21st Century Agency Managment Systems


No, this is not going to be another technical article aimed to impress you with the author’s knowledge and to confuse you further about automation within your agency. I don’t know about you, but I thought running an insurance agency should require knowledge about product, an ability to manage staff, an ability to establish relationships with clients and the skill to sell. Most agency owners and managers consider themselves “users” of automation, at best, and “Automation-Phobic” (the sensible fear that opening a computer will release the ‘Hard Drive Monster’ and permit all agency data to spill all over the floor), at worst. Many high-ego agents, earning hundreds of thousands of dollars annually, cringe when faced with the dreaded “system upgrade”. They wear garlic and crosses when they are near their systems vendor, the spellbinders who can sell you a pot and make you believe you will become a great chef as the result of the purchase, or their automation consultants, who explain to you why you still can’t cook after buying the “pot”. This article will try to take the mystery out of moving from 20th Century systems to 21st Century systems.


Starting slowly in the 1960’s and building quickly through the 1990’s, agencies began “automating”. Until the 1990’s automation was primarily defined as automated billing and accounting systems. The systems had databases that permitted agencies to use much more of the computer power than just for accounting, but most agents and their staffs did not know (nor did they want to know) how or why they should use all of the facilities of the agency management systems. In 1981 we had over fifty agency automation systems in our files and were trying to update ourselves on most of them to serve our agency clients. Today that file is down to two primary vendors, two secondary vendors, and a handful of “newbies” who feel that they have a better idea.

It was the decreasing commissions and contingencies that forced agencies to better use their automated systems, not the advances made by the vendors. It was either use the system to better service more clients with the current staff, or take a hefty pay cut to increase staff at the same time income was decreasing.


In the 1990’s we began hearing stories of the good fairy, “SEMCI” (Single Entry, Multiple Company Interface), that was going to make everything better by dovetailing entry into the agency’s automation system with ALL insurance company systems. SEMCI seems to have been just a fairy tale as can be attested to by agents all over the country that are required to enter data differently through several carriers’ systems. Different companies and vendors treat even “download” differently as some companies just download changes, while others download a complete customer file (thereby overwriting customer data in the agent’s system that is not a part of the carrier file). Certainly SEMCI has not been the panacea for which we hoped. She may have been dealt a deathblow by another acronym, XML, a new, simpler language that permits developers to create databases without writing new code. (English translation – XML could permit all systems to be written in basically the same language, making it easier for agencies to enter information one time (into their agency management system) for common upload to several carriers.)


Languages aside, the future changes in agency automation appear to concentrate on systems management. In the past, you had to buy a computer for every desk and one or more processors (file servers) that would house the applications, themselves. Technology and the agency management systems, themselves, changed so quickly that agents found themselves investing tens of thousands of dollars every few years in systems upgrades just to keep operational, and the most expensive part of systems was hidden. The human cost of systems management and maintenance either converted the agency’s financial manager or principal from more productive activities to systems or forced the hiring of a System Manager who cost dearly every year. Simultaneously, agency management system vendors were folding like cards due to their inability to generate on-going revenues. Once they sold a system, aside from maintenance costs, their only source of revenues were upgrades that they had to produce before they were ready (due to financial pressures).

A few years ago some innovators determined that they could better serve the agency community and their own pocketbooks if they, rather than the agents, maintained the hardware and software. The “ASP (Application Service Provider) Fairy” was created when partial T-1 telephone lines, cable modems and satellite modems proved that we could build enough speed into using the Internet to make processing relatively instantaneously (forget DSL – too slow and unreliable), but the jury is still out on whether this is a ‘Good Fairy’ or an ‘Evil Fairy’.

The concept of an ASP is great! The vendor (or a third party) maintains the computers, the software, and the customer database and makes sure 1) they are always up and working, 2) they are backed up and redundant so no disaster could stop agents from operating, 3) they were upgraded continuously with the latest and greatest in both hardware and software to permit uninterrupted use by the agents, and 4) they securely hosted the agent’s data to avoid anyone else getting access to your files. All they needed was very fast Internet access to permit agents to access their data on the Net as fast as they could locally.

The reality is:

1. ASP’s have not been around long enough (nor suffered sufficient hazards) to be sure that they will always be “up”.

2. The back-ups and redundancies are there. No fear of losing data.

3. Fast upgrades of systems and hardware on the ASP’s part does not guarantee the viability of the systems. All of us who have been Beta sites or who have accepted early versions of vendor upgrades know the pain of finding and working through the problems encountered in the first six months.

4. Some agents will NEVER believe that putting your customer database in a computer in Dallas or Atlanta is secure. We will never convince them, but it is probably more secure than your own local file servers and backup systems. Legal agreements with the ASP should adequately protect your files and should make them available back to you should you ever decide to leave the ASP. Of course, this is a “spider web” concept. That means that once you are in an ASP and no longer have or upgrade in-house systems, how easy do you think it will be to take back the files, even with full cooperation by the vendor? Once you are in the “web” assume that you are either trapped or can only move from one ASP to another.

And the ASP Fairy seems to be voracious. Although agency costs are fixed on a monthly basis when using an ASP and no “surprise costs” will arise, some agency management vendors insist on charging by the “user” as if an agency with 30 users would cost more to provide system residence service than one with 10 users. In reality, once the agency has paid for the base system cost, the only additional service provided by the vendor (or a third party vendor who is only a host facility, not an agency management company) is the hosting of the database with a band-with wide enough to permit all users to access simultaneously without a slow down or a “busy” signal. If anything, the cost should be responsive to drive space used, rather than by the number of users. Until they figure that out (or until third party vendors offer the service at more competitive costs), agents may pay more than necessary for this service.


CRM (Customer Relationship Management) is the obvious future of agency management systems. CRM makes it easy to cross-sell products to customers based on their profiles and permits customers to perform some of their own transactions 24 hours a day, 7 days a week from home. Asking for changes, ID cards, and billing inquiries will be available to agency customers directly with security levels to avoid dangerous situations to arise. Some vendors are already using the CRM term, but few have true CRM facilities available yet, but you can be assured that Customer Management and Customer Self-Management is the future of the insurance industry.

The automation process is just that, a PROCESS, not a project. Once you accept that automation is ever-changing and still in its infancy, you will find it easier to become more flexible to the changes that are pretty much assured for insurance agencies as they have been in other industries.