*This article is part of a continuing series about how to maintain and grow the value of your insurance agency so it will hopefully be worth more tomorrow than it was yesterday. In this entry we cover the importance of agency data and automation and why they are critical aspects of your agency’s value.
It’s 2011. Do you know where your data is?
If you answered, “Yes, it’s on hundreds of pieces of paper stuffed inside of manila folders that are stuffed inside of file cabinets”, then you are killing the value of your insurance agency. Seriously.
The most valuable asset you have in your agency is not your carrier relationships, not your talented staff, not your loyal clients, and not your length of time in the business. The most valuable asset you have is your data. Seriously.
You should write it down and post it on your office wall: “The most valuable asset in my agency is my data.”
Think about it, in the insurance business we don’t have a warehouse full of widgets to sell, we don’t hold patents on some new technology, and we don’t create or build anything that has value. The most important thing agency owners possess is data about their clients and expiring policies, and that data is the source of all income.
In our last entry we highlighted the value of performance metrics and measuring all facets of the agency’s business, so agency owners could see the production data and trends they need to effectively manage and grow their businesses. But in addition to performance data about your sales and service efforts, at the core of every agency is the detail data about each client, each policy, each payment, and so forth. Without that data, you don’t get paid!
And speaking of getting paid, in terms of your agency’s long term value as a business asset, there may be no data more important than your income and expense data. As an agency owner you should be able to press a button or run a report within seconds to answer the question, “How much income came in last month/quarter/year and how much were your expenses to generate that income?” If you can’t do that today, you need to take action or your agency’s value will be worth less tomorrow.
Here’s something else you can write down and put on your wall: “When it comes to determining how much my agency is worth, accurate accounting data about my agency’s financial performance is gold!”
Nothing serves as better evidence that you have a well-run, organized, and valuable business like 3-years of detailed financial statements that are produced within minutes of being requested.
So now that you know how important data is to the value of your agency, you need to make sure you have all of that data about your book of business and financial performance and that it’s accurate. Pulling it out of paper files from metal cabinets is probably not going to achieve that goal.
There are so many affordable options available today to automate your agency that there really is no good excuse to continue with manual processes and paper files. Agency management systems exist for virtually every size and type of agency. Most of them include the ability to scan all of your documents to digital files and get away from paper files forever. Many of them also include accounting functionality or the ability to interface with other popular accounting software programs, like Quickbooks.
And just so we’re clear, a comparative rater is not an agency management system. It’s great to have the data for everyone you ever quoted, but that doesn’t begin to scratch the surface for the type of data you truly need in your agency.
Managing and building a valuable business asset, that one day you can sell for the maximum price, requires keeping your client, policy, and financial data as complete and clean as possible. To do that, you need to automate the collection and storage of that data through agency management systems, digital imaging, and accounting software. Doing so will add considerable value to your agency.