By Jack Fries
What Have We Learned About Personal Lines?
*Personal lines customers account for 80% of the average agency's customers and contribute 30% of the average agency's commission income.
*In the average agency, 66% of the personal lines customers are one-policy accounts.
*In the average agency, more than 97% of the personal lines policies are automated and issued by the insurance company and direct billed by the insurance company.
*It has been proven that it is not necessary for an "outside producer" to be involved to write the new customer or maintain existing customers.
*It has been proven that if an "outside producer" is involved in the service of personal lines customers, the accounts will be unprofitable.
*It has been proven that if a producer receives a renewal commission, the accounts will be unprofitable.
What Have We Learned About Small Commercial Lines?
*Small Commercial Lines customers account for 17% of the average agency's customers and contribute 16% of the average agency's commission income.
*In the average agency, 25% of the Small Commercial customers are one-policy, mono-line accounts.
*In the average agency, 24% of the Small Commercial customers are one-policy, package policy accounts.
*In the average agency, more than 60% of the Small Commercial customers generate less than $100 in commission income.
*It has been proven that it is not necessary for an "outside producer" to be involved to write the new customer or maintain existing customers.
*It has been proven that if an "outside producer" is involved in the service of Small Commercial customers, the accounts will be unprofitable.
*It has been proven that if a producer receives a renewal commission, the accounts will be unprofitable.
*It has been proven that if a Small Commercial policy is manually issued by the insurance company or agency and/or is agency billed, the accounts will be unprofitable.
What Must Be Done To Overcome These Problems?*
*Combine the service functions of the Personal Lines and the Non-Exception Commercial Lines departments.
*Combine the sales functions of the Personal Lines and the Non-Exception Commercial Lines departments.
*Reorganize the service functions so that customer service representatives will be involved with the customer contact and data entry portion of each transaction only. It will be necessary to create a Personal Lines and Small Commercial Lines Administrative Department to process all non "on-line" requests to insurance companies and all paperwork received from insurance companies.
*Create a manager to manage the Personal Lines and Non-Exception Commercial Lines department.
*Completely automate all aspects of Personal Lines and Small Commercial Lines functions. This is to include policy information, accounting, word processing, and rating.
*Do business only with insurance companies that have "pure" direct-bill programs for Personal Lines and Small Commercial Lines policies. It is also mandatory that the insurance company mail both the policy transactions and billing transactions directly to insureds on transactions subsequent to new business policy.
*Upload/Download – Obtain the ability to do both and, if possible, using a variation of SEMCI (Single Entry Multiple Company Interface), Transformation Station or one of the other varieties of real-time company interface.
*Electronic Filing – What we are talking about here is using scanners and imaging documents.
