For Small Agencies CRM is the Path Forward

October 3, 2017 /

By Sharmila Ray, SVP of Product & Strategy

As personal lines become more commoditized, identifying new opportunities and rounding out accounts is critical for agency growth. The pace of change has been relentless and even innovative agencies are struggling to remain competitive. In the small independent agency sector, sales and customer relationship management (CRM) systems are quickly becoming one of the most essential technologies that directly impacts the success of the business.

Independent Market Squeeze In a commoditized market where consumers view all insurance products as the same, cost of coverage all too often becomes the determining factor in selecting an insurance carrier. The continued pressure of decreasing margins on personal lines is forcing carriers to re-examine commissions paid out to the independent agent. As a result of this domino effect, top-line margins for some independent agents – particularly those in personal lines – are getting squeezed.

Smaller agencies are perhaps most at risk, effectively stuck between a rock and a hard place. They have the least amount of leverage to negotiate terms with carriers, and they have the lowest level of capabilities and capital to invest in technological efficiencies that would lead to growth.

Operational Inefficiencies Pressed for growth, independent agents today have to run an extremely efficient organization while maintaining top-line trajectory to offset some of that commission pressure. The agency activities that drive the greatest inefficiency are connections with carriers (comparative rating), back-office accounting, and generating new customer leads.

Typically, smaller agencies do not have the scale and capital to invest in solutions that address these particular issues. On top of these challenges, solutions at the smaller end of the market that drive operational efficiency are few and far between. To solve for this issue, independent agencies should implement one best-of-breed solution that does the best job across all inefficient areas.

Path to Success It should come as no surprise that investments in key technologies drive long-term efficiency and effectiveness. With the insurance technology solutions sector growing at an unprecedented rate, the choice can be overwhelming. The profile of a successful agency is one that has implemented a core agency management system to streamline business processes in order to allow brokers to focus on current and prospective clients. However, implementation is not enough. Core end-to-end functionality must be leveraged on the carrier side, with comparative rating tools, and on the insured side with policy renewals and advanced reporting.

To further accelerate growth, agencies must also consider a sales or customer relationship management platform that links to the agency management platform. With CRM, agents can store customer and prospect contact information, accounts, leads, and sales opportunities in one central location, ideally in the cloud, so the information is accessible by many, in real time.

According to The State of Techsurance report, agencies that incorporate CRM tools are twice more likely to have a more effective sales process than those that don't, resulting in an increase of 43 percent more policies sold per producer. More accessible than ever, CRM tools manage internal sales workflows at a much higher level of rigor, mapping current and new opportunities and pushing action items through the pipeline. This assist ultimately impacts conversion rates and the conversion turnaround time, increasing customer lifetime value and leading to closing more deals, more quickly.

Invest in Relationships While it’s true that customers demand lower prices, it’s important to remember the vital role agents play in the process – and the advantages they have over direct-to-consumer products. Recent data from Vertafore shows that consumers do not want technology to completely replace insurance agents, even if that means lower rates. For small agencies to capitalize on this opportunity, it is more critical than ever to invest in technology that supports customer relationship management. Investment in technology is no small task; however not investing in tech could cost an agency even more.



Sharmila Ray's Career Bio 

Sharmila Ray is the senior vice president, Product and Strategy at Vertafore. Ray joined Vertafore after 11 years at McKinsey & Company where she most recently served as an Associate Partner and Senior Knowledge Expert. Ray served property-casualty, health, and life carriers and brokers across strategy, marketing, distribution, digital, and customer experience priorities for over ten years with McKinsey & Company. At Vertafore, Ray leads product management and strategy efforts.