How the Best Agencies Do It: Key Element 4

The following is from by Cheryl Koch's presentation at IBA West's Blue Ribbon Confernece earlier this month. Cheryl is President and CEO of Agency Management Resource Group and serves as Managing Director of IBA West Education/Insurance Skills Center. This is the fourth in a series featuring the eight key elements.


Element No. 4—Adopt “Beyond Best Practices” Processes and Procedures

Everything we do in the agency is a process—from sales to service to support.  The most profitable agencies have found that internal processes have to be examined and streamlined in order to provide each customer with true “valued added” services.  Many of the things we do in the name of service don’t represent any value to the customer and there may be other tasks we should be doing, but can’t manage to find the time.  By examining your workflows and eliminating wasted steps, you can improve both your level of service and your profitability.

Formal, written procedures are necessary to ensure operational efficiency, provide training to new employees, and reduce the likelihood of errors and omissions claims.  Yet few agencies have them and those that do often don’t require their use or audit for compliance.  Without an “agency way” of doing things, people usually create their own system for account handling.  This often leads to something that has the potential to cause very serious problems for an agency—chronic backlog.

Any item that remains in the agency unprocessed after five working days is backlog.  One of the complications of automation is that work not yet completed has more places to hide.  Where we once could see a problem as the paper started to pile up, there is now a multitude of ways to obscure unprocessed work.  If you ask your CSRs how to solve the problem of backlog, most of them would say “we need more people”.  This doesn’t solve the problem and may often make it worse.  The answer is to combine your written procedures with a uniform system to manage each CSR desk and to fully utilize your automation resources.

Many outstanding agencies have segmented their commercial lines business into complex and non-complex accounts.  The 80/20 rule has always worked in the agency business—80% of the agency’s income is created by 20% of its customers.  It makes sense to have different processes and procedures for the handling of these two very different types of accounts.  Non-complex accounts do not require extensive producer involvement, are often direct bill and automatic renewal and generally do not have a large number of mid-term changes.  This type of account can be handled using the most efficient and streamlined workflow and a “once and done” approach.  A larger number of accounts, and often an equal amount of revenue, can be handled by a CSR in such a department, which reduces the total number of complex accounts to be handled by a single CSR.

 (Look for Element 5 in the next edition of the Insider.)