Veteran insurance tech architect discusses the future of the independent insurance channel
From developing the first ACORD forms based policy and claims system, to co-founding CISCo (where he led development of Sagitta Agency Management System) or serving as Senior Vice President of Technology at Vertafore, Frank Sentner has been shaping how insurance agencies & brokerages across North America operate since the 70’s. Together Frank and Michael discuss where tech trends are carrying the insurance industry, and what kinds of strategies agents & brokers should use to thrive in the changing marketplace.
What are other agents & brokers doing to thrive? What are the biggest trends affecting the retail insurance agent & broker? What are the most important strategies and tactics you need to grow faster? Find out here in the Connected Insurance Podcast, where Michael Jans discusses the biggest issues affecting the independent insurance agent and broker with the industries leading figures.
[Transcript] Frank Sentner – Sole Proprietor at Sentwood Consulting
Michael Jans: Hello everybody this is Michael Jans with Agency Revolution. We make it easy to automate your systems, engage your customers and grow your agency or your brokerage. I want to welcome you to this episode of the Connected Insurance Podcast. Where we examine the trends, innovations, challenges, and solutions to the biggest problems facing the insurance agents and brokers. I am especially honored to introduce to you our guest today, my friend, Frank Sentner.
Frank has been engaged in that intersection of insurance technology in our industry for 40 years. And often times when those two fields come together, insurance and technology, Frank has been in the middle of it. He was the creator, he designed and directed the development of Sagitta. He went on then to be the senior vice president of corporate technology for Vertafore. He has consulted with ACORD and continues to do so. He’s currently working on a consulting project for the Pennsylvania FAIR Plan and as I said, there are a very few people who really have been in the middle of the maelstrom where tech and insurance come together. Few understand it as well as Frank does, both strategically and actually at a tactical and technical level.
So without further adieu, it’s my honor to introduce you to my friend, Frank Sentner. All right, Frank, I’m so thrilled that you’re here with us today, thank you so much. How are you?
Frank Sentner: I’m fine, Michael, thank you. It’s good to be here.
Michael: All right. Well, for me this is an honor. I’m not sure if you won a lifetime achievement award, [chuckles] if that’s an honor or if it’s just talk. How long we’ve been hanging out? You did some things that were absolutely cutting edge and innovative in the day and the industry took note and paid attention and I think it was transformative. So, can you just take a moment and give us a little background on what you have done and what your role has been in our industry?
Frank: Thank you, Michael, for the kind words. Well, a large part of this is being in the right place at the right time and being lucky. I got redoomed into heading up a development team for a company called InsureNet back in the ‘70s because I had successfully convinced Marsh & McLennan to roll out their product as an agency management system and it didn’t perform as expected. So, I got to work with the development team and I learned that the business people and the technology people really had a hard time communicating and understanding one another.
I headed up a team that built the first ACORD forms-based agency management system, the customer information system portion of InsureNet and then I left went out on my own just as a consultant, thought I was smart enough to write my own system and had some really good technology and business people, my partner Jerry Levy, who is an insurance agent, my partner David Murdoch who is a technology guy. We wrote a system that subsequently became known as Sagitta. Sagitta is still used by some of the largest agents and brokers in the country.
I was fortunate in that, ACORD released, not long before we began building it, their ACORD level three AL3 standard for download and it made a beautiful data platform for an insurance agent and again we were fortunate that Aetna was looking for a replacement of their agency management system called Gemini and we got into the last minute because one of the guys that had come to work for me was friends with one of the people at our competitor. I learned about it and we won the contest. I hung with that until Vertafore bought Sagitta and I’m not really a big company guy so I went back on my own as a consultant and I’ve been doing that ever since working with some of the early stage internet companies. I have a bunch of startup clients and ACORD is actually one of my clients and some insurance carriers. So it’s been a nice ride, 40 years.
Michael: 40 years. So, out of historical curiosity, Sagitta was released when?
Frank: The first release of Sagitta to an agent was in 1988.
Michael: Wow. Okay, so as a technology vendor representing a technology vendor myself, I have a question, was it difficult? was it challenging to get agency principals to accept the fact that they needed a management system when they had never had one before? and very likely many of them had never heard of one before?
Frank: Well, this is a pretty interesting time, the late ’80s, early ’90s because enough traction had been gained by the early versions of agency management systems, the ones that we’re primarily accounting and ACORD has done a great job of promoting the concept. I remember the slogan in the early ’80s was paper printed on 83, we did not know that that meant 2083.
Michael: [laughs]
Frank: Agents had bought into the concept that we would be able to do business electronically and now I’m not sure if most of them understood exactly what that meant, but I think getting an agency management system by the time Sagitta came out in the late ’80s. Remember the insurance carriers owned most of the vendors at that point and they had been actively promoting agency management systems in exchange for a commitment of premium volume. So most of the larger agents already had a system of some kind in the eyes of the law. It was an exciting time and it’s only gotten more exciting year after year.
Michael: Speaking of exciting times, let’s fast forward the clock to today. When we look at this industry now, clearly we see– some people would call it turbulent, some people would say it’s an era of great innovations, some people would say that the pace of change has never been this fast. Broadly speaking, Frank, what do you think the future holds for independent agents?
Frank: Well, I do think the rate of change is increasing and I do think that the nature of the changes is different. And I’ve–like I said, been in this business for 40 years and I’ve been listening to people predict the demise of the independent agents for that entire period of time.
Michael: Yes. I’ve heard it for 25 years.
Frank: And most of those threats were not really grounded in the reality of what the value proposition of an independent agent is. Things like direct bill download, service centers from carriers is a little closer to something that’s a real threat. This is a fear based product. Most people want someone in their corner that they can trust when making these decisions. Now we have watched non-high net worth individual personal lines and life and small commercial lines become commodities. I don’t think that independent agents can really compete well in that space.
We’re seeing all of the vast majority of the independent agent companies announce their plans for Omnichannel. An Omnichannel is just a nice way of saying they’re going to get into the business of insurance distribution along with it. Digital technologies allow them to do that very effectively for a commodity lines of insurance. Digital brokers are a reality today, but I do believe that there’s plenty of room for a traditional bricks and mortar independent agent to survive, assuming that they embrace the digital technologies that their competitors are using so effectively. There’s no denying that virtually every customer they have is carrying around the equivalent of– from when I started this business, a mainframe computer in their pocket–
Michael: A supercomputer in their pocket.
Frank: Using those devices, smartphones, tablets more or less successfully and the agency management system vendors that are out there have recognized for the most part that they need to begin to provide mobile technology. Unfortunately, all too many independent agents and brokers are not properly focused on that opportunity. That failure to focus on the digital nature of our society today is a real threat and there are plenty of entities, be they traditional insurance entities or new entrants into the space who are completely committed to this methodology of communicating with customers and more and more customers every day are coming to expect that.
If our agent and broker, customers, are not focused on digital communications, on mobile solutions, on using social media and on integrating their business processes with their partners, their insurance carrier partners and with their clients in a real time, they do run the risk of becoming irrelevant, and that’s the real threat.
Michael: In a moment, I want to circle back to the technology itself and you may want to just jump right there. The question I have for you is, What do you think agents need to do right now to prepare for the future?
Frank: Yes. I am a technologist and I do love technology but the reality is, that the steps that an agent needs to take today to properly prepare are largely the same concrete business processes that you would expect any good business person to undertake. They need to assess realistically and without rose-colored glasses, the nature of their book of business and if they are heavily dependent upon commodity lines of insurance, they’re at risk and they need to know that they have to change the way that they are structuring their sales process so that they’re not heavily dependent upon that.
They need to look at the capabilities of their management and staff in light of what their needs are from a business perspective. If they don’t have someone who’s really good in some commercial sectors of the business, in order to expand their commercial business, they’re at risk. They need to find people like that. If they don’t have people on staff who understand the nature of servicing high-net-worth individuals, which is to say that they’re very high-touch. You can use technology to effectively deal with them but you can’t take a person who doesn’t think that customer service is of the utmost importance and make them do that.
They have to have that in their DNA. They need to look at their processes and their technologies then. Then reactivate, look at their business, their people. Then they look at their processes and technologies. The rest of it is pretty straight forward, you have to have a strategic plan and it has to be written down. You have to implement the process improvements that are necessary in order to get– you also need a tactical plan and to get to that tactical plan, to make that work, you need to implement processes and improvements and that includes auditing the workflow of your people. That includes auditing the validity of the data that you’ve got in your system and [laughter] I see this all the time.
If you don’t and have not implemented a strategy in your office of adding emails to every single customer accounts you completely miss the boat. I’m sure you’ve run into that. Once you’ve done this top-down and bottoms-up evaluation of your organization then you can look realistically at the adequacy of your management system, the capabilities that you need to develop, that you probably don’t have. Mobile capabilities, digital communications, social media and there are people with the skills out there, mostly young people that you can bring in to your organization at a relatively low cost and they can help you implement the plan.
But if you don’t have the plan, if you’re not leading your organization with a plan to how to become a digital competitor, you’re not going to get there.
Michael: Well said. I want to circle on something we’ve touched in on a number of times, technology itself. Frank, what are the two or three or so technology innovations that you think are most exciting and will be most supportive to the agency for us today.
Frank: I alluded to this a couple of times, but agents need to get on mobile platforms and to do that they need to have mobile apps. Okay? This is not today rocket science. For instance, if you want to communicate with your customers via text message, there are very very strict laws about how much texting you can do, how often and what you need to do in order to get permission from your customers to do so and there are very severe penalties, fines, if there are complaints made against you. However, if you create or buy from your agency management system vendor a mobile app that runs on your phone, you can put up those annoying little red dots that show up on the app.
Michael: The notifications.
Frank: Yes. To notify people that there’s something there. You can do that all day long because by downloading the app they have signed an agreement which says they’re acquiescing to being communicated that way. So you have brand awareness because you are pushing your brand, you have instant communications with your customers so you can really help those high-touch individuals that are out there and it’s done in an un-intrusive way so that the customer really appreciates and doesn’t feel annoyed by it. Whereas a lot of times other forms of communication can be perceived as being annoying.
Now, all of that has to be tied in on the back end to an agency management system that is automatically triggering those communications. You don’t want a human being having to be responsible for that. You need very tight integration between your mobile application, your mobile app, and your internal back office system. That also means that you should be leveraging social media. That means you need to be on Facebook, you need to be on LinkedIn, you may need to be on Twitter, Twitter can be used very effectively if you know what you are doing, you should probably be doing things like this, podcasts.
Your customers have very different ways that they may want to learn about the services that you provide and you can leverage the same exact content, the same information in all of those media and last but not least, your website. But websites are passe at this point. That’s a very passive way of communicating. You’ve got to have automated digital communications and that’s where organizations like yours, Michael, the Agency Revolution come in, where you have made a science of how to communicate effectively with customers. That’s absolutely essential and you must have better digital communications with your business partners. You have to be able to do automated quote and submission with your carriers.
And agents and brokers have not done a good job of demanding that real-time integration with their partners.
Michael: I want to take advantage of the fact that I have somebody who wrote the code for one of the great management systems in the industry. Do you see some exciting innovations happening on the management systems side?
Frank: I do. Chief among them from the traditional agency management system vendors, the big one’s in particular, are the fact that they’ve created mobile apps for their producers so producers don’t have to be tied to the office and they’ve also extended those in some cases at least more or less effectively to the customer. So the agent or broker doesn’t have to pay somebody to develop a mobile app. They can use a mobile app from their agency management system better. The advantage of that is that it’s tightly integrated, as I’ve said, to the back-end system so the communications flow electronically with little or no human intervention. So that’s a big innovation. I will tell you the traditional agency management system vendors are a little stodgy in terms of their back-end processing and their mobile apps are not exactly the most beautiful and cutting-edge.
There are some brand new agency management system vendors coming up that base their systems on platforms like Salesforce’s CRM. The focus of their platforms is first and foremost sales. That’s not true of the older traditional agency management system, but it is true of the newer ones, and because they’ve grown up in an environment where mobile is taken for granted, their mobile apps are not only tightly integrated, they’re much better looking, they’re much snazzier and easier to use. That does make a difference. People do notice. They’re going to be comparing your mobile app to other mobile apps from people whose only business is mobile apps. That’s a difficult comparison to survive.
Goodness knows, there are new technologies available every day from natural language processing where you can talk directly to a computer and it will understand what you’re saying, to big data analytics which allow you to understand things about your customers that you’ve never understood before and couldn’t possibly have understood. We’re at a level of artificial intelligence. It’s already there and it is going to impact white-collar jobs.
Michael: Yes. Right.
Frank: Okay, now, I don’t see a machine selling insurance to anybody in the near future. By that, I mean in the next 20 years, but I do see customer service functions being replaced almost entirely by machines. You may still have a few people around answering phones and being available for human communication, but once we get to the stage where we’re using chat box to answer questions online from our mobile apps or from a website, people have no way of knowing that that’s a machine talking to them. I mean, sincerely, they couldn’t possibly tell.
Michael: Yes.
Frank: The good news about the artificial intelligence is that these machine learning systems are only going to get better every single day. [crosstalk]
Michael: Right. With every interaction, they learn, right? It’s the nature of machine learning.
Frank: They don’t sleep. They don’t eat. They don’t take breaks.
Michael: All they do is learn.
Frank: All they do is learn. It’s going to be an exponential curve in terms of the evolution of that process. So, yes, there’s some really amazing– and we haven’t used the word disruptive yet but that’s a very big word these days in InsureTech. There are some very disruptive technologies coming along but no one is going to replace, in the very near future, the person closest to the customer and that’s the independent agent.
Michael: Right, okay. So far, mostly what we’ve talked about is change, change, and more change. Now, you and I’ve been in the industry long enough to know that that’s not something that people generally think of when they think of insurance. They don’t think that this is the most innovative industry. They don’t tend to think of this as a fast-moving industry. Maybe one of its great strengths is its stability and its risk aversed nature. That has to be an obstacle to the transformation that the industry needs to undergo. What are the challenges or the obstacles to success for the independent agency channel?
Frank: Yes, you’re right. It’s a matter of- often your greatest strength is your greatest weakness. Old agency management systems and old agency business practices and workflows, those are a serious threat to the success of an independent agency in the years coming soon, very soon. And I would say because agents and brokers have to work so closely with their insurance carrier partners, that the extent to which the carriers are reluctant to digitize their business practices, reluctant to tightly integrate their technologies with agent broker technology, that also represents a significant threat.
Those are the primary obstacles that I see. We have a generation of independent agents who are my age or somewhat younger which is to say we’re on the way out. Unfortunately, our industry which used to have a very fine record of transferring these businesses from one generation to a family, a few families into another generation, that’s not happening so much anymore. So it’s incumbent upon agents to go outside of their family comfort zone and recruit young people to become part of the business and you have to give them an ownership incentive in order to keep them.
That process is not a smooth one or an easy one but it’s absolutely essential. Most of these young people, if you give them an opportunity to think about learning the business and think about how they would expect to be dealt with as a customer themselves, could tell you pretty quickly what you’re missing. You don’t have to make them a partner on day one but you do have to bring young blood into the agency and give them a vested interest in order to get them to plot what it is they know in viscerally to the evolution of your firm.
Michael: If an agent wants to, let’s say they’re going to take this conversation seriously, they want to learn more about technology, they want to learn about innovation and advances. What do you suggest they should do?
Frank: Well, we have a lot of insurance technology innovation going on right now. In fact, I spend most of my time working with startups and going to conferences and listening to podcasts like this. There are lots of opportunities for agents to learn about this. A podcast like this or joining innovation groups, the ITLs, Insurance Thought Leadership, Innovator’s Edge Group is something you can join for a nominal amount of money a year and you get exposed to all these new technologies and businesses that are out there specifically focused on the insurance vertical. There are articles, blogs, newsletters, innovation newsletters. A couple of my favorites are the insurance about leadership e-newsletter and my very favorite one is Coverager, C-O-V-E-R-A-G-E-R, Coverager, which used to be insurance entertainment, that I read every single day. [crosstalk]
Michael: I just finished interviewing Shefi before you and I had the opportunity to get on the phone. So, I also read that one every single day. She’s great.
Frank: She’s amazing. Then they should do the traditional things which unfortunately all to walk and get shunted off to individuals in the organization who have operational responsibility but not managerial responsibilities and that is, go to your agency automation conference, go to your vendor’s user group meetings, local and regional. You will learn more at those conferences from your peers than you will learn from the vendor or the vendor representatives, but if you’re not there you can’t learn it. There are InsureTech conferences cropping up everywhere. InsureTech Boston, InsureTech New York, InsureTech Silicon Valley, go in and google I-N-S-U-R-T-E-C-H or I-N-S-U-R-E-T-E-C-H, it’s spelled both ways, and you will find countless recommendations locally from Google, on conferences you can go and be absolutely amazed at what’s happening in the insurance space.
Michael: Ranking it a moment or two I’m going to ask you two or three of my favorite questions. Before I do that, first of all, I think we should clarify what the nature of your current work is and what kind of client do you think you deliver the most valuable service to and then of course how people could find you, how they can reach out to you?
Frank: Okay, my clients run the gamut, I have an insurance carrier that I’ve been working with for two years to transition their policy claims and billing systems. I’m running the project and not the vendor. I have a couple of insurance agencies that have retained me to help them with precisely what we’ve just been discussing for most of this time and I have several startup agency management system vendors and other types of startups that I’m mentoring and giving them both business and technology information to help them jump start their businesses.
ACORD, our industry standards body, and it’s not just forms [chuckles] has gone through its own transformation in the last year, we have a new CEO. They now have a for-profit division and they are beginning to bring to the industry some real technology tools that can be taken advantage of by solution providers, carriers and agents and brokers. So, I run the gamut of insurance technology from carriers to agents and brokers to the solution providers to standards and industry organizations.
Michael: If somebody wants to find you what’s the magic?
Frank: I’m on LinkedIn, that’s the best way to do it. It’s Frank Sentner S-E-N-T-N-E-R and that’s all you got to put in. They can also call me on my cell phone, I don’t know if I should give them cell phone but it’s 860 794 7806. It’s with me all the time.
Michael: All right. Before we’re done, can I ask you another couple of questions?
Frank: Sure.
Michael: All right, I want to go slightly off topic here. Question number one. Frank if you were going to select up to three books that have been most inspirational to you or do you think would be of the most value to the people that are listening, business or otherwise but we’re primarily business podcast, what would you suggest?
Frank: Well, the book that I’m reading right now has me really excited and it’s called the Rise of the Robots [laughs] and the author has quite deliberately chosen something out of Terminatorand it is astonishing. I thought I was hearing about most of the innovations that have been taking place and this book was written in 2015 okay, or published in 2015, written in 2014, just an amazing discussion of the impact of technological advancement on our economy and most specifically on our jobs and within that category most specifically on white collar jobs. So, really fascinating book.
Because I’m getting older and one of the things that I want to do in my declining years is transfer this stuff that I’ve got in my head from 40 years of insurance technology into younger brains. I read a book called From Age-Ing to Sage-Ing and it’s really about how to approach elderhood in a much more dynamic and effective way, much more proactive way than simply retiring or reclining.
Apart from that, I also read Sapiens: A Brief History of Humankind. I love those kinds of books. It really looks at what it is about our evolution that caused us to be the way we are and what we can expect going forward on the basis of the ways in which we’ve evolved and the kind of animal that we are. Those are the three really good books I knew last year.
Michael: That’s very thoughtful. Alright, I’m going to give you an opportunity to practice sage-ing. Are you ready?
Frank: You got it.
Michael: Okay, let’s say we give you permission for up to two sentences, okay? ideally maybe one, okay? but if you were going to say something, deliver something, share something that you thought was not just smart but may be wise to the independent insurance agency system, to the people who run it, to those of us who have some influence into agency principles primarily. How would you boil that down?
Frank: Well, I think one of the biggest enemies to our ability to think out of the box is our preconceived notions about the way things are and I often describe my consulting practice as the art of asking the stupid question.
[laughter]
Frank: You should never be afraid to question what appears to be obvious and I will sometimes email clients because we’ll sit down to have a meeting and they’ll state something they consider to be obvious about their business and I will say, why or what or how and I will keep asking the question and sometimes I apologize, “I’m sorry, I know this is the third time that I said why but you’re not answering my question.
Michael: You still haven’t answered my question [laughs].
Frank: Right.
Michael: Right
Frank: “Why do you believe that to be true?” and that’s what the Zen monks called beginner’s mind and I try whenever possible. I’m much better at teaching this when I’m doing this. I will tell you but I try whenever possible to approach every client with beginner’s mind and to try to understand them as an organization because every organization has its own personality in smaller organizations that tend to be very predominantly the personality of the owner, but in larger organizations, there’s this interplay amongst the parties.
My consulting is really all about people and process and very little about technology, to be honest with you. I get called to come in and help agencies choose an agency management system and I come in and the first thing I want to know is how they’re using their current system and they’re often, “Well, no, we don’t want you to look at how we’re using our current system, we know we’re doing that really wrong.”
Michael: [laughs] Right.
Frank: There’s no reason that the system has to be used long if you know you’re doing it wrong. Why don’t we start practicing by using it right? Why don’t we get the data correct in your current system before you move into the new system and spend half your life cleaning it up? It can be frustrating because once people have made the decision, “I want to change systems”, they want to change systems. But I am uncomfortable taking that at face value. I will also tell you, I’m often called in to deal with the aftermath of that kind of decision making, okay, we changed agency management systems last year and it’s a nightmare. We can’t conceive of changing again [laughs] because it’s been so awful.
Michael: Right.
Frank: Right.
Michael: It’s usually the most painful part of a legend’s life right?
Frank: It’s like a heart-lung brain transplant.
Michael: [laughs]
Frank: But they know that it’s not right, they know that it’s not working and I’ve seen my beloved Sagitta used so badly in an agency that it broke my heart. Okay? I’ve seen systems that I consider to be completely deficient used so effectively that I was astonished. It’s just how the people are doing it. It’s not the system.
Michael: Got it. Frank, I’m going to gift you a box of semi-colons and then I think we probably did get that answer into one or two sentences.
[laughter]
Frank: Thank you. I appreciate it.
Michael: Something you said makes me want to share a quote with you and then I’ll wind it up here. I think my favorite quote from Steve Jobs, and I might paraphrase a little, but I’ve used this enough that I think I have it by heart. He said, “It’s not technology alone that makes the difference. It’s technology buried with the humanity’s liberal arts that makes our hearts sing.”
I thought, when you said, as a technology strategist, when you said you’d go in and you don’t talk that much about technology, I thought, “Right on”. Really, ultimately it’s about people and how it help makes our lives better. Thank you for sharing that. All right, my friend.
Frank: You’re welcome. Thank you, Michael.
Michael: Thank you very much for joining us. This is a treat for all of us. It was a treat for me and I have a page worth of notes that I wrote down myself. Frank, thanks for sharing and wish you terrific day.
Frank: You too. Take care.