Why Sounding Line? When there's great change, it's difficult to digest. Harder still to figure out what to do about it. Sometimes it's useful to have someone scout the new territory and report back. In a nutshell, that's what Sounding Line is about.
The world of insurance technology is on the verge of massive transformation -- more pervasive, more useful, more varied, and more complex than the automation revolution of the last quarter century. This tide of change, fueled by the potential of the Internet, a deep need for greater efficiency, increasing competitive pressures, and rising consumer expectations presents both unprecedented challenges and enormous opportunity for independent agencies.
A new game is afoot, with new players, products, rules, and standards, and a good bit of the understanding of technology acquired over the last 25 years isn't relevant to this emerging world. We're at the beginning of a new technology cycle and it's going to take enthusiastic experimentation, a few mistakes, plenty of hard work, and, hopefully, a dollop of fun before we can master it. We're like the blind men each examining a different part of the Internet elephant. None of us individually knows what to make of it. Together, we'll be able to "see" its shape.
One historical perspective
Insurance technology over the last 25 or 30 years has focused on automating manual processes and assisting insurance workers. Automation and assistance. Interface, by the way, is mostly an element of the automation initiative. Virtually all of this effort has been devoted to internal, industry concerns. Classic insurance technology, i.e., most of what's available and is for sale today, has been developed for the use of the insurance industry itself, not for the use of its customers.
That's not a surprise, really. Why would the industry provide technology tools for its customers? After all, they didn't deal with the insurance process directly. The process was mediated by agents and other insurance professionals. And besides, there was no reasonable way to connect the customer into the process -- except by personal visits, mail, telephone or FAX or more recently e-mail. So why bother figuring out how to provide technology access directly to insurance customers? It's one thing to let people pump their own gas or be their own bank tellers. It's quite another to let them be their own agents. At least that's been the thinking.
In order to distinguish the world of classic insurance technology from the emerging new world, I've come up with some terms I think can help. Classic insurance technology is in-facing services, that is, intended to provide services within the industry. It may be provided through in-agency computers or Internet servers. That doesn't matter. But its constituency is the industry itself.
The new category of insurance technology is out-facing services. It is intended for the direct use of the customer and often delivered through the Internet. ATM machines and credit-card gas pumps are examples of out-facing, non-Internet technologies. Internet stock trading and banking are examples of out-facing, Internet-based technologies.
Classic insurance technology, (which is in-facing), was invented two or three decades ago. In the intervening period we've seen improvement. We've come to understand and use it pretty well. And we've experienced the migration from one technology to another -- today from in-agency automation to Internet ASPs (application service providers). But we really haven't seen anything new for at least 20 years. And that's partly why some agents are reluctant to spend big money on a new management system that is marginally better than what they already have.
Out-facing insurance services is a new technology category, one that really didn't exist until recently. It will be the place new technologies appear, including software genres we can't even imagine. Out-facing insurance services are not just a simplified version of in-facing services any more than ATMs are just another version of the systems tellers use in banks. Out-facing services call for new engineering and new thinking -- not repackaging. All our assumptions about the use of technology in insurance, the wisdom we've gathered over the last 25 years, need to be questioned as they're applied to out-facing services.
But why bother?
Is this really a big deal? Aren't some agents still using typewriters? Didn't the last agents reluctantly leave their batch service bureau just two years ago and then only because the service bureau was shut down? All this talk about out-facing services sounds like another blood drive, another excuse to bleed the agency sales force. Haven't agents already squandered precious time and money? Aren't their technology lives already excessively complex and demanding. Enough already. Tell me about it after I retire.
In some important ways, your customers absolutely don't care about your computer system (your in-facing services). That's your problem. It doesn't matter whether you're manual, you outsource to India, or you have a $5 million computer center. So what. All they want is the right coverage, competitive premium, accurate policies, changes handled conveniently, their payments accounted for, and claims taken care of. How you do all that is up to you.
But everything, everything!, changes once you or your companies begin to provide technology services directly to your customers. Then what you use and how it works does matter. It matters a lot. And make no mistake, out-facing services are going to happen. The market demand is emerging. The need to reduce expenses by shifting some of the work to the insured is there. And the general technical infrastructure, the Internet, is in place and improving rapidly.
So is the emergence of out-facing services important? Yes, very. Can you ignore it the way you did for a while with in-facing services? No. If you don't play, you'll wither away. In the next few years, insurance customers will become reluctant to do business with agencies that do not provide out-facing services.
If you do play, you'll have to pay attention in a different way than you have to your classic agency automation. Out-facing services touch your customer just as your one-on-one sales calls, CSR telephone service, and telephone receptionist do. If it's done right you'll improve sales and retention. Done wrong -- well, you know what would happen if your receptionist regularly hung up on callers or talked gibberish. Think about your out-facing technology services the same way you think about your other, personally delivered out-facing services.
The re-intermediation of the independent agent
The emergence of out-facing services has a critically important potential value to independent agents. It can help them reverse an historic trend of increasing disintermediation and thus eventual redundancy.
At one time, general agents could directly handle all elements of the insurance transaction. They could rate, underwrite, and issue policies. They could handle billing, receipts, and other customer financial transactions. They could manage the claims process. Agents, in a manual world, were part of a once-and-done system. They were right in the middle and strongly intermediated.
Then we used technology to improve everything and began disintermediating agents. A few years ago, the worry was that the Internet would cause disintermediation. In fact, the process was already well underway. Ironically, it is the once-feared and now confusing Internet that has the potential to re-inter-mediate agents.
As companies centralized historic agency tasks and agencies cooperated (efficiency the motivation of the former and convenience the latter), the customer often received poor, fragmented and confusing service and began to wonder what purpose the agent served. Today, some companies are wondering the same thing and are experimenting with direct sales.
The truth is that independent agents have an important and useful mediating role to play in the insurance process. They can act as knowledgeable coverage advisors, provide alternatives and competitive prices, and advocate for the customer. It's not likely that all insurance, even personal lines, will be sold directly through the Internet any time soon -- or ever. Most rational people, wanting security against loss more than saving a few dollars will not try to be their own agents, but will want to hold someone nearby accountable.
But even if wide-scale insurance sales do not materialize through the Internet, it's almost certain that marketing and customer service activities will become popular. Customers will come to expect the kind of multi-channel access Allstate is rolling out -- with the customer choosing the Internet, call center, or agent depending on the nature of the transaction and their inclination Ð and expecting the various channels to be seamlessly integrated. That's going to be a challenge for independent agents and their companies, an order of magnitude more formidable than the problems SEMCI was intended to address.
If independent agents play their cards right, they can use the Internet and their Web sites to become more, rather than less, important. They can provide information and needs analysis on their sites. They can support Web-issued service requests. They can provide self-directed sales and then high-touch follow up. Agency Web sites can provide a wider product offering and more help than agencies carry now or have been able to offer. They can provide the customer with more control. Agents and their staff can spend more time providing professional services and less on administration. I think we're watching the dawn of a new golden age for independent agents, not the twilight.
Ok, I've got it. So what about Sounding Line?
Sounding Line is intended to deal specifically with out-facing technology services and their implications for independent agents and their company and vendor business partners. By providing information about what technology is available, insight into industry trends and opportunities, and practical implementation help in planning, choosing, and doing, Sounding Line can help independent agents plan and get started, or improve what's already deployed. And Sounding Line can be a public voice representing agents and their customers interests to companies and vendors.
But what about SEMCI?
We will do our best to ignore SEMCI and the imaginary controversy that swirls around this industry distraction.
Do we really need another industry technology publication?
Of course!
The industry has plenty of publications. Virtually all of them are advertiser supported. No matter what the editors say about editorial independence, advertiser supported media are sometimes reluctant to speak frankly. They suffer from split allegiances -- to the reader and to the advertisers. Sounding Line has a single constituency; its subscribers.
Most existing industry publications fall into two classes: for general insurance readers on the one hand and for company IT management on the other. The general publications cover technology in fits and starts but not as an obsession. The IT manager publications are not appropriate for agency principals and managers. And in both kinds of publications, the Internet and out-facing services appears to be of limited interest.
No industry publication exists today that has Sounding Line's charter. It is intended to provide savvy -- knowledge and know-how about the Internet and out-facing services to agency owners and managers, company marketing and agency automation managers and staff, vendors, and finally associations, user groups, and other industry organizations
Why the name Sounding Line?
A Sounding Line is a weighted line used to manually measure the depth of a body of water. "Mark twain" was a two-fathom measurement taken on Mississippi riverboats in the 1800s. A sound line plumbs the depths, gets below the surface, and takes an objective measurement of something hidden or difficult to discern. So a Sounding Line is an apt metaphor for Sounding Line.
Sounding Line is published by Sound Internet Strategy, an enterprise focused on providing information, seminars, public speaking, and consulting services to the insurance industry that assist in the successful planning and implementation of Internet strategies for agents, companies, vendors, and other industry groups.
The company name is a play on the multiple meanings "sound." "Sound" can be part of a proper name for an inlet from the sea, as in Puget Sound (where we try to spend most of the summer). It can mean rational, logical, and dependable -- the best kind of business strategy. It can also mean to alert, as in a warning (editorial), or to articulate and express, as in a newsletter.
Welcome to Sounding Line. Please make some sound so we know you're listening. You can find us at www.soundingline.com and John Ashenhurst at
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