Commercial lines insurance may be a booming growth opportunity, but Applied Systems research has found that it is also a profitability and admin burden for many independent agencies and the software company believes the answer to lessening this cost load lies largely in technology.
From tapping into commercial quoting solutions, to payment processes, to big data, at Applied Net, Applied Systems’ annual conference, senior leaders and executives at the insurance software business pledged to slice down admin costs and time burdens for its users through innovations that have debuted and are set to take flight on platforms Applied Epic and EZLynx.
In recent years, small commercial insurance acquisition and remarketing costs have “skyrocketed” for independent agencies, according to Raghav Tanna, Applied Systems SVP, product management in commercial lines.
Applied Systems research has found that the average renewal or remarketing is taking 103 days, and a lot of that can be “idle time”.
“If you’re spending 103 days on a $1,000 policy, you’re probably not making money on it,” Tanna, who joined Applied Systems following its 2022 acquisition of commercial lines rating solution Tarmika, told Insurance Business. “Our goal is to essentially allow them to do that in seconds – so you click a button, all of that goes through, you bind the policy, and you’re done to make it profitable.”
With carriers tapping into direct-to-consumer methods, which have the potential to “shut out agencies”, Applied Systems has also sought to build a comparable solution for its independent agent customers.
Its latest launch with Tarmika Insured has seen it target embedded insurance, a way of selling that has been predicted to boom by anything from $70 billion in the US to $700 billion globally by 2030, according to Deloitte.
“We’re essentially giving all of the direct-to-consumer tools that carriers have back to agencies so they can put it on their point-of-sale systems, they can put it on the websites, they can add it to their affinity partnership, or wherever they want – and they can get business from places where you typically wouldn’t see people buying insurance,” Tanna said.
“Consumers will buy insurance when they’re buying other things with which it makes sense to buy it – if you’re doing your taxes, you should buy insurance, if you’re buying a new car for your business, you should buy a commercial auto policy, and we think this is invaluable.”
Payment processes is another area that has the potential to drain time, dollars, and resources for agents and build friction with customers, Applied Systems has found.
“For a lot of our agencies, the process of collecting money from their insured customers has been clunky, and they know it’s clunky, and they want to give their insureds a better experience,” said David Stevens, Applied Pay VP of GTM, who joined the business from a senior strategy and insights role at Google, the parent company of which has made a strategic investment in Applied Systems through growth fund Capital G, earlier this year.
“You’ve got to make it easy for people to pay the money, because nobody’s like: ‘I can’t wait to pay $1,000 or $10,000 to this insurance company’,” Stevens said.
For Applied Systems, which has moved to “differentiate itself from its peers” according to Stevens, this has meant rolling out both credit card and ACH transfer functionality across Applied Epic.
The addition is intended to appeal to customers but would not alone solve what can pose a resource-heavy headache for insurance agencies: manually linking payments into their broker management system.
“It’s not horribly value adding to spend a lot of time on that, a lot of the people that are in that seat have lots of other things to do,” said Stevens.
Seeking to address a need for easier fund applications, Applied Systems has rolled out the ability to automatically integrate these into Applied Epic.
“Those things now just automatically match and they’re good to go,” Stevens said.
Looking forward into 2024, Applied Systems intends to target reconciliation stresses, including what Stevens described as the “horribly painful process” of reconciling receivables, including through a competence score that will show the system’s confidence in the attribution of any stray payments via a zero to 100 scoring methodology.
It is also looking to tackle accounting and compliance “pain” disbursements, particularly when it comes to manually apportioning how much premium collected needs to go to the carrier, according to Stevens.
“We are working to treat this the same way as reconcile [in terms of the scoring system],” Stevens said.
Agents may also be missing out on getting a better understanding of their customers and opportunities from within their own businesses through tapping into big data to drive profit and growth, attendees at an Applied Net keynote speech heard.
“One thing we’ve heard from agencies over and over again, is we don’t want to be a data guy, we want to be a trusted adviser,” said Anupam Gupta, Applied Systems chief product officer who spoke just over a year into the role having previously led teams at big tech firms and major media analytics and software businesses.
Nevertheless, being in the “data rich” insurance industry presents big opportunities for agents where it comes to boosting growth and improving their internal business practices, according to Gupta.
Applied Systems has been running pilot programs with its product advisory committee, with measurable results when agents have used data to their advantage.
One key example included a family insurance agency owner who had used the pilot to zone in on higher risk policies at renewal, with the agency’s policies in force having grown from 90% to more than 95% year over year.
“How you are able to easily identify high versus low risk and activate those group of individuals differently could make a big difference,” Gupta said.
Taking advantage of the latest technology may seem like a big job for any lone independent agency looking to keep customers happy and renewals on track amid a hard market, and a big message at Applied Net was that agents should not feel like they need to go it alone.
“We strive, we invest, we invent for one simple reason – our investments to accelerate the digital roundtrip of insurance create incredible power and value for you, helping you work on the most valuable tasks, execute faster, and create more value for your clients,” Applied Systems CEO Taylor Rhodes told attendees during a keynote speech. “We have a big ambition – and that’s to serve you for so long that you will be proud to call us your indispensable growth partner, and we know that’s a very high bar that we can never stop working towards.”
