As with embracing change, embracing technology is no longer an option. Technology can no longer be viewed as a pure cost, but needs to be seen a business enabler. For some agents, investment in technology is already an integral part of running an agency business. These agents have made the shift and are thinking of technology and automation as a way to save money and help make money.
The average technology spend for an agency ranges 1.9% - 2.9% of net revenues (revenue minus broker commissions) ("A vision of the Future for Agency Technology" by the Agent Council for Technology (ACT)). This total spend includes core agency management system, networking and internet connectivity, scanning and imaging, infrastructure and replacement costs for hardware like PC computers and printers. Compared to other industries, this amount is very low. For example, on average, insurers are spending 3.2%- 3.5% of net written premium. Research shows that some of the market leaders are spending greater than 3.5%, driving competitive advantage implementing proprietary systems that are being 'pushed' down on the agencies creating a gap to what the agencies really need.
Our research also finds that the agency market leaders view technology spend as a way to execute their aggressive growth strategies and 'leap forward' in the competitive landscape rather than being driven by the carriers.
The core underpinnings of agency technology are base level technology and an agency management system. These two elements create the foundational technology platform necessary to compete in today's marketplace. Once those are in place, there is a variety of add-on functionality for agency management and advanced technologies that integrate with the management system and can drive business productivity.
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