Digitize or die? Evaluating carrier relationships
Here’s what agents and brokers should look for in their carrier partners when speed and simplicity are at a premium.
Thirty-two years ago, when I was an entry-level customer service representative at Marshall & Sterling, I never dreamed of being a chief information officer in an insurance world that ran on technology. Back then, all the work was done by hand: Telephone messages were written on pink paper pads; customer claims were submitted to carriers by mail, and clients had to wait for claim checks to be delivered by their local post office.
Today, it’s a whole new world in the independent agent (IA) system of carriers, agents, brokers, and technology and service providers. It has been decades in the making, and as a distribution channel, IAs are on the verge of capitalizing on these blossoming industry opportunities. The time is right to digitize insurance processes for speed and simplicity.
Assessing relationships
Annual carrier assessments — discussions, analyses and decisions — have been the standard way for carriers and agents to examine their relationships from multiple angles, including productivity and profitability. Whether formal or informal, these assessments yield various results, ranging from an effortless renewal of a strong relationship to a parting of ways.
I’ve been at Marshall & Sterling my entire career, and I’ve held various positions in servicing, underwriting, rating, sales, and, ultimately, IT. I have never been employed on the carrier side, but I imagine their assessments of agents are doubly difficult compared to those of IAs. Why?
- Carriers typically have had to assess each IA partner individually on an annual basis.
- They also must strategically evaluate whether they should continue working within the IA channel at all.
Let’s face it…
Most every carrier within the past 25 years has had to consider what would happen if the entire agency system faded away or underwent a paradigm shift of some kind. That’s no surprise to anyone who has attended an insurance industry conference regardless of focus, whether it’s a tech-user event such as the Network of Vertafore Users’ Accelerate or an agent’s Big I Event.
The IA channel has faced an onslaught of investment, some of it directly taking aim at the IA channel. For example, there’s been a massive vested interest in InsurTech and solutions, and much of it is tied to new distribution channels.
Yes, agencies bring value
The current trend seems to be that carriers are gaining a refreshed appreciation of the value agents bring; third party investors and InsurTechs are realizing the significance and strength of this value. The world hasn’t quite turned upside down the way some InsurTechs might have expected, and carriers that once pushed away from the IA system are coming back.
At Marshall & Sterling, we have 800–1,000 carrier-wholesaler relationships. Like many other similarly large insurance agencies, we have a central marketing team. Besides their other numerous duties, they monitor our top partners, including wholesalers, and their markets on a regular basis. A year-end assessment process also is in place.
Better tools for better relationships
The InsurTech revolution has brought agencies new tools to be profitable and experience steady growth. For instance, a data insights platform called “RiskMatch” is a business analytics tool we use to scrub our customer data against that of third parties. It lets us monitor our book of business in real-time in various segments: office, producer, product, industry, insurer and revenue bound. RiskMatch is built on a database that tracks $100 billion in in-force premium and gives us a robust view of what’s happening in our geographical and target markets.
We are excited when such a tool can give our agency unprecedented visibility into our book vis-à-vis a broad span of carriers. We expect it will help us benchmark carrier commissions and provide a better look at their appetites.
From a customer risk management perspective, RiskMatch lets us gauge our clients’ coverage with their peers’ using public data. We use this additional information as we make risk assessments and coverage recommendations. RiskMatch also identifies revenue opportunities and gives our agency better intelligence to select the right growth options.
Tools such as these can help us achieve solid, improved and transparent relationships with carriers and customers.
Criteria for carrier evaluation
Regarding our agency’s annual assessments of carriers and wholesalers, all parties have in mind one goal: Earn more new business. To that end, as an agency, we must be selective. One of our key desirable attributes for any carrier or wholesale partner is visible evidence that they are furthering the IA system. Lisa Tyner, Marshall & Sterling vice president and director of central marketing, heads a team that facilitates and assesses these carrier relationships. Lisa and other executive leaders track and evaluate these partnerships.
The crucial attributes the central marketing team seeks out when conducting assessments are familiar to the insurance industry. They are, namely:
- Quote activity with each carrier;
- Hit ratio: the number of quotes the carriers issue versus those quotes that are bound;
- Contingent income; and
- Loss ratio.
Because of the diversity of risk type, the geographical location of our clientele, and our book of business size, we recognize that carrier relationships and pressures are constantly changing. While we want to support our markets, we also need to take a hard look at our carrier relationships. For instance, if we don’t see growth in a carrier’s book, we may need to scale back.
Putting customers first
A better customer experience for our clients is higher than ever on our list of carrier priorities. This emerging area of support becomes more and more meaningful each year as customer expectations and demands grow. We want carriers to enable us, as agent partners, to use our own portal to give customers service and policy information from any and all carriers. Why? It simply does not make sense for a customer with multiple policies to have many different websites, logins and passwords; that’s not a good customer experience. Marshall & Sterling’s message to our carriers is this: We don’t want customers going to your website. We need you to give us the tools to facilitate our client relationships so it’s a positive customer experience. A carrier who has been proactive in this area is Selective Insurance.
I realize our agency’s demand for an updated customer engagement and the ready exchange of data can’t be met overnight. However, I would counter that such a customer experience is not only beneficial to the clients themselves, but it is also better for carrier persistency, the agency, and the industry. In short, what the insurance world needs are the mechanisms to make it easier for agencies to accept data from carriers.
Annual carrier assessments must soon include evaluation of the vital element of customer experience along with the traditional criteria of revenue, growth, and profitability in order to retain agency business.
Jim Dahoney (jdahoney@marshallsterling.com) is a board member of the Network of Vertafore Users (NetVU) and senior vice president and chief information officer (CIO) of Marshall & Sterling Inc., an independent agency and wealth advisory firm headquartered in Poughkeepsie, New York. The firm has 27 branches across the United States and the U.S. Virgin Islands.
These opinions are the author’s own.
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