How to Kill Agency Profitability

Frank Pennachio is a Principal at Oceanus Partners a ReSource Pro Company. Frank has more than 30 years of experience in the insurance industry as an agency owner and producer. Highly regarded as a speaker and thought leader, Frank regularly presents at conferences and publishes articles in national and regional trade publications. He hopes to educate, entertain and provoke his audiences to think in a new way about emerging challenges.

Teamwork Makes the Dream Work

Now’s a good time to take note of the words of W. Edwards Deming, “It is not necessary to change. Survival is not mandatory.”

Historically, insurance agencies have been separated into fiefdoms—sales on one side, service on the other—and these siloed workplaces are killing agency profitability.

In many respects, the agency functions as multiple organizations under one roof, and the producer may engage with clients and service commitments differently from their colleagues. This can cause stress among teams and inconsistent customer experiences.

We all know standardization is good for business, but let’s talk about three ways NOT using uniform processes is stifling your agency growth:

  • You can’t use automation

At times, the insurance industry has been slower to consider alternatives to manual processes, such as robotic process automation (RPA) or chatbots to help customers. These automation tools can reduce the cost of the claims processes by 30%, according to McKinsey.

However, jumping into technology solutions without addressing the agencies’ existing workflows and processes may doom the initiatives for failure, which Ernst and Young estimates happens to 30-50% of RPA initiatives. Bots are only as efficient as the processes you program them to follow.

  • Tensions between teams will blow up

In siloed environments, teams often execute tasks differently. These non-standardized practices can introduce errors—errors that one of those teams will have to fix. To ensure your people are collaborating effectively, remove the discrepancies and get them on the same page with consistent processes.

  • Customers will suffer

Inconsistencies are little cracks that allow mistakes to sneak in. For insurance, small mistakes can carry immense consequences.

For example, let’s assume a vehicle is left off the Business Auto Policy, and the policy is written with Symbol 7 for liability. The business will be uninsured for an at fault auto accident with that vehicle, which could be financially devastating.

Consistency is Key

Creating a uniform workflow and procedure lets you rest easy that customers will get a great sales and service experience every time.

Widespread economic and marketplace pressures are illuminating the perils and consequences of insurance agency inefficiencies and under performance. The culture and processes that have historically carried agencies to their highest level of success will not likely be the same as those that are required moving forward. It’s long past time for a fresh and more agile approach.

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