The Evolution of the Agency Management System

Part 1: The Evolution Of Agency Management Systems Throughout Time

In the early years of the agency management system in the 1980’s most systems were predominately “accounting based”. With agency bill accounting the primary billing method, agencies wanted a more efficient way of handling this task over doing it manually or the “batch” method where they contracted the job to 3rd party companies which added an additional cost to the agency.

This was also the days of DOS.

While a number of management systems also offered policy management and client management tools, it was the accounting piece that played the biggest need for the agency. During this era of management systems Agena had the premier accounting system with Redshaw (no longer available), AMS and Applied right behind. There were a few other lower end systems available.

The 90’s Brought Big Changes …

As the 90’s came we started watching the transition from agency bill to direct bill. Along with this came reduced commissions since now the carrier was taking on the billing costs. More about this shortly.

The main management systems of this era would run $8,000 to $15,000 for a single user system plus the cost of the computers. Even the AMS Pioneer system which was predominately an accounting system started at $3,995.

We also watched the computer environment go from DOS to the graphically attractive Windows operating system during the 90’s.

It soon became a battle of ‘who would get their windows based system out first’. InStar won and was the first windows based product to hit the market followed by Agena’s window based system. Now keep in mind, I’m talking about 100% windows based, not a DOS program that ran in a windows overlay.

AMS was also trying to get their windows system out to replace their Pathfinder system but eventually dumped their product and purchased Agena to acquire their customer base and their windows based system. This became what we know today as AMS For Windows, otherwise known as AfW.

Applied’s main system — their TAM product — was rewritten to part windows and part DOS. Applied, like Agency Systems Newton product (the old Matrix accounting system), kept their accounting system in the outdated DOS environment. Both of these companies ran their DOS based accounting piece in a windows overlay.

By the end of the 90’s the very robust Redshaw system met it’s fate. Having been written in a non-standard environment, the Wang system, they eventually sold out to Applied. The lesson here is the importance of writing your software with industry standard programming languages.

In the 90’s as the industry moved from agency bill to direct bill we watched management systems starting to put a much larger emphasis on policy and client management. With the reduced commissions agencies needed to start becoming more efficient and productive.

The 90’s were an important time for the agency management system and where the foundation of the agency management system was laid. This was when …

  • Insurance specific accounting was still very important to an agency management system because insurance accounting has very distinct differences from standard retail accounting. This included things like handling direct bill policies to track which policies you were paid on and which you weren’t, handling agent commissions and a number of other insurance industry specific accounting tasks making retail accounting packages like Quickbooks unable to handle the full insurance accounting needs. Running key reports in retail accounting programs was also next to impossible.
  • As an industry we started the transition from needing primarily an accounting system to also needing a a system to more efficiently manage clients and policies as commission percentages started dropping.
  • In pursuit of a more efficient system the focus started shifting to having a single-entry system and workflows.
  • Management systems moved to the more graphical Windows environment with the introduction of the Windows operating system by Microsoft which was the dominate operating system.

With the two huge changes that took place in the 90’s, moving to direct bill and the Windows operating system, we experienced big changes in the 1990’s that really made management systems vendors scramble. We saw new players enter the market place like InStar and watch others start to limp by or literally go out of business like the Redshaw system.

Another thing that created quite a stir in the industry was the turning of the millennium. Many vendors used a 2 character year field in their dates, i.e., 98 for 1998. For date fields to properly calculate and operate correctly moving into 2000, these vendors were scrambling to rewrite their date fields to a 4 digit field. This was not an easy undertaking!

And finally, one other event that dramatically changed the industry for the good of all agencies was launching of the management system Agency One in 1991. The significance of this product was two key points …

1) It was priced significantly below the other systems at a starting price of just $995 and offered client management, accounting, ACORD forms, notes and the other core features of the more expensive systems, and

2) They were the first vendor to successfully sell agency management systems by telephone to keep costs way down which allowed them to sell the product for a much lower price.

Agency One at their peak was bringing on over 100 agencies per month to their system. This included starting to strip AMS, Agena and Applied of their clients. Even though Agency One wasn’t really a very good product with lots of double entry and a clunky workflow, in a very loud voice the agencies across America were saying, “We’re sick and tired of paying the high costs for an agency management system.”

The other vendors soon realized their glory days of high priced software were coming to an end and they needed to find better, lower cost way of selling their systems.

By October of 1993 Agency One was acquired by AMS (now called Vertafore). Because of the huge customer base of this product AMS retained the product. By 1997 Agency One, which was a DOS product, was placed in a windows overlay and renamed to AMS Prime. It’s still being sold today under the name “Prime”.

This brings us to the 2000’s …

In the 2000’s The Pursuit Of Increased Productivity Continued As The Main Theme For This Era…

The pursuit of creating a productive system continued in the 2000’s. During this time frame we watched the introduction of …

  • Imaging and document management to move toward a paperless office. This became a big movement in the 2000’s and offered many time saving and cost saving advantages.
  • T-Filing which is filing your paperwork by transaction date and documenting it in the management system. With most documents now being sent by email which has reduced the amount of paper documents being mailed, T-Filing streamlined the handling of paper in an office. Of course, scanning documents and doing document management is an efficient way of handling paper documents.
  • Company Interfacing to reduce your data-entry. More about this following.

As each new approach to increasing your productivity is introduced, the workflow changes to processing your work. The objective is to handle all of the steps to the task to include proper documentation (i.e., notes) in the least amount of steps and time, and to avoid doing any duplicate entry of data.

Over the years of working with agencies on their automation, teaching workflows and helping agencies to create a productive agency, the four things I’ve found to create the biggest cost in time to the agency is …

1) Duplicate entry of data. Having to re-enter data already in the system is very costly in time and is one of the top “thieves of your time!” Many times you can’t even open up the window that has the data in it AND the new window you’re entering information in at the same time.

Another, what I’d call “unacceptable process” I’ve seen in systems is where the data downloaded from the carrier does NOT update the clients policy. Instead it just creates a view window to see the downloaded data and requires the CSR to manually update the clients policy information. If you run across this system low cost system, run the other way because for the money you save to purchase it, it’s going to cost you 100 times the savings in additional staff to do the data-entry.

2) A system with poor or no workflows built into it. With this kind of system you’re bouncing from one part of the system to another to process your work. Unfortunately this is pretty much all of systems on the market. For example, take a look at how many steps and how many windows you have to go through to process a task with AMS 360… just crazy!

For whatever reason, vendors just have not figured out how to add workflows into their system or are getting design layouts from the wrong people. Further down I talk about this very important element to the designing of an agency management system.

3) Not being trained on how to process your work with your current system. The problem is vendor trainers are just product trainers … they don’t know and therefore can’t train “proper workflows”. Instead, they’re just teaching agencies how to use their system and leave the bigger, more important task of proper workflows to the agency to figure out.

This is where insurance automation consultants come in. Unfortunately there’s just a handful of these in the industry, and to make matters worse they generally only specialize in the more expensive systems like Applied and AMS 360. It’ll be hard to find an insurance automation consultant for the lower end, lower cost systems.

4) Hard to use systems. While there’s no excuse for a system to be hard to use other than a poor design team and bad programming, sadly there are systems on the market that will take a CSR up to 9 months to become proficient on. The more steps and windows you have to go through to process a task the harder the system will be to learn.

This is very important to the agency because the sooner the CSR is able to handle processing work on his/her own the sooner that CSR becomes an “asset” to the agency by not requiring other staff resources (other CSR’s) to help him/her do the work.

Finally, for the 2000’s, we have watched a whole new approach to agency management systems be introduced … internet based systems.

The first thing you need to understand is that hosted agency management systems didn’t become available because the majority of agencies pushed to have their client data and management system thousands of miles away on somebody else’s computer to be accessed via the Internet. Hosted agency management systems came into existence as a solution to a couple of vendor’s numerous problems with their network version that caused agencies to spend huge sums of money on IT costs to keep their network up and running!

In fact, from survey’s we continue to do at this site, about 70% of agencies would prefer to have their management system on their own network, not hosted on the internet. There are multiple reasons for this.

Regardless to how they came into existence, hosted internet based systems are here to stay.

However, that does not mean hosted agency management systems are the only solution or the wave of the future as many would like you to believe. It’s just another solution to specific challenges some agencies experience. For example, if you have multiple agencies and your clients can go to any of the agencies to make a payment, an internet based system would create the kind of environment you need to reduce your work and meet the needs of your clients in an efficient way.

I’m not going to spend a lot of time on internet based systems here other than to introduce them to you since another article goes into a lot more detail on them. All I really want to point out here is you would choose an internet based system because it makes sense for your specific agency.

The 2000’s was a foundational era for management systems with the focus on “increased productivity”.

Plus, after Agency One demonstrated very successfully that management systems could be sold by telephone and with the internet on just about every computer, we’ve watched a lot of new management systems hit the market.

I’ve been surprised at all of the systems hitting the market, and very disappointed that all of them are just “feature driven” systems that seriously miss the mark when it comes to creating a productive agency. But then to compensate for this huge design error these systems have been priced very low which is very enticing to the agency.

What saddens me is, if agencies understood and could calculate the true cost to them by having an inefficient system and the additional staff needed to manage their book of business they’d spend the bigger dollars to get the more efficient systems to increase their profits significantly. With salaries and employee benefits the largest cost an agency has, in the name of “increased profits” an agency should be doing what needs to be done to reduce their labor hours, or stated differently, to increase the size of the book of business each CSR can manage .

I cover “feature driven” systems more in the next major topic of this article which is immediately following …

Go to The Evolution Of The Agency Management System, Part 2. While Part 1 covers the history of agency management systems and how they’ve evolved up to this point, it’s Part 2 that covers the most important part to their evolution … how they’re designed and created.

 

Bradley Chesnut

Bradley Chesnut

Insurance Automation Consultant at Insurance Automation & Marketing Consultants, LLC
About Mr. Chesnut: Mr. Chesnut has been serving insurance agencies since 1989 which is when he sold his interest in his agency. His area of expertise is two fold …

1) Increased productivity. This is accomplished numerous ways to include teaching proper workflows when processing work with their agency management system, along with other productivity strategies. Mr. Chesnut is very proficient in workflows and productivity strategies. This is an important area of expertise because increased productivity equals increased profitability.
2) Agency growth strategies. Building your agency through innovative marketing strategies.

Over the past 20+ years Mr. Chesnut has represented two agency management systems playing a significant role in their success. In addition, he's worked with many of the systems on the market, including some that are no longer around as he’s helped agencies increase their productivity. Mr. Chesnut has extensive experience and first hand experience with the agency management system.
Bradley Chesnut

Filed under: Agency Management Systems