TECHNOLOGY
Direct Bill Commission Download is a well-kept secret that can save agents "serious money"
By Nancy Doucette
"Re-entering data--one policy at a time--is nothing more than a black hole of expense for our agency."
--Mike Randles, Insurance Center Associates, San Pedro, California
Why hasn't automation delivered on its promise to provide agencies with greater efficiency and increased profits? Duplicate entry of data--according to a recent survey of agencies on their workflow and technology issues with their carrier partners. Conducted by AUGIE, the ACORD User Groups Information Exchange, the survey yielded responses from thousands of agencies of all sizes in all parts of the country. In fact, 50% of those responding to this question said duplicate entry of data was the greatest automation time-waster--more so than using proprietary programs or software products, or manual verification of upload/download transactions.
How can duplicate entry be reduced in a way that has meaningful bottom-line results for an agency? Many agencies need look no further than their own agency management system. AMS for Windows (AfW) user Mike Randles, president of Insurance Center Associates in San Pedro, California, and his 12-person agency are currently saving 80 person hours a month by using Direct Bill Commission Download. As Mike says: "Assuming a 40-hour work week, that represents half of a person's time. By eliminating this time-consuming process, that person is now able to do work that's more productive--contributing to our bottom line. Re-entering data one policy at a time is nothing more than a black hole of expense for our agency."
Direct Bill Commission Download offers an electronic alternative to the manual data input of an agency's direct bill commission information. Before Mike's agency adopted this new approach, the person responsible for this task would enter the information from the carrier's statement (usually a computer print-out mailed to the agency) line-by-line, item-by-item into the agency management system. The individual would then reconcile the data to make sure that the data entry matched up with the paper entry. If it didn't, the individual had to go back and compare each entry one at a time to figure out why the figures didn't balance. With Direct Bill Commission Download, it now happens automatically.
The Direct Bill Commission Download is sent along with the other downloaded items (personal lines policies and commercial lines policies) during the agency's regular download session. The only action the agency now needs to take is simply to review the statement. Transactions that the system cannot match with existing policy data (e.g., transaction dates or deviations from "default commissions") are highlighted for review. Once these are checked, the agency simply posts the statement as usual.
For Mike's agency, this is an important "ease of doing business" issue. He says: "We have seven carriers that write the majority of our business. Right now three of them offer this download and another two are in the process of implementing it. I really appreciate the carriers that are doing this since they've taken an important step in making all our lives easier. We're able to use our time more productively now that we're not doing as much duplicate entry of data. With our 'found' time, we've initiated a cross-sell program which is turning out to be very effective at generating new business."
Which agencies can implement direct bill commission download?
For his part, Mike Randles is more than just an AfW user. Mike is a volunteer leader in AMSUG, the AMS Users' Group. As a board member and co-chair of the AfW Research and Development Committee, he has helped make both AMS agents and carriers aware of the benefits of Direct Bill Commission Download. For AMS users who want to start using Direct Bill Commission Download, Mike says that AfW and Sagitta users who are currently set up for download need only to request that their companies "turn it on." While there is an additional cost for the product itself, he says, "it's paid for itself two or three times over and we've been using it only 18 months. Getting it up and running went so easily for our agency that our staff was ecstatic. All of a sudden, there was the data--just sitting in our system. What used to take us two days to input now comes through in less than two minutes. If an agency is currently inputting off the carriers' commission statement, then this is a no-brainer. Why would an agency not do this?"
Companies are already generating commission reports electronically from their computer systems. The irony is that they are then sending this data to a printer, collating and mailing the print-outs to their agents who then need to have someone re-key the information from these printouts back into electronic form for the agency's management system. Some companies attempt to simplify the process by putting the data at a secure Web site that agents can access. But the problem is that agents still need to print it out and re-key or "cut and paste" it back into their agency management system. By using the existing ACORD AL3 standards and downloading all of this data directly to the agency, everyone saves time and money. In fact many of the carriers that are already providing download find that adding Direct Bill Commission Download is a relatively easy task.
Mike points out that a number of carriers have taken a leadership role in offering Direct Bill Commission Download to AMS users. In his own agency, Mike writes a large share of business with SAFECO. He says that "SAFECO was an early adopter of Direct Bill Commission Download, and that has made a tremendous difference for us. With them alone, it's saving us about four person days (or 32 hours) each month."
For its part, SAFECO offers this service because it realizes how much money it can save the agencies it writes with. According to John Carmody, assistant vice president for SAFECO Insurance, "Considering the cost savings, we're truly surprised that more agents aren't taking advantage of this. Just counting AMS and Applied users, we have well in excess of 4,000 agencies that could be using Direct Bill Commission Download. By way of example, one agent using it estimates it saves the agency about two person days of work per month--call it 24 days per year. At an average salary of $32,000 ($136 per working day), the expense savings or reallocation potential amounts to $3,264 annually. If the savings were applied equally across 4,000 agencies, it amounts to just over $13 million. That's serious money. Unfortunately most of that money is just being left on the table by agents. My guess is the product cost payback for most agencies is around six months. Clearly, agents need to take a close look at this service."
As of November 2002, 24 carriers were offering Direct Bill Commission Download to AMS users. A list of the individual carriers is available at the AMS Users' Group Web site (www.amsug.org). *