Why now’s the time to digitalize your business
Inflation is squeezing every section of the economy, and the insurance industry is far from immune. One estimate shows that rising prices in 2021 led to an increase of approximately $30 billion in loss costs (the amount insurers pay to cover claims).
MGAs and agents are already operating on thin profit margins, with the average around 2-3% per customer. So, passing the rate hike on to your customer simply won’t work. Achieving and maintaining operational resilience is going to require squeezing every ounce of efficiency from your operations. There’s never been a better time to digitalize your insurance business. Streamlining operations and improving efficiencies is a long-term strategy to help insurance organizations become more resilient, no matter what outside trends and developments come your way.
Given all that, let’s look at the ways going digital can help your insurance business thrive in this economic climate.
Activating Your Data
Soaring prices and thinning margins mean there’s less room than ever for inaccurate business decisions. Insurance businesses must begin gathering their own customer data and gleaning the insights that data has to offer. The question is how to do that, and the answer is a more powerful and flexible agency management system.
It starts with true and comprehensive integration. The right modern AMS will provide real-time access to all customer and policy data at the point of need. This is achieved by bringing every aspect of a business into a single platform, providing 360-degree visibility of the front, middle, and back office. Your people must have the power to access the data they need, when they need it, from anywhere.
Smoothing the seams between offices creates new efficiencies that already contribute to a healthier bottom line. But that’s only the first step. Once your data is consolidated, what’s to be done with it?
Putting Your Data to Work
You’ll need a platform that provides powerful analytics tools to help turn your raw data into actionable insights, facilitating better-informed decisions.
For example, a modern AMS will track the resources that are being spent on each account, from time spent selling, supporting, and traveling to relevant salary and commission costs. You can use this data to determine which accounts are most profitable. The results are data-driven insights into what kind of new accounts you should pursue, as well as better planning for the resources you’ll need to effectively manage those accounts.
Using Data to Win and Retain Customers
Encore Insurance, a digital-native independent insurance agency specializing in personal lines, needed to to revamp how its sales team managed and assigned incoming business opportunities. Unleashing their data and creating a single source of truth across the agency was paramount. Once Encore had a clearly defined picture of where growth opportunities existed, everything changed. For the first time, Encore had the ability to accurately evaluate its new business closure rate and determine whether they’re spending too much on the leads they acquire.
There is tremendous value in learning what kind of customers you want to acquire, but there’s arguably even more in retaining and optimizing the profitable accounts you already have. In fact, the cost of acquiring a new insurance customer is seven to nine times higher than the cost of selling to an existing customer. Increasing the lifetime value of your customers, then, is crucial.
Of course, along with robust and accurate service, today’s customers also expect increasingly short turnaround times. Which brings us to:
Automating workflows allows you to free your team from repetitive tasks that can become a bottleneck. For example, Novidea’s comprehensive approval process workflow can confirm authority limits, view peer reviews, and notify the right team members of activities ready to be approved.
This kind of intelligent automation helps your bottom line multiple ways, including:
- Eliminating human error from repetitive workflows, helping protect you from potentially costly errors and omissions.
- Reducing processing time for new policies, thereby increasing your customer satisfaction and retention.
- Helping you keep talented team members who want to flex their expertise, not do busywork.
Operational efficiency, customer retention, and data-driven decision-making are vital for navigating this high-price, low-margin insurance industry. When you’re ready to go digital, reach out to the Novidea team. We’d love to discuss how we can help inflation-proof your business.