Agencies Made Progress With Technology During Pandemic but Data Issues Remain Obstacle to Digital Future

It’s difficult enough keeping up with the latest trends in agency technology let alone trying to do it during a global pandemic. But industry technology experts say independent agencies made progress, with many accelerating their technology use during the pandemic. However, data issues continue to get in the way of more widespread adoption of new technologies by agencies.

“By and large, agencies performed great,” said Ron Berg, executive director of the Agents Council on Technology (ACT).

From a digital standpoint, the pandemic pushed independent agencies to further expand their online presence, creating business opportunities through virtual sales and marketing efforts, and extending their reach beyond traditional geographic boundaries, Berg said.

Berg said the pandemic pushed agencies to “up their game” on the agency tech front. Client and prospect interactions are now common via video conferencing, as an example. Voice Over IP systems have been extended to employees’ home offices as well, he added.

Agencies also learned that a hybrid workforce can work for them and that remote work can work for other agency positions outside of sales, too, according to Berg.

The pandemic helped agencies realize where they were lagging in digital performance and customer offerings. They sought help with finding new business opportunities and with offering digital business tools and servicing for customers, according to the Big I’s 2020 Agency Universe Study released in March 2021.

The Big I study said building an online presence for marketing and improving online business tools are important for an agency’s ongoing success. Small (65%) and medium-small (61%) agencies said building a digital presence is most important while newer agencies cited building an online marketing presence as most important (80%).

There has been some progress, but there’s still work to be done, advises Frank Sentner, sole proprietor for Sentwood Consulting. Sentner has been providing technology services to the insurance industry more than 40 years. Sentner has spent the last seven years working with insurtechs.

Sentner believes that agencies, in general, continue to lag when it comes to technology. “I haven’t seen what I would consider to be the normal uptake on digital platforms, customer facing digital platforms, in the agency space,” Sentner said. “I think a lot of that has to do with the difficulty that the insurtech start-ups are encountering in getting access to the agents’ data.”

Sentner believes that data is more important to the functioning of insurance businesses than to any other kind of business. “Unfortunately,” he told Insurance Journal last year, “most agents have ceded the rights to the data in their agency management systems to the vendors that control them.”

Sentner has managed policy, billing and claims system replacement projects for insurers and provided strategic consulting for The Council of Insurance Agents & Brokers and ACORD. He also serves on the boards of several start-up insurtechs. He is outspoken in wanting to eliminate the obstacles to better communications among partners and right what he sees as wrongs being done to agents by certain agency management technology vendors.

But things may be starting to change. Sentner says some agency management system vendors have refused in the past to work with insurtech startups, impeding agents’ ability to digitally engage with their customers.

“Slowly but surely, we’re starting to break down those barriers and there’s at least some rhetoric on the part of the major vendors that sounds like they’re going to become more open in terms of their willingness to share data properly permissioned from the agents’ environment to third-party vendors,” Sentner added.

Data Ownership

Others agree with Sentner that data remains a problem across the industry.

ACT’s Berg moderated a recent Big I webinar in June titled, “Whose Data is it Anyway?” Webinar panelists included Mike Stansbury, principal for Franklin, Tennessee-based Elite Insurance Solutions; Delin Shen, director of innovation and research at Cincinnati Insurance Group; and Rushang Shah, chief marketing officer Hawksoft, a provider of management systems for independent agents.

“All data sources come with their own set of challenges,” Shen said. “The data collected by agents and policyholders, for example, are generally very accurate but that data has always been a challenge because at times it’s not complete or updated information.”

Even the data that Cincinnati Insurance secures in-house isn’t perfect. “We have many different production systems over the years, and they don’t always talk to each other,” he said. “Integrating data sources, giving a holistic view of the policy, is almost next to mission impossible.”

A number of challenges accompany the use of third-party data. First, the data must be validated for accuracy and come from a trusted provider, and then it has to be used properly. “There is new data coming up every day, so you have to keep your eye on the market to learn,” Shen said.

Data challenges are different for vendors than for carriers. According to Hawksoft’s Shah, there are two core challenges when it comes to data from a tech vendor’s perspective.

One challenge technology providers must overcome is data inconsistency, he said. As data moves throughout the technology space it becomes less consistent. For example, moving data from management system A to management system B creates problems in terms of consistency.

“How consistent is that data and all the long tail history — attachments, policy data, client data — all that rich data — how consistent is it?” he asked, calling the “portability” of data in a consistent manner a huge obstacle for vendors. “We’re getting better at it as an industry but that still remains the number one challenge from a tech vendor vantage,” according to Shah.

The second core challenge is what Shah refers to as “freedom to move about the cabin.” He likens that to a challenge experienced in the mobile phone industry not long ago — “number portability.”

It hasn’t always been the case where customers could easily take their mobile phone numbers with them when they switched cell phone providers, he said. “Now it’s easy to take a phone number to a new cell phone provider. That’s something the insurance industry can learn from,” he said.

“I feel that we can borrow that system — and we should — because the agency from our perspective should have that same level of ‘portability’ irrespective of which tech vendor they choose to use,” Shah said. The agency’s data “should not be held hostage at a tech vendor,” he said. “The agency should have freedom of that portability and freedom to move about the cabin.”

Stansbury said he views the agency as the front line, a critical role in the insurance value chain. But connectivity between partners — agencies, carriers and technology vendors — needs to keep improving, he added. He refers to this relationship as a “triangle” where the carrier, the agency and the client all connect, he said. “We ought to be able to use technology in a way that creates a more seamless communication bridge” in that triangle, he said. “That’s a bridge that we need to build,” Stansbury said, in order to make a better experience for the client.

Custodial Care

Regardless of who owns the data, every stakeholder in the agency value chain — the agency, the carrier and the third-party vendor — has a responsibility to protect clients’ data.

The role that each stakeholder plays in managing the customer’s data is more important than who owns the data, according to Berg. “We’re getting to a point where we are becoming of one accord, if you will, an agreement among the agents, the vendors and the carriers on what aspects or role each plays in data.”

Every player is in some way a custodian of the data, Berg said. “Agents create the data, carriers create the policies that flesh out the data and the management systems and the other tech providers are the custodians of the data,” he said.

But questions still remain around who owns the data: the customer, the agency, the insurer, the vendor?

“At the end of the day, the insured owns their data,” Shah said. Hawksoft’s role is to deliver secure access to whoever needs that data, wherever they are, he said. “We view ourselves as a custodian of the data; while it is in our hands, we are responsible for it,” he said. “But Hawksoft does not own that data,” he said. “We tend to think of it as one of these constituents — the agency, the carrier or the tech vendor own it — but at the end of the day, it’s the insured.”

Client data is one of the most valuable assets an agency must protect, and agents often don’t realize they’re sharing or giving away ownership of their data through third-party vendor agreements. That aggregated data can be used, even sold, to other providers.

“Many of the largest agency management systems and technology providers are being bought out or given investment capital by private equity and big data companies, who spend billions to acquire the aggregated data of the agencies that use them,” according to a recent Hawksoft whitepaper on the issue.

That’s a concern to some agencies, Stansbury said. “The concern [that] comes up from an agency standpoint is when we are interacting with our carriers or others making copies of our clients’ information without us knowing about it,” he said. “We need to understand what’s going on.”

But Elite’s Stansbury also agrees that the information belongs to the customer.

“It’s the client’s information and it’s the client we are trying to protect,” he added. “So when it comes to our role, and what we are doing for our customers, in our situation, we do have the ownership of that data,” Stansbury said. “We do have the relationship with the client.”

‘Clean Data’

In Sentner’s view, an even bigger problem the industry must address is the quality of the data itself. Even if an insurtech gets access to an agency’s data, that data is not always good.

It might even be “terrible,” Sentner says.

“And that is partly the result of management systems not being very open in terms of the kinds of data that they will allow to be captured within the system,” Sentner said. “There’s not a lot of structure around the quality of the data — the validation of the data on input — because management systems wind up being the dumping ground for data from a whole variety of different sources,” Sentner said. “Agents get data from all over the place and input it into those systems.”

Then of course there’s the conversion from one management system to another, which messes up the data up almost universally, he added.

Data analytics can be valuable for agencies seeking opportunites within their book of business to upsell/cross-sell, or retain customers, but analytics will not provide accurate results if the data is not clean, he says. “That’s the challenge.”

Sentner implores agencies to clean up their data. The insurance industry is a data-driven business and the complexity of the data is astonishing, he says. But if agencies want to be able to use their data in ways that help drive new business they must have clean data. “Properly interpreting the data depends on it,” he says. “But unfortunately in most cases and agency systems the data is bad.”

That’s where Sentner believes agents can help the insurance industry move forward.

It’s the agents’ responsibility to provide clean data, period, he said. “Nobody else is responsible. Now, there are other parties that are responsible for messing it up, potentially, but agency personnel are the custodians of that data and they’re the keepers of their customers’ data, and also their partners’ data,” he said.

Agencies have to mount a campaign to clean up that data, he added. “Because as old as computers are, it’s still garbage in, garbage out.”

Sentner says the Agents Council for Technology recognizes this problem and is fostering an environment in which agents can become more aware of their biggest data and technology problems.

The pandemic is helping to drive more progress. According to Boston Consulting Group, the insurance industry’s digital transformation has been accelerated by at least five years as a result of the pandemic.

That’s good news for agents, ACT’s Berg says.

“That’s one thing that came from the pandemic,” he said. “The pandemic extended the understanding of ways that agencies can use their data, data that they already have, to a far greater extent than they ever did before.”

The power of data is in their hands, Berg added.