Agency Management Systems

Agency Management SystemsAs an agency owner you must consider a number of important issues when implementing a new agency management system. Below is a small sampling of those issues to help you determine what you should expect to get from your own system. Agency owners who simply accept inadequate and somewhat "user unfriendly" systems under the concept that "if it ain't broke, don't fix it," also are having to live with problems and inefficiencies that can hurt the agency's performance. You should start out with a wish list and then see how much of that list your current system provides. Of course, no system will offer everything you want, but there are some things that you should insist on.

The problem with most systems is missing or inadequate reports. And the problem is the same, regardless of the size of the agency. The reality is that size doesn't matter since the information required to run any agency is generally the same. Based on past experience, your system should be able to produce the following reports:

  • Commission Revenue:
  • Monoline Client Lists for Marketing
  • Premiums and Commissions by Client and Producer
    New Business
    Lost Business
  • Premiums and Commissions
    Department or Branch
    Client--in descending or ascending order
    Insurance Company
  • Average Commission Rates
    Line of Business
    Insurance Company
  • Exception Reports

In addition to the above reports, the system also should be able to deliver a monthly and year-to-date P&L and Balance Sheet to the agency principals within four business days after the close of the month.

Tie-in is imperative

In many cases, the preprogrammed system reports will not tie in with the trial balance or financial statements. This may not sound catastrophic at first, but a multitude of problems can ultimately arise. For instance, producer commission statements may bear no resemblance to the commission revenue reported on financial statements. This often happens because the system recognizes revenue when it is billed, rather than how revenue is recognized for financial reporting purposes (usually the latter of the billing or expiration date). As a result, producers will be paid commission in advance of the agency's receiving or recognizing commission revenue. Reports that reconcile these discrepancies will eliminate potential producer questions. We have found that, in most cases, the delivered reports do not reflect the total commissions reported by your accountant on the financial statements. If this is the case, you should hire a consulting professional to modify your reports so that the operating reports are a direct reflection of the financial statements.

When it comes to working with agency management systems, we suggest following the maxim "When all else fails read the directions." Have a detail-oriented staff member check the documentation that came with your system. There might be a report you always wanted already delivered with the system.

Time and time again we have seen "great revelations" come to pass when the staff revisits the documentation months or years after conversion. Fortunately, by now your staff knows the basics and has the time and knowledge to revisit the documentation for more effective and efficient ways of utilizing the system. Now may be the time to take refresher classes given by the computer system vendor since these courses can help your customer service representatives operate more effectively. If the local courses are too rudimentary, ask about higher-level courses on the regional or national level. The interest you show in improving the system will come back tenfold in the enthusiasm of the staff and the increased customer service you can provide.

After this exercise, you may find that you were previously using only about 20% of the capacity of the system. It is not anyone's fault since until now no one had the time or responsibility of maximizing the program utilities delivered with the system. Typically, there is so much to do and absorb in training during the conversion that one forgets half of what was learned or perhaps makes mental notes to revisit that information when the crisis is over. Knowing how the system already works will help a great deal when making notes as to how it can
be enhanced.

The following steps may be helpful in getting started:

* Form a team with members from each department. Lead this team and show your support.

* After reviewing the documentation, have the team come up with its own wish lists. Get everyone on the team together and discuss the enhancements.

* Upgrade to the latest release and, prior to the actual installment of that release, issue an agency newsletter documenting the changes with suggestions for implementation.

* Train the staff on the new features of the upgrade.

* Assign someone to set up standardized letters so that all communication meets your standards.

With the onset of the new reporting package you will be able to run your agency the way it should be since you now have the information to do so. Your employees will feel more like team members and will "buy into" the continuing responsibility of updating their skills since they came up with a lot of the enhancements that were implemented. Discovering new and better ways of implementation becomes contagious.

In summary, never forget why you are in business: to sell insurance and maximize profits. Inefficiency and a lack of information are roadblocks to these goals. Utilizing a system to its fullest despite its shortcomings is a goal that can be achieved with a relatively small investment. You might want to seriously consider outside consulting help. *


Acceleration Clause - The part of a contract that says when a loan may be declared due and payable.

Accidental Death Benefit - In a life insurance policy, benefit in addition to the death benefit paid to the beneficiary, should death occur due to an accident. There can be certain exclusions as well as time and age limits.

Acknowledgment: the act of going before a qualified officer (e.g., Clerk) and declaring the validity of the document. The officer certifies same, whose certification is known as the acknowledgment

Acquit: the act of freeing a person from the charge of an offense by means of a decision, verdict or other legal process; to discharge