" SPEND MONEY TO MAKE MONEY ": DOES IT APPLY TO TECH ?
Absolutely . While initial tech investments can require upfront costs , the long-term benefits often outweigh the initial expense . Here ' s how :
• Reduced Costs : Automation can streamline internal processes , minimize human error , and reduce operational overhead .
• Enhanced Client Acquisition : Modern marketing automation tools can help personalize outreach , nurture leads , and drive higher conversion rates .
• Competitive Advantage : Cutting-edge technology allows you to offer innovative services to clients , such as personalized insurance packages or AIpowered risk assessments , setting you apart from the competition .
Colby agreed that successful agencies must invest in themselves to reap returns later . " When we review an agency ' s financials , we categorize expenses into a few major buckets : People , Marketing , and Operations . Successful investors will tell you not to drop money into a stock and cross your fingers .
An insurance agency is a sales organization . How you invest in people , marketing , and your operations will directly impact how you generate revenue ."
THE RISE OF AI : A PARADIGM SHIFT
Agency Management Systems ( AMS ) have traditionally been many agencies ' most significant tech expense . However , the emergence of Artificial Intelligence ( AI ) is poised to change the landscape . AI-powered tools can automate tasks , generate datadriven insights , and personalize client experiences .
To Colby , agencies are moving away from a ' doeverything-in-a-single-system ' approach and toward point solutions that solve specific problems . For them , " we are already seeing a shift away from the traditional sole AMS model agency and more towards agencies finding the right tool to accomplish their needs ."
While AI solutions might only partially replace AMS , they can significantly reduce their workload . Colby considers AI " an advancement toward empowering people to make decisions faster ." According to them , " ReFocus AI is a great example of this by analyzing retention risk and prioritizing items to those who can make an impact . That type of analysis is doable by a person , but it can take significantly longer . Handing over that task to ReFocus AI gives important time back to that agent by putting a laser beam focus on what ' s important versus a flashlight approach to searching for what ' s needed ."
Buying specific systems to solve problems frees up the budget previously allocated to maintaining and updating legacy systems , allowing for investment in more innovative AI-powered tools that can generate a higher ROI .
THE TAKEAWAY : A STRATEGIC APPROACH TO TECH SPENDING
There ' s no magic formula for determining your agency ' s ideal tech spend . However , by considering industry benchmarks , focusing on measurable ROI , and embracing new technologies like AI , you can optimize your tech investments and gain a significant competitive advantage . Remember , technology should be seen as an investment in your agency ' s future , not just an expense . By strategically allocating resources , you can leverage the power of tech to streamline operations , enhance client service , and drive sustainable growth for your insurance agency .
Colby Tunick is the founder and CEO of ReFocus AI , an InsurTech that provides agents & brokers with valuable insights on their client renewals for improved retention . Colby Allen is the Director of Consulting and Valuations for Agency Brokerage Consultants , an industry consulting firm for insurance agency valuations , sales , and acquisitions .
26 KANSAS INSURANCE AGENT & BROKER