Digitizing a traditional insurance brokerage doesn’t have to break the bank, as many might believe, but the tech you pick — and how you roll it out — will make a difference to your costs.
“It all depends on how you do it,” said Surex co-founder and CEO Lance Miller. “When I digitized my first traditional brokerage, I did a lot of the work myself. I invested in a really good scanner and then trained my staff how to use it. In my case, we bought a $2,500 scanner.
“After that, the cost was just the time it took the employee to do the scanning, which they fit in among their regular duties.”
So new tech itself wasn’t a major cost driver, but rather the method of roll-out.
For some brokerages, particularly smaller ones without digital expertise, outsourcing consultants to do the grunt work might be worth the investment. But Miller warned outsourcing can get pricey if not carefully managed.
“The value doesn’t outweigh the gain. I personally believe it can be done affordably [internally],” he said.
Raw costs aren’t sky high, agreed Adam Mitchell, CEO at Mitch Insurance. “It depends if you have the capabilities to roll it out internally. Do you have the project managers that can put this out?”
Like-for-like purchases can help brokerages improve their processes without adding to the bottom line.
“Changing the platform or the tech behind your business isn’t a crazy cost,” said Mitchell. “If you’re upgrading your BMS, some inexpensive ones are available, as well as more expensive ones.”
For example, introducing a new phone system may create a better outcome than switching out one functioning BMS with another, Mitchell said. “Anybody under [age] 45 really appreciates the ability to text for business. Its costs around $50 a month per line, the same as your Bell line. It’s not a high cost, so why wouldn’t you adopt it?”
Brokerages should be wary of false digital promises. Don’t get duped into buying technology your business won’t use. “I think there are a lot of snake-oil salespeople out there for websites, SEO, Google ads and other things,” said Mitchell.
Beware of automation as well. Although it can be beneficial for streamlining repetitive tasks, not all brokerages need to invest in it. “Automation is just an accelerant,” Mitchell added. “If you’re accelerating a bad process, you’re just going to have a higher-speed crash and burn.”
Digitization can result in downtimes as employees are trained on new systems. It’s a soft cost, but brokers will notice it during the transition.
“Maybe you run slower for a couple of weeks while you ramp up. But then it’s going to make such immediate sense afterwards that I think it pays for itself,” said Mitchell.
For Miller, digitizing his traditional brokerage took nearly a year before his staff was fully integrated and comfortable with the new processes. The implementation time was reduced by having staff work with paper and digital systems simultaneously during the transition.
“Switching from an analog delivery system to digital [is] a big process,” he said. “I would say plan [for] at least a year, so you get that one month of renewals all cycling under a digital process.
“During that one transition year, we ran both systems for a few months so [staff] could have access to the digital [files]. But if they just couldn’t figure it out, they could go grab a paper file. But everyone knew there was a hard date when we were going to stop the paper files.”
Depending on the price tag of your digitization project, brokerages can turn to banks to help finance their ventures.
“You’re investing in modernizing,” Mitchell said. “And banks give loans all the time to retail businesses.”
Miller added digitization doesn’t often have to be financed.
“I would say it’s something you can work into your budgeting,” he said. “Having digitized traditional agencies and having started a digital agency, I believe cost savings are possible by doing it internally, in small steps. It’s not something that has to be financed over years.”
Feature image by iStock.com/payphoto