Quantifying Quality: a Conversation with ValChoice and K&M Insurance

The Insurance Perspectives Podcast involves contributors outside of HawkSoft. The participants' views are entirely their own and may not reflect the views of HawkSoft.

HawkSoft is excited to announce the launch of our new Insurance Perspectives Podcast, hosted by HawkSoft's Director of Partner Integrations, Kenny Hendricks! This 30-minute podcast airs every Tuesday and aims to provide valuable, agency-focused conversations about how technology providers and independent agencies can partner within the independent agency ecosystem. It’s kicking off with some open conversations with HawkSoft’s API and Solution Partners, alongside independent agencies that use their platforms. Each episode will have two parts: one focused on the partner, and one focused on an agency who has implemented their solution. 

In this article:

• Part 1: ValChoice (Dan Karr)
  
  • What is ValChoice's reason for participating in the independent agency channel?
  • What one aspect of ValChoice draws agencies in and keeps them working with you?
  • How does ValChoice approach data ownership with regards to your customers?
  • What is the hardest part of working with insurance agencies?
  • What is the best part of working with insurance agencies?
• Part 2: K&M Insurance Agency (Kelly Endicott)
  • How does your agency use ValChoice with HawkSoft?
  • Tell us about your agency
  • What is your agency able to do now with ValChoice that you couldn't do before?
  • What is one thing you would change about ValChoice if you could?
  • What are some of the things you're looking forward to with ValChoice?
  • How would you describe the value that ValChoice brings to your agency?

Part 1: ValChoice (Dan Karr)

Watch the video podcast - Part 1

Question 1: Why does ValChoice exist? What is your reason for participating in the independent agency channel?

Dan admits that his entry into the insurance industry was an accident—a car accident, to be specific. As an engineer moving up the ranks in the tech industry in California, Dan was also an avid bicyclist. One day as he was cycling to work, he was hit by a car and seriously injured. “While I had a long physical recovery,” Dan says, “I learned over the coming months that I was going to have a longer financial recovery.” Though three insurance companies were involved in the incident—the car insurance of the at-fault driver, as well as his own motorist coverage and health insurance—it became a years-long struggle for Dan to get the costs of his medical bills covered.

After the incident, Dan started asking people what he could have done differently in that situation. While most people recommended he check the financial strength and stability ratings of the insurance carriers he worked with, he found those factors didn’t give insight into the issues he faced with a carrier’s service and treatment of claims. “I thought, this is a problem that needs to be solved,” he shares. “I set out to find a way to collect reliable, high-quality data that would let people know the difference between ability to pay a claim, which is a financial stability rating, and willingness to pay a claim, which is the problem I ran into.”

“This is a problem that needs to be solved. I set out to find a way to collect reliable, high-quality data that would let people know the difference between ability to pay a claim, which is a financial stability rating, and willingness to pay a claim, which is the problem I ran into.”

Thus was born ValChoice, a platform that provides ratings for carriers based on the carriers' handling of claims and their service level in interacting with policyholders and prospects. ValChoice can provide high value to independent agencies, allowing them to identify the highest-performing carriers to place policies with and ensure client satisfaction. Most of all, it helps insureds receive the best possible service on the policies they’re paying for. “This is a mission-oriented business for me,” Dan says. “I really believe in it. I really believe consumers need it. I don’t want anybody to go through what I went through.”

Question 2: If you had to pick one aspect of ValChoice that draws in and keeps agencies working with you, what would that be and why?

Increased profitability

“Agencies are looking for a way to run their business more effectively,” Dan observes. “They’re looking for a way to reduce all these remarketing requests that are coming in. It's a very stressful time in this industry right now.” He’s crunched the numbers to show agencies how ValChoice can help, recalling telling a prospective agency that ValChoice could reduce their remarketing by a staggering 75%. “I think his first thought was that I was completely crazy,” Dan says. “He said, ‘I'd actually be happy if you reduce it by 10%.’ We've been working with them for six months. We have a couple thousand policyholders through the process, and we're really delivering that 75% reduction in remarketing.”

To help agencies understand the specific ROI of the platform, ValChoice includes several calculators on its website, including one on savings related remarketing costs. Dan gives this quick example: “If we take a relatively small agency, say 3,500 policy holders, and say 30% are wanting to be remarketed, put in how much time you think it takes to remarket them (we put in two and a half hours for our assumption), that agency is losing over $90,000 a year just in labor costs and almost $60,000 a year in lost commission, assuming there’s no drop in commission rates when you remarket. That's more than a 3,000% return on investment in a year. ValChoice is astonishingly effective. It literally can pay off in days and it can be set up in minutes.”

Kelly, who collaborated with Dan on the calculator, says, “Dan was very open to asking me, how does this process work? Is this accurate? I would encourage any agency owner, even a salesperson, to go out there and check out that calculator. I think we all know intuitively how important retention is, but to actually interact with this calculator and put your own figures in there, it's extremely powerful and a little bit gut wrenching to see truly what a difference it makes. It helps you lean into the value of retention within the incumbent carrier.

“I think we all know intuitively how important retention is, but to actually interact with this calculator and put your own figures in there, it's extremely powerful and a little bit gut wrenching to see truly what a difference it makes. It helps you lean into the value of retention within the incumbent carrier.”

Quantifying quality

“Everyone says insurance is a price-driven industry,” Dan notes. “And the reason it's a price-driven industry is because there's no quality metric. If you don't give consumers a quality metric, they have no way to make a decision except for price.”

He compares shopping for insurance to shopping for wine, where all products look virtually the same from the outside and price may be one of the only ways for consumers to differentiate between them. “On wine you’ll now see labels that say, this one scores a 92 by Wine Spectator,” he points out. “And even if one is a little outside my price range, I’m willing to pay a little more for something I know that has been rated highly by a trusted source. We've created that kind of rating system for insurance carriers. And it’s just as easy to use. Set it up in minutes. Nobody has to learn a new interface. It runs in the background as an add-on.”

“Everyone says insurance is a price-driven industry. And the reason it's a price-driven industry is because there's no quality metric. If you don't give consumers a quality metric, they have no way to make a decision except for price.”

Question 3: How does ValChoice approach data ownership with regards to your customers?

“Agency data is agency data and nobody else's,” Dan answers simply. “We only use that data to benefit that agency. So however we can mine that data and deduce things from it and take action items for your agency, we'll do that to the best of our ability. But we won't ever do anything to market or use that data in some other way that's not a benefit to that agency.”

Question 4: What is the hardest part of working with insurance agencies?

Dan reflects that his answers to this question mainly pertain to the insurance industry as a whole. “A lot of Insurtechs have come into the industry, overcommitted, and didn't deliver. And now it’s hard for agents to trust an Insurtech. That’s just a reality that we have to deal with—not to mention that the industry doesn’t really like things that are new and different.”

The second frustration he mentions is a reluctance in the industry to focus on the right numbers. “There are really only three ways you can measure performance,” he says. “You can measure market share, you can measure policy count, or you can measure premium. Nobody's measuring market share, which in my opinion is the only true measure of telling you how you're doing relative to competition. Carriers I talk to don’t think they have a retention problem, but then I find out they're measuring retention by premium dollars.”

“Nobody's measuring market share, which in my opinion is the only true measure of telling you how you're doing relative to competition.”

To help carriers understand where they’re losing money and how they can increase profitability by improving retention, ValChoice provides a carrier retention calculator on its website as well. “With one carrier our estimate was that we could increase their profit per year by about $70 million,” he says. “It's an absolutely stunning number. So to say we don't have a retention problem is just looking at things the wrong way.”

Question 5: What is the best part of working with insurance agencies?

“I'm kind of a numbers geek,” Dan admits. “I love being surrounded by numbers, so this is a good place for me to spend time. And it's personally fulfilling. I feel like I'm on a mission that's benefiting agencies, carriers, and consumers. I feel like I'm delivering something positive to society.”

Part 2: K&M Insurance Agency (Kelly Endicott)

Watch the video podcast - Part 2

Question 1: How does your agency use ValChoice with your HawkSoft agency management system?

Kelly mentions that the setup process choice was simple, as ValChoice has two-way API integration with HawkSoft. “We work in the ValChoice program to decide what we want the automation and the tasks to do,” she says. “They [ValChoice] compile the data, they send out the emails, the ratings, and put the information back into a log note on the customer policy tab.” The agency can set the automation to create tasks for the appropriate person at the agency, and Kelly appreciates that even if she’s not the one being assigned the task, she can still pull reports to see what automations have happened through ValChoice.

“We really turn the AMS into a CRM, Dan says of the ValChoice platform. “We're mining your database and finding the type of business you want to find. In a market like this, maybe it's upselling because you can't really bring in new clients to some of the carriers. Tell us how you want to upsell, and we can go look for all those things in the database, and then you can say, when that customer is ready to do something, either assign it to the agent or the producer or the CSR.” He points out that one of the best things about the automated process is that people don’t have to learn another system. “If there's something they have to do,” he says, “it's right there in their face, in the interface that they're always used to going to.”

Question 2: Tell us about your agency. How long have you been in the business, and how did you get into the business? Do you have any specializations? What gets you excited about insurance?

Kenny introduces Kelly as one of his favorite people in the industry. Aside from being an owner of K&M Insurance Agency in Columbus, Ohio, Kelly is also president of the HawkSoft User Group, a prior chair of the National Conference Planning Committee, and the chair of the Regional Planning Committee. “And maybe my favorite aspect of Kelly,” he adds, “a connoisseur of the espresso martini. Kelly is one of the most professional, talented, and hardworking insurance professionals I know.”

Kelly has been in the insurance industry for nearly 40 years, all at the same family-owned agency which was started about 65 years ago. “The agency has a lot of history to it, and a nice seasoned book of business as well,” she says. Kelly started just out of high school as a file clerk, back when every dec page and invoice was a paper document that needed to be filed. She moved her way up the ranks to a CSR assistant, then a personal lines CSR. From there she got her license and eventually moved into agency management, becoming one of the agency’s two owners. The agency is about 75% personal lines and 25% commercial lines, with their 15 employees divided into dedicated teams for each.

Question 3: What is your agency able to do now with ValChoice that you couldn't do before?

Automation without the learning curve

Kelly says, “I'm in that situation where as an agency owner I'm also the HR person and sometimes the janitor and sometimes the restocker and sometimes I run to the post office. I’m doing all of these things.” She observes that while she’s open to trying new software tools to help her agency, she doesn’t have the bandwidth to learn every new system, which is why she appreciates that ValChoice works in the background with HawkSoft. “I can go out there and I can create these campaigns, I can set them in motion, and then step away knowing in all confidence that it's running appropriately. We've done the A/B testing, we've really put it through its rigors. The luxury for us when I'm doing so many other roles is the automation. Set the task, let it run, check in on it with reports, get some statistics to see what the ROI is or what it's developing for us. That’s really what has been beneficial for us.”

80% less remarketing

Dan mentions how powerful the A/B testing has been for both agencies and carriers to see the power of ValChoice’s automated process. The testing allows one group to go through the agency’s normal process, while the other group receives ValChoice’s automated campaign with carrier ratings, which doesn’t require any work from staff unless the client selects that they want to talk to someone. The log notes that go back into HawkSoft note which version each client received so the agency can see which version is more successful.

“What we're seeing,” Dan reports, “is the fully automated version, across all the different agencies, is delivering around an 80% reduction in the number of remarketing requests back into the agency. Agencies are maintaining a fairly typical agency retention level of 99% because they still have the opportunity to remarket. That option hasn't been removed. It's just not the first offer.” He points out that the results are great for carriers as well: “The carriers are thrilled because they are getting in the 98% range for retention because the remarketing isn't taking place. That is transformative for the industry because the profit increase on keeping those customers versus finding new customers is huge.”

“What we're seeing is around an 80% reduction in the number of remarketing requests back into the agency. Agencies are maintaining a fairly typical agency retention level of 99% because they still have the opportunity to remarket. It's just not the first offer. That is transformative for the industry because the profit increase on keeping those customers versus finding new customers is huge.”

Changing the conversation with clients

Kelly points out that she appreciates that the email campaigns are sent from her agency, but that the ratings are from a third party not connected to the agency or the carrier. “It's a reachout from my agency, it's not carrier branded, and even the rating piece of it is not me telling you that I made a good choice for you as a consumer. It's another data point. It's something outside of what I've done that substantiates that this is a good choice for you.”

She also mentions that ValChoice’s automated campaign has reduced the calls that have come in to the agency, and that the ones that come in are now less difficult to handle. “What I noticed almost immediately with those that were getting the report ahead of their renewal was that the conversation became, ‘let's review it, let's look at my deductibles. Should I do this? Should I do that?’ Those were conversations. Those weren't confrontations any longer. So it really changed the tone and became a more valuable conversation with the consumer as opposed to a fully focused rate increase conversation of ‘find me something cheaper.’”

“In my cubicle at Hawksoft HQ,” Kenny shares, “I had a sticky note that said, if the conversation becomes about price, you're a commodity, and the lowest price wins. And I think that a lot of people have this misconception of insurance as just a commodity. If it's auto insurance, you're required to have it to be on the road. If you're renting an apartment, you have to have that renter's policy. I think that the value independent agents bring is the ability to demonstrate why it's not as cut and dry as, I can pick my rate. Yeah, but what's your coverage, what's going to happen when the toaster shorts and causes a fire and you're in trouble?”

He says ValChoice helps agencies change the direction of the conversation. “It gives you the ability to say, let's talk about what extra value you get by staying with this carrier, instead of shopping around to find the lowest rate that might not have good coverage for you, or might be with a worse carrier that even if you do have a legitimate claim, might take the maximum two-year time period to pay out. You can provide a more holistic perspective grounded in your expertise as an agent.”

“What I noticed almost immediately was that the conversation became, ‘let's review it, let's look at my deductibles.’ Those were conversations. Those weren't confrontations any longer. So it really changed the tone and became a more valuable conversation with the consumer as opposed to a fully focused rate increase conversation.”

 

Upselling opportunities

“If we're looking at retention policy count versus premium,” Kelly says, “one of the best things that we can do with this program is dig into that renewal book and see how I can not only retain it but I can also work to upsell it. Probably one of the biggest lessons we've learned over this last two years is that the rental reimbursement that we sold way back in the day is not going to get very far in a claim situation right now. Now as an insurance agency owner, how do I reach all those people that I feel like need to come up to a better [coverage] level? I can use this program to say, here's what I'm seeing on your policy. And if they're interested or if they want more information, then that's going to come back to the forefront. So I've done my due diligence, but then I can also follow up on it if I know they're interested.”

Question 4: What is one thing that you would change about Valchoice if you could?

“I put some thought into this,” Kelly says. “I really did. This isn't a softball, this is me being totally honest. I'm not sure that I would change anything.” She points out how available and willing to help Dan has been throughout her agency’s implementation. “Your ear is always open to the agent's voice. You know what we need to reach our consumers. You know what we're hearing from our carriers. There's been times when we've reviewed some campaigns and he's helped me get something in motion. And then he'll email me the next day and say, I thought of something when we were talking, I'm going to change that because I think it'll do a better job for you.”

She also points out the similarity in work ethic between HawkSoft and ValChoice. “I love the fact that they're a HawkSoft partner because it so echoes the HawkSoft heart. And it just says, not only do we want to be a partner with you, but we want to hear you and we want to do what you need us to do, not what we think you need to do.”

Question 5: What are some of the things that you're looking forward to seeing in ValChoice in the future?

Dan shares that ValChoice is looking to move beyond renewals and retention. “We’re evolving to do everything sales-oriented. You tell us the type of opportunity you want: is it an upsell, is it a cross-sell, is it a customer referral, is it a book consolidation? And we automate that entire process too. And your team just has to respond when they get an action item that appears saying this customer's ready. What we've found is that we can sell as effectively as the best salespeople, in an automated fashion. So how do we take advantage of that to minimize the less productive things that are repetitive, and maximize the person that's doing that work to get directly to the point where they add the most value?”

Book rolls

Kelly agrees that she can see the potential the platform has for assisting with book roll communications. “Any agency owner out there will tell you when you come to a book roll or book consolidation, it is painstaking,” she says. “You don't want to disrupt the insured. You know what you're trying to accomplish moving from carrier to carrier. There’s nothing more valuable than sending out an email with a rating on this carrier that you want to move them to that says, this is a good choice.”

Policy updates

The other area she sees huge potential is in communicating changes from carriers. “Carriers are making some big changes right now. We're talking wind hail deductibles, base policy deductibles, and every struggle with every carrier is how best to communicate that to the consumer. They're mandated by the state, and I'm sure it’s somewhere in the 48-page packet they send out. But as an agent, I know that my obligation is to reiterate that this change is hitting your policy renewal. ValChoice gives me that capability. Not only that, but if you have a choice to buy back a higher deductible that's going to be mandated, you can tell me that in that email and I'll follow up with you. So I think it's just a nice extra layer of doing right by your customer in difficult times like we're in right now.”

Dan points out that clients are often more likely to read something from their agent than straight from the carrier. “We're delivering over 80% open rate on emails,” he says. “When carriers have a hard time getting anything read, this can help with bringing the agent into the loop and having the agent do this on their behalf. It's a very reliable, very robust communication method, no matter what the challenge at the time is.”

Sales

While Kelly admits that her agency hasn’t used ValChoice heavily in sales campaigns yet, she recounts an experience where it helped one of her agents close the sale. “He was up against another carrier. He sent out the [ValChoice] ratings, and it swayed him [the client] to go with one of our carriers versus another competitor. It totally gets their focus off of premium. Premium's always going to be a piece of it, but you can shift focus a little bit and say ultimately when a claim happens, this is the carrier you want standing behind you. We always say in the office, $100 savings at the point of sale means absolutely nothing at the time of a claim.”

“He sent out the [ValChoice] ratings, and it swayed him [the client] to go with one of our carriers versus another competitor. Premium's always going to be a piece of it, but you can shift focus a little bit and say ultimately when a claim happens, this is the carrier you want standing behind you.”

Question 6: How would you describe the value that ValChoice brings to your agency?

“It’s given me the ability to be proactive with my customers as opposed to reactive,” Kelly says. “That is what's going to differentiate me from the guy down the street. I think the fact that it's been able to change the tone of the calls that are coming in has been immensely beneficial to my staff.”

While she says she feels her agency has always done well with retention, she realizes that increasing retention even by one percent can make a huge difference for an agency. “It’s the law of large numbers,” she says. “1% book loss doesn't seem like a lot, but if you have X amount of premium volume, it is a lot. I don't think there's anything more painful to an agent than taking the exact same risk that you have on the books with one carrier, shifting it over to another carrier, cutting the premium in half, all the manual hours it takes to get that switched over, and then taking a two-point commission hint. When you start adding all that up, it's just staggering. So I'm very happy that this has helped me maintain our good retention numbers, if not bump those up. Because I think it's just the nature of things right now. Retention has got to be where we all focus right now.”