On a recent Wednesday, John Carmody and I enjoyed an extended lunch at Anthony’s Home Port in Edmonds, Washington, in sight of the comings and goings of the Kingston Ferry. After a 35 year career at SAFECO working with agents and most recently with agency-oriented technology, Carmody retired, and is enjoying the opportunity to shop for a boat and plan intercontinental travel.
Stints with ACT and interaction with AUGIE, user groups, vendors, and thousands of agents have given Carmody a rare perspective that he’s shared in occasional articles and in ongoing interaction with parties interested in the technology tangle.
Over the last couple months Carmody has had a chance to step back from the fray and take a more Olympian view of interface and other significant issues — so it seemed to me a good time to pick his brain. He was willing. What follows is a recounting of some of our conversation.
Core Observation
JA: John, over the last few months I’m sure you’ve had a chance to come to some conclusions about carrier Web sites, SEMCI, single workflow, what’s possible, what makes sense, what agents ought to do, and so on. What’s your core observation? If you could talk to all independent agents, what would you tell them?
JC: First of all, I think that agents need to realize that on their own carriers aren’t likely to do anything significantly different from what they’ve been doing. That is, they’re going to focus on what they believe within their own organization and culture brings them advantage — in competition with other carriers and in reducing their expenses. That means they generally won’t, at least on their own initiative, create single workflow solutions for agents. For the most part, they’ll continue with their agency portals and other single carrier solutions. The fact is, like it or not, it’s really only agents who are in the multiple company end of the business, not their carriers per se.
JA: That sounds a bit discouraging. Is it hopeless?
JC: Not at all. It’s just very difficult to get all these independent entities, each with their own vision and agenda, to understand, and more importantly, buy in to the common good.
Over the last 25 years, and especially more recently, many independent agency carriers have experimented with direct selling. Since none of these initiatives appear to have fundamentally changed the way they do business, the important lesson carriers should have learned is that they’re really stuck with agents.
Direct selling simply isn’t easy to do and it’s very expensive to set up. Carriers need to finally understand that their true success depends on a strong and successful independent agency system. And therefore they need to facilitate putting the technology in place that most profits independent agents. But the carriers need to understand what agents need and they need to be sold on why helping agents with single work flow is really in their best interest.
Agent groups need to speak with a stronger voice
JA: So carriers have a natural tendency to continue their “proprietary” solutions, but at the same time they also want and need to listen to their agents. So how should agents get their point across to the carriers?
JC: Agents haven’t really used their economic power. I fear they seriously underestimate the focused effort required to sell carriers on helping to implement single workflow. And they way underestimate the budget and personal time commitment needed to successfully make the sale.
They need to unmistakably speak with one voice and they need to be very serious about their meetings with carriers to make their case. Agent groups, working together, should be jointly sending top leadership and large producers to meet with top carrier management — as many times as it takes to gain commitment.
But lately I’ve seen too little really serious commitment as well as a casualness that won’t be taken seriously by the carriers. The large agents should be saying, “You are very important to us, we want to work and grow with you, but our workflow problems are serious and we need you to cooperate. Please do not force us to ultimately choose between you and other carriers that will help us.” And they have to categorically mean what they say.
JA: So agent groups should speak collectively and effectively. What should they say to the carriers?
JC: Over the last several years agents have told me over and over that their number one need — outside of markets in the current hard market environment — is to get to a single, standard workflow, especially in quoting. Agents, especially their leadership groups, need to be very clear about that message and be able to show how the current situation is destructive to the very sales force the carriers depend on.
JA: But carriers hate comparative quoting and they seem to push agents toward single-company portals to reduce it.
JC: Right, if you really think about it, bottom line, carriers are not in the comparative quote business — their agents are. I don’t think, for the most part, carriers ever got over their basic dislike of automated comparative quoting. Agents simply forced them to deal with comparative rating vendors or lose new business opportunities.
Today, with the significant advances in automated risk selection and pricing technology that minimize the effectiveness of comparative raters, I think that carriers are doing what’s convenient for them because, so far, they don’t have enough reason to take agents’ griping seriously. I’m fairly convinced that many carriers would cooperate with agents if agents made their case more effectively — especially if they sold a reasonable number of the top tier carriers who write the lion’s share of the business. But in a way that isn’t the main problem.
JA: The main problem isn’t that agents haven’t been effective in how they speak to carriers?
JC: That’s important, but the real problem is that agents expect carriers to take care of the problem for them — including paying for it. Agents want single workflow and comparative quoting and look to carriers for the solution.
But how can individual carriers create multi-carrier solutions? And, philosophical discussions aside, why should they? As much as agents might wish it were so, the harsh fact is comparative quoting and single workflow are not culturally or practically individual carrier issues.
Yes, carriers should cooperate with agents, but agents need to be in charge of making it happen, and agents should pay for it. Agents need to speak collectively and they should be saying to the carriers that they need cooperation — or else. They should be willing to bring economic pressure. But they should also be saying, “We’ll fund it, we’ll take care of it because we’re the primary beneficiaries.
JA: Interesting point. So agents need to step up to the plate. They need to demand to be heard, but at the same time take responsibility.
JC: Adequately funding the required sales effort alone will be very pricey. And I think that agents don’t understand how complicated and expensive the solution will be. Getting cooperation from the carriers doesn’t solve the problem; it only makes it possible. Single workflow won’t happen through negotiation with carriers or with standards — though both are very important. It will only happen with significant collective agent investment, effort, and focused leadership.
Agent will and leadership
JA: Are you optimistic about the possibilities that agents can see what they really need to do and then carry it off? Haven’t they tried this in the past?
JC: They’ve made an effort to talk with the carriers certainly, but they haven’t told the right story the right way — and certainly not often enough. But maybe you’re asking whether agents have the will to work hard together to solve the problem — and to invest in it.
I don’t know whether agents really have the collective will to do what it takes. I suppose some veterans of earlier interface struggles may not have the energy, but I’ve also met a number of impressive young, smart, energetic agents. Of course they can’t do it alone.
The Big I, the user groups, and other producer associations need to provide leadership to educate agents about the possibilities, but also realities, of the need for agency investment and time. It has to be a main priority of the entire board of directors and management structure — not just the technology leadership group. In the past the Big I did a good job publicizing SEMCI. What they need to do now is more seriously educate agents on the complexity of the problem and the need for the agency community to invest and create a solution.
JA: Do you think the producer groups can provide the leadership the agents need? In the past they worked awfully hard and their efforts never paid off. Why believe they will today?
JC: The times are completely different. Years ago agents had the will, but not the means. It just wasn’t possible to create single workflow given the technology at hand. Their intentions were good, but the problems insurmountable.
Today, on the other hand, technology isn’t the problem at all. Carriers are using the Internet to provide access into their systems in a way they couldn’t ten or even five years ago. Technically speaking, agents can have what they want. The means are available, but it’s an open question of whether agents have the will.
Final thought
JA: Anything else you’d like to say to agents?
JC: Agents have a chance to get what they want — single workflow. The technology is finally available. But they need to more effectively speak with one voice to their carriers and they need to make their case clearly and with implied economic consequences. And agents need to understand the complexity and cost of what they want and the need to accept responsibility for it. And they need to act now or lose their chance.
In his Big I keynote address in 1974, SAFECO’s Dick Stevick said something that struck me then and is worth quoting now: “Upon the plains of hesitation bleached the bones of countless millions who upon the verge of achieving victory sat down to wait and waiting died.” Independent agents are on the verge of achieving victory. What happens next is up to them.
JA: Thanks for sharing your thoughts. And good luck in your search for the perfect boat.
JC: John, I’ve enjoyed the conversation. Moreover, I’ve truly enjoyed being a part of this industry, especially working with agents; they always inspired me to think about how to make this business better. Single workflow is unquestionably good for agents. After considerable reflection, I’m equally convinced over the long run it will also be very good for the carriers they represent — not to mention our joint customers. More efficient agents will ultimately serve everyone better. And thanks for lunch.
© Copyright 2003 by Sound Internet Strategy. All rights reserved
Carriers need to finally understand that their true success depends on a strong and successful independent agency system.
…the harsh fact is comparative quoting and single workflow are not culturally or practically individual carrier issues.