By Bernie Cesar Jr., CIC, and Nadyne Taylor, AAI, CIC
Cesar Insurance Agencies / Amherst, New York

GROWTH is imperative in the American Agency System. With banks, Internet sales, direct writers and other various factors to contend with, agencies that plan to be long-term players in this business either have to find a way to increase their size, become more efficient or partner with agencies that can provide them with the carriers, technological assistance and other support they need to prosper.

At Cesar Agencies, one of our strategies for growth is to acquire or partner with other agencies in New York state. These partnerships are valuable, and we encourage these agencies to retain their identities after we acquire them. The agencies that join us have different needs, including immediate continuation of their business, perpetuation or the retirement of the owner. Whatever the need, we have the ability to meet it.

Automation is important to agency operations, customer service and growth. Because of its importance, we recently not only switched our agency management system but converted to one that we access via an application service provider. We believe the ASP approach is an ideal fit for our agency’s growth strategy, as we’ll explain in this article.

In an ASP system, an agency’s data and software reside not in the agency but in a remote location on a server operated by the ASP. The agency accesses the ASP’s server either via the Internet or over a private network, or “intranet.” The ASP alternative has a number of important implications. One is that the user doesn’t have to bother with purchasing and installing upgrades to a software product. The ASP includes those enhancements in its monthly fees. Nor does an agency have to obtain increasingly more powerful computers or additional memory to run ever-more complex programs. Hardware is the ASP’s responsibility. A user needs only a “dumb terminal” or similar unit to access the ASP’s server. A typical personal computer also will do.

When Cesar Agencies decided to use an ASP-furnished system, we selected InStar’s Orion Agency Management System. While the product is available in the traditional “in-agency” format, we chose to access it through Andalon, a Web hosting company that functions as InStar’s application service provider. Andalon maintains the intranet-or virtual private network-that connects us to its server.

To implement this strategy, we had Instar convert the data files from our previous agency management system for use in our new one. We also installed two high-speed “T-l” lines, one for voice and one for data. With the T-1 lines, we have rapid, continuous access to the virtual private network. The T-l lines also give us full-time, desktop Internet access. Away from the office, employees can access our applications 24 hours a day by making a local telephone call to log on to an Internet service provider. From there they can connect to the virtual private network by use of passwords and access our data.

When CSRs start their PCs in the morning, they just click an icon to gain access to the remote server, then another for the InStar system. For security purposes, each employee has a password that he or she uses to log on to the network. Andalon is hosting more than our InStar system for us. Through the ASP, we also enjoy access to Microsoft Office, desktop faxing, remote and local printing, comparative rating and insurance-company download. Some of our software, such as DOS programs we use to run CLUE reports and various company-specific rating and upload programs, still reside on a local server in the agency itself.

We’ve been using our new agency management system since last July. The system has been quite reliable; we haven’t had any problems accessing the network, our programs or our data. The ASP maintains redundant servers to help ensure continuous service. It also provides security for our data, backs it up nightly and stores the backup media away from its premises. Because of such measures, we are comfortable with transferring the responsibility for maintaining our data-which, after all, represents the value of our agency-to a third party. We incurred a minor upfront charge when we went to the ASP system. We also paid InStar a one-time fee for data conversion. Now, we pay Andalon a monthly licensing fee for use of the agency management software as well as for such products as Microsoft Office. The fee is calculated on a per-user basis, and the total cost amounts to about what we would have paid just for monthly support of the agency management system and hardware, had we purchased everything outright. And, of course, we were spared the expense of buying an agency management system. Essentially, we are now “renting” one from the ASP.

We’ve seen a number of advantages to having an ASP system-in addition to not having to deal with software upgrades, as previously mentioned. One is the enhanced access we have to our agency management system and programs. Any of us, regardless of where we may be, can use a laptop and a local Internet connection to access our system, whether retrieve client data or to troubleshoot a problem. InStar’s staff can also “shadow” our CSRs and system, meaning that technicians can go to the ASP’s server and watch what we’re doing as we’re doing it. But perhaps the biggest benefit we see from our ASP system is that it will make us a more attractive suitor to a small agency looking for a merger partner. Many such agencies are being pressured by their carriers to obtain comprehensive agency management systems that can accept download, thereby sparing the insurers the expense of mailing paper documents to the agencies. Such a system can create major upfront and continuing expenses for a small agency.

We can save such an agency that expense. We can set up the agency’s client files as a separate unit of our agency management system on the ASP’s server, and the agency can then access its data with a PC-or even with just a network terminal lacking a hard drive. To have continuous, high-speed access to the network, as we do, the agency could use a high-speed T-1 line or a digital subscriber line. One-person offices possibly could get by with just a “dial-up” capability, using a standard telephone line and 56k modem.

For those agencies using outmoded agency management systems, we will have their data converted for our new agency management system. For those operating with paper files, we can arrange to have their carriers download their customer information directly into our agency management system, instantly converting those agencies into automated businesses using state-of-the-art technology. We can provide agencies with all this for a fraction of the cost of a traditional “in-agency” automation system.

The agencies we’ve already acquired are connected to our ASP system. For the most part, the principals of the acquired agencies are now working out of our office here in Amherst. One of the agents, however, continues to do business from his agency in Niagara Falls. The ASP solution enables us to accommodate either approach.