Analyze Your Supporting Cast

Today, what the letter carrier brings to Northern Insurance, Inc. of Santa Fe and Las Vegas, N.M. is next to nothing. And not surprisingly, the number of service workers at this multi-lines agency, with just under $2.5 million in annual revenues, is down to seven from 11 just a few years ago. “With e-mail and download, there’s less need for clerical help,” says Wolff, “and the people we have are very efficient. They can probably handle 10 times as much now as they could 10 years ago.”

But at what point do you draw the line between technology and personal service? And how do you know when the staff you have is sufficient, even though your business is growing?

Beyond Automation
Take a look at IIABA’s 2007 Best Practices Study, and you’ll see that the number of support personnel varies widely in certain agency size categories. Agencies with annual revenues between $10 million and $25 million, for example, average just shy of 51service employees. But in the same category, those earning 25% profit average only 36 employees, while those with 25% or more growth have just fewer than42 clerical staff members. Is automation the only factor at work in this spread?

No, says Shirley Lukens, of the Atlanta-based Reagan Consulting, which coordinates the annual Best Practices Study. At least four main issues influence the number of support employees at any agency at any given time, she says. These factors include: types of accounts written, carriers represented, quality of work done by personnel and extent and type of agency automation.

“One of the biggest impacts on productivity is the type of accounts written,” says Lukens. “If an agency has a specialty, or is very selective in the type of accounts they’ll write, they can more easily streamline the support.”

At the same time, an agency whose carriers are well automated will need fewer support personnel than one whose companies are in various stages of technology deployment. “Some carriers are just easier to do business with,” Lukens says, “and thus reduce the amount of work for the CSRs.”

Yet if CSRs and clerical workers aren’t well trained or held accountable for their production, the agency will need more support staff—because well-trained, experienced and dedicated employees are simply more productive.

At Northern Insurance, a full-time operations manager conducts training for support staff every Wednesday. Over lunch, administrative employees receive 45minutes of instruction on aspects of the agency management system or processes of a particular carrier. The remaining 15minutes are reserved for questions and answers. “With fewer employees, we find we’re better able to train them and work more closely with them to get things done,” Wolff says.

The Roots of Backlog
If you regularly train your service staff but still have a backlog of work, it’s critical to locate the source of the problem. Maybe your agency has enough people, but they aren’t doing work best-suited for their skills and interests. Bill Kliewer, president of Bigham Kliewer Chapman Watts Insurance Agency in Killeen, Texas, says his agency moves its employees around to learn how they handle different jobs. “Sometimes the problem might be that some people are on the wrong bus,” says Kliewer, quoting Jim Collins’ book, “Good to Great.” “Or maybe they’re just in the wrong seats.”

To measure productivity, every few months Kliewer and his partners examine daily activity reports to see how many suspense files are outstanding and how much e-mail is unprocessed. “We look at the same things we always have; we just do it electronically,” says Kliewer.

Regular activity monitoring has taught Kliewer and his partners what to expect. They know their commercial lines CSRs can usually handle two producers each. They also know workers in the agency’s business placement department can typically handle work from three producers. But since this Best Practices agency with between $5million and $10 million in annual revenues is on a growth curve, it has hired two new support people in the past year—and four new producers. And revenue-per-employee is still equal to or above the $185,571reported by Best Practices agencies in this size category, with annual growth of 25%or more.

The Trickle-Down Strategy
The larger the agency, the more important it is to funnel as much work as possible to service employees. Doing so allows higher-paid workers to devote more time to their areas of expertise. Jan Clark, controller at the 70-person Brady Chapman Holland agency in Houston, says her agency’s managers routinely look fort asks in their departments that can be reassigned to the administrative department. As a result, these service employees, including a receptionist, an executive secretary and a mailroom person, handle all document scanning, answer the phones and perform a growing number of tasks for all other departments.

Nonetheless, the agency decided early this year to bring on one additional administrative person. “The three people we had were regularly overwhelmed with their workload and not getting done all the things that needed to be done,” says Clark.

At the same time, other departments were identifying even more tasks that could be shifted to administration. The loss control department, for example, want edits consultants to spend more time in the field. And the business development department voiced a wish to work at a higher level to provide clients with more individualized services.

Thus the agency soon hired a fourth clerical worker. But temporary leave taken unexpectedly by another employee returned the department’s head count to three, so work requested by loss control and business development had to be put on hold. Yet efficiencies are still occurring in other areas. General phone calls, for example, have plummeted with the rising use of e-mail and direct phone lines. Both factors freed up the receptionist to take on more tasks, so she has started scanning all incoming paper. “We used to send the mailto the various employees and they’d scan it,” says Clark, “but front-end scanning is much more efficient.”

That’s understandable since it eliminates scanning backlogs and misplaced documents. And already, the receptionist has told Clark she has the scanning under control and is ready to take on more assignments. Even so, this agency with more than $10 million in annual revenues still maintains a per-employee revenue rate of $211,000 per year—almost $3,000more per person than agencies in this size category with growth of 25% or more. And at 70, Brady Chapman Holland’s total head count is well below the average84 employees reported for similar-sized agencies.

What does Clark suggest for agencies wanting to increase their efficiencies? “Keep communication open with all of your staff,” she says. “Ask the right questions about workload and audit their performance.” As part of her audit, Clark surveys all other agency departments twice a year to learn if the administrative group is providing adequate and competent service. “If there’s a hiccup, we can fix it quickly,” she says.

Thinking Outside the Cubicle
Perhaps your agency is automated but still not reaching the benchmarks for similar sized agencies in the Best Practices Study. Tim Cunningham, principal at Optis Partners LLC, a Chicago-based financial consultancy for agencies and brokerages, says one reason may be that your support staff is not adhering to the procedures you’ve set up. Or, they may be following procedure, but the processes themselves are flawed. “You could have lots of technology, but little consistency, which leads to sloppiness,” he suggests. Or, your systems may not be optimally integrated, causing employees to spend more time than necessary accomplishing some tasks or redoing them when a subsystem malfunctions.

Another avenue toward boosting support-staff efficiency is using part-time assistants who can do the most straight forward tasks at a lower rate of pay. “Think about hiring assistant CSRs,” says Cunningham, “or students who can ride their bikes to take the photos that accompany some applications.” How can your staff accomplish more in the same or less time? How could the same tasks be done using fewer or less expensive resources?

Agency owners should not to operate in a vacuum. Unless you’re willing to benchmark against the most successful agencies, you may never find out how to run your operation at top capacity. Experiment with staff assignments and new procedures to improve your support team. Finally, make changes others suggest, in order to feel the satisfaction that comes from watching your company improve—and your profits grow.

Hodges (hodgeswrites@aol.com) is an IA senior writer.

Start from Scratch for Support Staff

As vice president of Zutz Insurance Group, HRH, in Wilmington, Del., Mary Rowland may not be starting a new agency any time soon. But she has watched others, and racked up years of experience at the 50-person firm with an annual premium volume of about $100 million. Rowland has thought about the ideal situation for an agency starting fresh, and says there are these important points to consider:

1. What lines of business will the agency sell? What size market(s) will it target and how does the agency define those markets?

2. What are the benefits of selling to these markets? If you’re planning to target a high-net-worth segment, for example, you’ll be expected to provide several levels of expertise and more personal service than required for other markets.

3. Which carriers will your agency represent and how many of these have service centers? By contracting with service centers, you can free your support staff to handle other tasks that heighten the agency’s efficiency. You may also be able to reduce your support staff or eliminate the need to increase it.

4. What expectations will be set at the point of sale with customers? If your value-added is great service, you’d better have the staff, training and depth of knowledge to deliver.

5. What agency writing standards will you set? Some agencies will write low limit business while others will not. Some will write non-standard coverages while others will stick to standard. How easy will it be for your agency’s support staff to cross-sell, given the parameters of business your producers sell?

6. What resources will the agency provide for its support staff? Will you invest in an agency management system that can grow along with your agency? Will you provide regular training to keep your service workers on top of system capabilities and carrier support? Will you hire an on-site automation manager or outsource this work to a reliable firm that can respond quickly?

7. Will you match your menu of carriers with the types of selling and servicing that you want to do? What resources will each carrier bring to the table, and how will you complement those resources or avoid duplicating them?

“I think we’re reaching the point at which many agency owners are going to have to look at each employee and decide how much value they bring to the agency,” says Rowland. Whether or not to keep those workers whose contribution is below average should depend on “where the agency wants to be at the end of the day,” she adds. How much profit does your agency want or need? Your support staff—its quality and quantity—holds one of the keys.

—S.H.

Capturing Carrier Efficiency

Mary Rowland, vice president at Zutz Insurance Group of HRH in Wilmington, Del., stresses the role carriers play in agency efficiency. She believes many agencies represent more carriers than what’s feasible. To keep the list of companies trimmed for maximum efficacy, “set minimum (writing) requirements for each company to maximize your profitability,” she suggests. “Then write a certain amount of business and retain it.”

The more carriers an agency represents, the more varied the procedures and processes service workers must use. And the more varied the processes, the more time is spent switching back and forth, and the greater the possibility for errors. “There will always be an account manager who tells you that if you get rid of a particular carrier, he or she won’t have a market for a certain client,” says Rowland. That may be true. But when a carrier that offers little in the way of automation support is eliminated, the efficiencies gained often more than compensate for the loss of a client.

“The companies you do business with should be great resources,” says Rowland. Not only should they offer several forms of support, such as help with advertising, automation or producer financing; they should also be able to tell you about their most profitable agencies. “Also, join carriers’ agent advocacy groups,” she counsels. “You’ll hear what other agents are doing, and get real feedback about how well service centers work.”

—S.H.