Scale – Don’t Grow – Your Insurance Business: 3 Ways to Reduce Operating Costs to Increase Revenue at Scale

Help your business grow revenue exponentially without growing expenses at the same, rapid rate

Whatever your role in the insurance distribution channel – from individual licensed producer to agency owner to insurance carrier compliance staff, and many more – your organization wants to increase revenue and reduce expenses.

Historically, many roles can only do “so much” before they hit capacity, and another person needs to be hired. For example, if a producer working at full steam seven days a week (and we’re not recommending you do this) can only handle 100 clients at a time, then the agency has no choice but to bring on another producer if they want to serve more clients. You can see how this model doesn’t allow a business to efficiently scale because the costs go up proportionately to the new revenue coming in.

Lucky for insurance agencies, carriers, and MGAs/MGUs that are hoping to grow business without costs getting out of control, modern technology is changing the game. Here’s how technological investments can pay dividends for your revenue growth, so you can scale your insurance business without costs rising at the same fast pace.

What does it mean to scale a business?

Scaling a business refers to increasing revenue without proportionately increasing expenses. This is why “growing” a business and “scaling” a business aren’t the same thing. You can grow an insurance agency by hiring more producers, but with each new producer you add, you also add a proportionate set of costs. Scaling, on the other hand, is about efficiency and getting more output with the same input (or even with less!).

An example of scaling an insurance business is when you equip staff with something that allows them to do more work with less effort, resulting in more revenue without equivalent expenses coming along for the ride.

How to grow your insurance business without increasing expenses

To bring more revenue into the business while at the same time limiting new expenses that send money out the door, many businesses turn to technology. Through investing in solutions that automate previously manual processes, and solutions that integrate across multiple systems, people’s time is freed up to do more revenue-generating work. And no, these solutions aren’t free of charge, but the goal is to find ones where the initial and/or ongoing cost easily pays for itself as you don’t have to hire more staff for these tedious tasks.

As a side note: The cost of implementing a new tech solution can be intimidating. How much down time will there be? How many hours of your team’s work will be diverted from their essential duties? Will the organization at large even accept and adopt the new technology? We’ve got you covered with six questions to ask before implementing a new technology and a guide to successful implementations.

1. Reduce operating expenses

Excessive operating costs are the bane of most businesses’ existence. Whether it’s spending too much on something as small as web hosting and email or paying for unnecessary office space, all the costs that go into operating a business quickly add up.

A few tech-forward tips on reducing operating costs include:

• Consider a remote or hybrid workforce. This can save money on office space, allowing you to add more people without the cost of the physical space they would normally occupy. It can also help with attracting and retaining talent at a time when the insurance industry is facing a talent shortage and most workers still prefer remote and hybrid work instead of fully in-office.
• Go paperless. Get rid of printers and paper whenever possible. Use dry erase boards instead of sticky notes. Invest in digital writing tablets for those who refuse to give up taking notes by hand. It might seem small, but research suggests that companies spend as much as 3 percent of their revenue on paper and that doesn’t even count all the added time employees spend organizing and searching through that paper!
• Use technology to automate any operational tasks you can. This overlaps with the administrative expenses we’ll touch on below, but it’s worth mentioning twice! You may be able to save a lot of human-hours by automating things like your payroll, new-hire onboarding procedures, and other common operational tasks that take up way too much time when done by hand. Then, repurpose those saved human-hours into impactful projects that either help the company bring in more revenue, retain more current customers and clients, or save money by increasing employee satisfaction and lowering attrition.

2. Reduce administration costs

Administrative expenses include all the paper shuffling (or, if you’ve gone paperless, email and PDF shuffling) that people spend time doing. None of this admin work is truly leading to revenue, but it’s definitely costing you in payroll, benefits, office space, and many other ways.

For insurance agencies and MGAs/MGUs, onboarding and offboarding producers are major administrative costs that are ripe for automating. Similarly, ongoing producer license compliance management is a task that could easily occupy a full-time employee (if not multiple full-time employees) yet can be reduced down to a fraction of the time commitment by implementing a tech solution.

For insurance carriers and some MGAs/MGUs, appointing producers and doing their own part in monitoring compliance in their downstream partners is equally time consuming. There’s also the added role of insurance adjusters who require attention during the onboarding and offboarding process.

For any insurance business still managing all of this on paper, or even in “modern” ways like spreadsheets and cloud-based shared documents, scaling is still a pipe dream. If you have to dedicate admin staff to supporting your revenue-generating roles, you have no choice but to increase the admin staff (and associated costs) as you increase other roles.

We’re certainly not suggesting that you not grow your business through adding more people! We just know that the business would rather add more people who bring in revenue, and at the same time, the people you’re hiring would prefer to spend their time on high-value work and not repeat data entry. It’s only possible to scale when you let technology take on some of the tedious work so your people can focus on their business impact.

3. Improve the employee experience

In a definitive case of “last but not least,” your bottom line isn’t the only thing that’ll be happier when you remove the busy-work from your staff’s plate. Now, more than ever, employees (and we’re counting producers and others who may not be traditional employees, by definition) are demanding a modern and pleasant experience.

If producer onboarding consists of a lot of data entry (and repeat data entry), a lot of follow up emails and phone calls, and a lot of waiting, your operations staff and producers alike are going to start looking elsewhere.

If claims processing involves cross-referencing different systems, hand-written documentation, and an excessive amount of human touch at each step of the way, your adjusters and other claims staff will soon be frustrated by the tedium.

Investing in technological solutions that both automate processes and integrate across systems dramatically improves the employee experience. When you reduce the number of places people have to look for – or enter – data, reduce the number of steps or clicks it takes to do frequent tasks, and even provide self-service capabilities so no single person has to act as your company’s central encyclopedia, employees are happier and more engaged.

Scale your insurance organization without scaling your compliance expenses

Compliance is a non-negotiable part of the insurance industry. But it doesn’t have to be complex, time-consuming, or costly. See how AgentSync can empower your carrier, agency, or MGA/MGU to quickly reduce operating and administrative costs while improving your producer and employee experience.