Agency Tech Stack 101: Focus on your core functional areas
Here are some best practices for insurance agencies faced with right-sizing their tech stack and improving efficiency.
The rapid growth of cloud-native technologies, artificial intelligence (AI) and other innovations empower insurance agencies to increase productivity, enhance the customer experience and even reduce costs like never before.
But, increased choice is creating complexity and clouding good decision-making. Agency owners often choose multiple bespoke solutions for each individual task, rather than focusing on solutions for core functional areas that can be more effective in creating efficiencies.
So, how can agencies find the right balance? Let’s break down where agency owner decision-making falls short, uncover a smarter, modern way to simplify your tech stack, and set up your agency for long-term success by focusing on core functional areas like marketing, finance and human resources.
Finding your fit
Ironically, an agency tech stack with too few tools will run into the exact same challenges as one with too many solutions. Both approaches expose agencies to the perils of disconnected processes and broken workflows.
An all-in-one system for the entire business sounds enticing, but the reality is far from satisfying when the tool doesn’t align with each core functional area. The insurance business is so complex that no single system can do everything well. That means you might end up with a solution that has a great Agency Management System (AMS) but a subpar Customer Relationship Management (CRM) or billing solution. Additionally, most monolithic solutions — especially older ones — are difficult to update and challenging to scale, creating broken handoffs, siloed data and slow development times.
Even worse, with a single solution for the entire business, you get locked into using only one vendor, and if that vendor’s products are not keeping pace with the market from a pricing or innovation perspective, you are stuck.
In contrast, if you introduce too many solutions within a single functional area of your agency, you will also create confusion. For example, if you choose one solution for invoicing, a different system for billing, and a third one for accounting, you are likely to end up with multiple disparate processes. As a result, you will create widespread inefficiency, frustrate your employees, and end up paying too much for solutions that contradict, instead of complement, one another.
Achieving balance
Finding the middle ground between all-and-one and one-too-many isn’t easy, but it is possible. The best approach for agencies — one that is used across multiple other industries today — is to identify specialized solutions for core functional areas.
Start is with your AMS — this will ideally be the source of truth for your agency. Once you find one that works best for your agency, it is time to start adding solutions that will enhance operations for your functional areas, such as sales and marketing, customer service, underwriting, human resources and accounting operations.
This type of approach will create simplicity in several ways. For one, by choosing solutions that will integrate with your AMS, you will ensure smooth cross-departmental handoffs. Secondly, by layering in department-wide platforms, you will streamline departmental workflows and avoid the data silos and breakdowns that can happen with larger, organization-encompassing tech stacks. You’ll also benefit by having the flexibility to choose best-of-breed solutions and upgrade them as technology advances.
Choosing wisely
Insurance is risk averse by definition, so it is no surprise that agencies often need more time to perform due diligence on new technologies than their counterparts in other industries. And while the explosion of technological advances has made it more complex to choose the right solution providers, agencies can benefit from a few time-worn best practices.
Start by asking your peers for their recommendations. I have found that many agency principals, even those who work in competitive markets, are willing to help each other out by sharing insights into which solutions work best for them.
Second, seek solutions that are purpose-built for insurance. This will save you from the headache of retrofitting general purpose workflows to suit the needs of your agency.
Third, attend insurtech trade shows, talk with vendors, and get hands-on experience with potential solutions.
Be sure to open your search to multiple solution providers and not just the vendors with whom you already work. This will help you avoid getting stuck in a one-size-fits-all trap.
Then, when you sit down with vendors, dig deep to learn about the people behind their solution. What are their motivations? Will they be accessible? Are they local to you? Do they truly care about your agency and its success? The answers to these questions will give you insight into the type of customer service you will receive after the sale.
Finally ask yourself, if you do nothing, what does that really cost your agency? Many agencies have grown accustomed to the status quo as the cost of doing business. But in today’s world, where our industry faces growing hiring challenges in tandem with a pressure to increase capacity and efficiency, agency owners have to take an honest look at the inefficiencies within their agencies.
Stack wisely
While it’s true that the insurtech market has no shortage of potential solutions, increased choice brings agencies tremendous advantages. By performing your due diligence, selecting best-in-class, industry-specific solutions and simplifying your tech stack to focus on core functional areas, you’ll make every department in your agency more efficient and productive. You’ll also improve your agency’s customer experience. You may even be surprised by the savings along the way.
Andrew Wynn is the co-Founder and co-CEO of Ascend, an insurance-industry platform that automates the entire financial operations lifecycle across collections, accounting, reconciliations and disbursements.
Opinions expressed here are the author’s own.
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