A few months back I took a look at the retail industry to see how data analytics are providing specific value to businesses. Let’s continue to refine this thought experiment by envisioning our own industry, just farther down the maturity curve.

We’ll look at two fictional companies to contrast how a slight change in focus can create a completely different result. The decision point will be this: is the focus of our agency technology the transaction and placement of insurance, or is the focus of our agency technology the generation of meaningful insight used to make better risk decisions? Either choice will follow a remarkably similar path but will result in different outcomes.

Let’s call the first firm TipTop. TipTop is at the pinnacle of current agency technology capability. Every firm has varying degrees of automation maturity, but I’ve never seen a firm that hits on all cylinders like TipTop. This agency has a single management system that provides account management, accounting and flawless carrier integration (just suspend your disbelief for the next 800 words). All producers utilize a common customer relationship management system, keeping all prospecting activity current. When a prospect converts to a client, the CRM system populates the management system. Benefits can see property-casualty clients and vice versa. Clients can download policies and certificates from a portal. They can call, text or live chat with agency experts.

When service teams market accounts, the applications and quotes are transmitted electronically. Business is bound, and the corresponding policies, payments and commissions transmit digitally. Carrier reconciliation and financials are push-button events.

Stewardship and pre-renewal meetings are presented on iPads, and everyone has an iPhone. The agency is full of smiling young people in $300 jeans and black turtlenecks.

TipTop probably spends double what your firm spends on technology as a percentage of revenue, but the resulting gains in efficiency and effectiveness propel them well beyond your firm’s overall revenue per employee. They made the hard decisions. Standard servicing procedures and data governance are in full swing. Producers are paid based only on what’s in the CRM. Basically, they made every decision you struggle with, they pushed through the pain, and they now operate as a well-oiled machine. TipTop has a complete digital approach to the placement of insurance both upstream and downstream.

In today’s environment, with a little luck and solid management, a firm like TipTop would solidly trounce every one of our firms by every conceivable metric. TipTop would quickly solidify a place among the largest brokers of U.S. business. Sounds good, right? Unfortunately, there’s a problem. TipTop’s automation focus is too narrow. If the agency doesn’t change its strategy, it will be unable to compete in the new retail economy.

So let’s look at another firm, which we’ll call FutureState. FutureState also interacts via digital channels, but its focus is different. Where TipTop’s automation focuses on the transaction, FutureState’s automation focuses on the data.

Rather than standardizing on a single system and a single set of processes, FutureState chooses systems based on three criteria:

  • Is this the best system for the colleagues who use it?
  • Can this system interact with our data architecture?
  • Does this system net us the maximum amount of data on our clients and trading partners?

Digital communication tools are a dime a dozen, and FutureState’s platform approach ties it right in. If a client needs a certificate, FutureState can download it. If a client needs to change a property schedule, no problem. In this sense, FutureState sounds a lot like TipTop. But because FutureState has a data-centric approach, the content of its client communication is fundamentally different.

When clients log into the TipTop portal, they see a list of active policies with additional documents under those policies; a digital file cabinet full of facts and figures. When clients log into the FutureState portal, they see an overview of their risk health. They can get to a policy, but many times their question is answered in a single picture without ever paging through an insurance policy. Make sense?

Reality Chimes In

Now let’s look at a real-world example.

Log into your American Express portal. The first thing you see is a big round chart of categorized spending. You can play with that visual to quickly understand your current financial state, health or spending dysfunction. Looking for a specific charge? Sure, you can go there, but every time you log in you aren’t presented with just data points; you are presented with insight. Amazon does this based on your spending and browsing habits. Every social network in existence attempts to provide you with insight first, then facts and figures. Given the widespread adoption of these types of service providers, our entire population is being slowly trained to expect immediate answers.

In contrast, we’re all becoming less tolerant of just being handed facts and figures.

So a FutureState client has a more compelling reason to go into the agency portal. Why do your clients call you to ask for policy information? Chances are they have a question they are trying to answer so they can create insight for their organization. It’s great if your agency is viewed as a source of this information, but wouldn’t it be better to actually provide the insight instead of the raw materials?

FutureState answers client questions because it has harnessed the true power of data. It has moved beyond simply providing facts and figures in a digital way and now uses the digital channel to provide insight and actionable intelligence. Our agencies do provide insight today, but it’s usually a manual process that requires a colleague to speak with an insured to get to the heart of the question. FutureState can provide a high-touch service, but it doesn’t have to because it understands a deeper truth: what we know about our clients is more important than how we transact their business. When you get both right, you change the game.

FutureState is poised to be just as successful as TipTop, but its focus on the data over the transaction results in a firm with far more longevity. A combination of deep insurance expertise and an ability to turn data into insight has created a firm that embodies all the goals of modern insurtech startups inside a traditional independent agency. Which firm do you want to be? Neither path is easy, but they aren’t impossible either. The commitment is the same, the costs are similar, but the result is completely different. Deciding what you want your customer experience to be is the first step.