In the ever-changing and post-COVID world, one key element that rings true for agency owners across the country is being efficient. But in reality – what does this entail and what do owners need to do to increase and streamline their agency efficiencies? In this article, you will read about areas where an agency could be lacking, how to improve, and last but certainly not least, why it is so important to emphasize and strive for an efficient agency.
An essential element of agency efficiency is the use of technology. Technology is one of the most essential areas to stay up to date with, but potentially the most difficult as well. Innovation is happening every day, so staying up to date will help an agency maintain business practice and allow for cost-saving opportunities. Without the right technology and tools in place, agencies may find themselves unequipped to meet the demands of customers, carriers, and colleagues.
According to the 2022 Big “I” Agency Universe Study, agencies face a plethora of challenges including marketing your agency effectively, dealing with multiple carrier interfaces, keeping up with the pace of technology, cost, and many more. Agency owners should be actively seeking out these areas to improve upon and help grow. Keeping an inventory on agency technology needs, leasing equipment to allow for upgrades, and making sure technology is well represented in your budget are just a few ways to stay ahead of the curve.
Interestingly enough, the Agency Universe Study actually shows a downtick in processing technologies used from 2020 to 2022.
As you can see above, our industry has seen a downtick in thirteen categories, with a significant downtick in PL download, CL download, and direct bill commission statement download. However, the trend is moving in the opposite direction in terms of communications technology, seen below.
the industry is experiencing growth in multiple areas when it comes to customer experiences and convenience. The big question that agency owners must ask themselves is: Is my agency prepared when the newest tech comes in and changes the game? The first place to look would be whether or not your agency is paperless.
If you answered yes to being paperless, great start! If you answered no, it is not too late to adapt and adjust, just as you have had to do many times in this industry. Converting to a paperless agency can provide some serious benefits. First and foremost, this will emphasize for your employees and customers that you are not lagging, but rather pushing toward a high-tech mindset. A tech-savvy agency provides more convenience and ease across all aspects of the business, especially for your customers (and we all know the customer is king!).
In the long-term scope, a paperless agency makes you a stronger acquisition candidate when it comes to sell (or internally perpetuate). Not to say that still using paper is a dealbreaker, but during a transition process between a new owner, it makes the organization process much easier. If not, the buyer will likely have to install updated AMS systems to get the agency up to date and prepared for the future.
The IA Valuations team has collected data from over 200 valuations over the years and has found that only 42.3% of owners between the ages of 60-69 have paperless agencies and only 30.8% of owners above the age of 70 have paperless agencies. These numbers are significant because, as these owners approach retirement age, they should be taking advantage of every opportunity to make themselves a more suitable candidate for acquisition when the time comes. Moving forward with technology is one of those opportunities to help.
Technology and Next Generation Talent:
Finding and keeping next-generation talent is difficult for many agencies. Having state of the art technology is one way to attract and retain top talent. For recruits who do not know much about the insurance industry, walking into an agency that does not have modern technology could be like stepping back in time.
For older agency owners who have focused on selling and servicing their clients over the years at the expense of maintaining antiquated systems, recruiting tech-savvy workers who are comfortable with installing and leveraging the new platforms could enhance the appeal of your agency as a place of employment. As a spin-off of utilizing more modern technology, many agencies are able to sell, service, and support their clients with greater ease, which can add value and lead to increased retention.
While we can all agree that the customer relationship with the independent insurance agency is often a handshake business, we know that leveraging technology can help the agency meet their clients where they are and enhance their overall experience. By focusing on incremental deployment of new technologies, agencies can modernize and position themselves for success in a technology-focused future.
About IA Valuations and Agency Link – Founded in 2017, the IA Valuations team has performed over 200 valuations to independent insurance agencies across the U.S. Our advisors have 25+ years of experience guiding agency owners on maximizing their agency value, planning, and legal needs for ownership transition. In addition, IA Valuations has provided perpetuation planning, financial modeling and business planning for independent insurance agencies. Finally, IA Valuations has advised dozens of agency owners on selling their agencies through our Agency Link process. Agency Link is a platform that connects buyers and sellers together to further the growth and strength of the IA system. To learn more about IA Valuations, please visit IAValuations.com or firstname.lastname@example.org.
The information provided in these documents is general in nature and shall not be construed as personal legal, tax or financial advice for your situation. Please email@example.com to discuss your personal situation.
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By: Luke Hippler, MBA