Center. Pulmeri quipped that his philosophy is that if a riot is occurring, make it a parade and then lead the parade. He said he used that approach to help steer Willis through the World Trade Center claim situation.

The ‘Value Gap’

Pulmeri described what he calls the “value gap,” which he defines as the difference between what a business can do for the client and what the client can do by his or herself. The bigger the gap, the more the “value” is provided by the business. The smaller the gap, the more the product or service is a commodity.

The “value gap” was put in context when Pulmeri emphasized that a broker’s (or agent’s) ultimate purpose is to make sure the client’s claims are paid and done so in a timely fashion. He noted that the average claim takes eight months to settle (it is assumed he is referring to commercial accounts). He also pointed out that policies often take over 90 days to get to the client. It was inferred that he did not find this performance acceptable.

Therefore, an agent/broker who is able to provide a client an insurance product that delivers policies in just a few days and pays claims in a few weeks will be providing a service most other agents/brokers are not providing. In this case, the “value gap” is big and thus the agent is creating more value for the client, compared to other brokers.

Embracing technology was seen as a part of the solution to exploiting the “value gap.” Technology should be used to create superior client service and improve productivity and efficiency. For long-term success, the key is not to sell on price. Pulmeri stated, “Price is an issue in the absence of value.”

The ‘New Way’

The symposium had over a dozen other speakers who addressed various technology related topics. The overall theme was a review of current technology and how it is being used today, as well as a look at what the future will hold. It was clear that there is now a technological chasm being formed between the “new way” of doing business and the “old way” for the insurance industry.

It was also clear that technology is getting very complicated and very specialized. For example, one speaker, Leah Woolford, the CEO of USDM.net, spoke of the techniques agents can use to drive business to their Web site. Her speech was fairly technical but she discussed some of the techniques used to optimize the design of a Web site for search engines.

Agency owners cannot be expected to master Web site design and search engine optimization. Hire outside experts to keep the agency Web site up-to-date.

Technology is a tool, just like a car. We all drive cars, yet most of us do not know the details in how to design and build our cars. Agency owners, however, need to be educated on the capabilities of technology and learn some of the basic language.

How can owners do this? First, it is important to pay attention to news and articles on technology. Staying up-to-date is imperative to being ready for the future.

The next step is for owners to either have an employee or an outside vendor or consultant as their technology expert. There is just too much information for an owner to know and it changes too rapidly to keep current.

Using technology does not mean just having an agency management system and a static Web site. To be on the forefront of the wave of technology users, agencies must have a strategic plan for how to incorporate automation and technology in the agency.

The market is driven by the client’s expectation for exceptional quality at the best available cost. There is technology available right now that will improve the reliability, efficiency and consistency of service from the agency staff.

Proper use of automation technology includes being a paperless office, uploading and downloading of data, getting multiple quotes with a single entry of data, having online services clients can access, and creating a system that incorporates new technology when it is released. It is also important to service existing accounts and sell new business via the Internet and over Web browsers on mobile phones.

Last Byte

Agencies that are able to consistently and reliably make sure their clients’ claims are paid quickly and provide the quality service that clients expect will be successful. Because of the evolution of the industry, this will only be possible by embracing automation and technology. It’s a brave new world, so agents should expand their technology horizons to exploit the “value gap.”

Topics Agencies InsurTech Tech