Episode 328: Is Your Agency AI Ready

Welcome back to the Scale Your Insurance Agency Podcast, the show built for independent agency owners who are done being the bottleneck in their own business. I'm Daniel Metcalf, and every week I'm joined by my co-host Mike Stromso, one of the most respected operators in the independent agency world. Between the two of us, we bring you the real levers that move a $3 to $20 million agency from successful but maxed out to systemized, scalable, and running without you holding it all together. Here's what we focus on. Mike brings the people side, leadership, team development, niche sales mastery, and a three-piece system that helps agencies build a business worth owning. I bring the machine side. AI, automation, and workflow design that frees your team from the operational drag, eating your margin and your time. Together, we're building a framework that can grow an independent agency 4X to 9X without burning out your people or your checkbook. If you're an agency owner who's tired of growing by hiring, who knows you have a capacity sitting on the table but can't figure out how to unlock it, this is the show for you and your weekly edge.

Greetings, everybody. Welcome to the next episode of the Scaling Your Insurance Agency podcast. I'm here with my co-host, Daniel Metcalf. Hey Daniel, how are you doing?

I'm doing fantastic, Mike. Yourself?

The gift of another day, another opportunity. And it's been a whirlwind this week in the industry, has it not?

Uh it seems like every week is a whirlwind at this at this particular time. We can go we can go hour by hour uh if we like at this point.

I I remember in our growing agency days, I used to say hour by hour, and then I started cutting it down to every 30 minutes and then every 15 minutes, and and reality is today minute by minute, right? That's right. I mean, with the news that came out uh from the top of the industry this week concerning that direct writer SF and their decision to axe contracts for all of their agents, and and there's other large agencies out there making decisions to use things that are right in your wheelhouse, Daniel. Automation technology powered by AI instead of human beings. Before we get into it, Daniel, what are your quick thoughts on that?

Um, my quick thoughts on some of the decisions to use artificial intelligence-driven um agents, if you will, in order to close some deals, to provide service. Um, we all knew it was coming, right? We we've been trying to we've been talking about it since the LLMs came out in 2022. We've been talking about it and talking about it that eventually someone was going to make the investment and start to do it. Um because it just, you know, if the other enterprises, you know, the other businesses on Wall Street can take advantage of it, then of course they're gonna take advantage of it too. And there's still gonna be a lot of learning, there's going to be a lot of, I think, um, you know, might maybe there'll be some short-term gains for a lot of these organizations, but then there might be some pushback from people. We'll have to see, right? It's it's a wait and see from this standpoint of it. But this is why we've been beating this drum for as long as I have to say if you don't start looking at your agency and looking at how you're building up your relationships, how you're managing the distribution, how you're in charge of the distribution and the relationships, and using AI and automation to drive your agency to scale, you could be in a position where this could start to affect your business. Um do I think that it's at the same level of what others are saying that every agency is now put on notice? No, I don't. But do I think if you took three agencies that are in um the name just came to Peach Tree, Georgia as an example? If there's three agencies in Peachtree, Georgia, and two of them are using AI and automation to help make them more efficient and help them be the best possible management of their relationships of the risk of those individuals in that town versus one that hasn't even started yet, I'd put my bet on the two that have AI and on AI and automation.

And and we were talking about this earlier this morning in a different conversation. It's really a cultural mindset, is it not?

Yes, and that's that is a lot of where um that is a lot of where we're we're seeing the hard work being put in right now, which is look, we have to start having the cultural mindset that artificial intelligence and automation is no longer just an item on our in our tool belt, tool belt to work off of. We now have to start to integrate it and use it on a regular basis. And we're gonna, and for those that are going to um thrive with us at this agency, we're gonna, this is this is the attitude and effort and culture that we're going to build here. Um that doesn't excuse the fact of not getting out in front of your relationships, not getting out from behind your computer and going to still build be in the community. That that is where we should be looking is like, how do I free myself up to spend more time doing that, right? To take the niches that we've identified that are going to be the best particular, you know, the best where we can be the best at, that we're gonna focus on, whether that's a geographical niche or that's a type of, you know, a type of individual niche, or if that's a if that's a type of business niche, whatever that might be, that is what we're gonna hyper focus on, and we're gonna grow within that list so that we can basically protect ourselves from any of these outside forces that might be um coming trying to come after our business.

Singular focus is something that we've been talking about. In fact, we're working with an agency right now um that we I you identified it. I believe you were the one in our team conversation that said, why aren't we making this singular focus our priority right now? There's so much opportunity there, and we find it in agency after agency after agency in reality, right? It's right back to the acre of diamonds, right? And so we've taken that and implemented it in this agency. And when you and your team created the dashboard, it became very, very real. It's like they went, oh, holy moly. Right. So great, great work. So let me let me jump into. You have something else to add there?

No, but that's you kind of led to the next piece, which is if you if if you can't take in the data, analyze the data, and put that against the benchmarks of where you're trying to go, you won't see, you know, you can't see the label from inside the box, as we like to say, right? So knowing your numbers, gathering those numbers, assessing those numbers, analyzing them, and then coming up with an output that says, oh, hey, this is the direction that we should go. All the numbers tell us that we should do that, right? But math is telling us what we should be working towards. And now we have to make decisions, sometimes hard, sometimes easy or simple, not always easy decisions on where where should we be putting our focus and money and you know, lead generation and marketing and staff and expertise and tools. Like that's that's what we should be focused on. Put in our guidelines of these are the dates that we want to get this done by and work towards those. What are we doing every single day to get to the to that deadline? Without the having that number, we couldn't have had that strategic conversation about how are we going to scale with the.

And frankly, you don't know this because we haven't had a chance to collaborate as a team uh after an executive coaching session this week, but that was part of the conversation. Yeah. It's like, wait a minute, these benchmarks, how come we're not even close? And and that's the beauty of doing the entirety of the work. Yeah. And really, it goes back to the top of the podcast. The things that are going on in the industry right now, let's keep going on this conversation, shall we? Sure, sure, sure. I'm getting off fire now. So the direction that the industry's going with regard to AI, and frankly, like I said at the top of the show, uh, there's a lot of large insurance organizations who have taken big, big steps with regarding uh technology automation powered by AI for their companies, and they're planning to use it in a very big way because they have the resources money, people, and all of it, right? Some agencies out there don't have those kind of resources, and we get that. And we lived it, and we're living it right now. So, with that being said, and we talked about cultural mindset, how important it is that an agency have build in the right kind of cultural mindset. And I remember when we looked at the most recent Reagan Best Practices Report, right? I believe one of the big aha moments when we went through that together was organizational readiness. You remember that paragraph?

I do.

Yeah. Do you want to comment on that real quick? Because I mean that's what this is all about for us to continue to keep up, and then I'm gonna dovetail after that.

No, keep on. You're gonna do it.

Yeah, okay, good. And I'll set it up and I want to hear what you have to say. But with that being said, I remember to set the tone back to 20 years ago when a national carrier, which is absorbed uh, you know, the other company, and it's the company that is now selling direct via AI. You know, the Statue of Liberty. Um is now selling directly. I mean, it's out there. Liberty Mutual did it, and they are selling insurance directly using an AI-powered engine. Uh, one of the top five uh independent insurance agencies in America is now selling, or excuse me, servicing, excuse me, servicing insurance below a certain revenue threshold by only using technology, no human intervention, and everything else that's happening out there. So it is real, it is out there, but the crux to use a scaling term is this. I personally believe, because I had virtual producer over 20 years ago in my agency. I was one of the very first agencies that was given that opportunity and it failed within two years. Done. They eliminated the program. Now, my opinion as to why that happened is because first of all, insurance is a mystery. Insurance is a mystery. Most consumers don't understand that, they think they understand it. They're becoming more educated because of technology, which is fantastic. Yep. Okay. Technology can explain a lot of things, but the critical thinking decisions and how it applies to a personal situation with regard to protecting assets, I don't believe for a second that we'll ever be able to be completely and properly answered by technology. As fast as I say that in the next five years. What do you think about that, Daniel?

Yeah, I I would, you know, never is a really long time. Yeah, that's true. Um, never isn't a really long time. I think that if there is the monetary motivation in order to find a way to make that happen, right? So that, and if there is a way that it helps both the end user, right, the insured, and the carrier of the company, they're gonna find a way to have technology do it. Right? That does that's just the where where we're going up to this point. The piece in the middle that is still, if you quote, the mystery to me, is that as a consumer, I might have questions or I might have a personal situation, or I might have something that is confusing to me that I might get the robot answer for, but I'm not gonna get the empathy, the sympathy, I'm not gonna get the uh unbiased conversation with someone that can actually help me with what, you know, getting the value of what I'm buying, right? That I don't think a robot's going to be able to replace in the next five years. Um I feel that there is still a sense of community and there's still a sense of being a part of something working with small businesses, working with media, like I still feel that there is that sentiment here, you know, especially in the United States. And so that's where I feel that that's that's still the opportunity.

100%. So importantly, for the cultural mindset, it's important from a leadership perspective in the independent insurance agency operational space that leadership has these conversations with the team so that they are clear what they bring to the table, the value that they bring to the table.

Exactly.

And why those human relationships are so vitally important. And like you just said, money follows trust. And how do we build trust?

No like trust, right? You gotta get them to know them, then they gotta like you, and then they're gonna trust you, right? And that's and that's that's the piece of it. So if you can create no like and trust with uh with an artificial intelligence agent, then what's the value of that?

Well, I mean, I'll just use my own example as uh to as a story point. You know, when Cindy and I first started dating over 30 almost 30, let me think, 35 plus years ago, she didn't trust me after the first date. Sure. Maybe not even the second date. Maybe it took a couple of months, I don't know. But, you know, it's the same type of equation with regard to technology. I mean, to what extent are people gonna truly trust it to do the work? I think absolutely 100% there's a part of the agency operations that automation technology powered by AI can absolutely fill that gap right now. And that's what you guys see and do. But there's still that larger piece of the pie that needs the right people doing the right work. So exciting times to try to unpack this and figure it out, right?

Yeah, I mean, that's and again, I mean, there's so much going on, there's so many things. And yes, the we all knew that the people with the funds and the people with the most to win and gain were gonna try to find a way to use artificial intelligence to replace something, right? Or enhance something. Yeah, that shouldn't have us put our heads in the sand and say, oh, doom is us, we're never gonna, we're you know, we're getting replaced. Instead, it should be like, what can we do in order to make ourselves irreplaceable? What can we do? What can we do? What can we add? What can we eliminate? What can we, what can we alter in order to make us as effective as possible within this threat that's out in front of us? How do we embrace it? How do we how do we see things differently? How do we, you know, that that's where I see what's such an exciting part of the time is now we can start to reinvent and re and re uh re-engage ourselves on, you know, if we've always wanted to say to ourselves, hey, I'd rather work on the business than in the business, well, there's no better time than now to be able to start to do that, right? And make those different choices to be able to do it, in my humble opinion.

I I do agree. Great take, great take. So I was studying this week, uh, my current read again or audio study again is Choose Your Enemies Wisely by Patrick Vett David. So it's it's a it's a leadership mindset, but he blends in a lot of his own stories and history. And he said yesterday in my listen a quote by Peter Diamondis. Do you know who Peter Diamondis is, the Silicon Valley entrepreneur?

Yes.

Yeah. So anyway, Peter said roughly 2022 when all this started, when all the AI really came to the forefront, he said, and this is for everybody. So, I mean, even if we're here roughly three to four years later, you still have an opportunity right now to make sure that you get started somehow. And that's our goal. Get started somehow if you haven't. And I know a lot of people have, but they're still in that trying to figure out what the best strategy is stage. But Diamond has said 10 years from now, there's going to be two kinds of businesses: businesses that have embraced and adapted AI to the best of their ability, and businesses that are out of business. And it's our position here to help the industry as a whole. And that's why Daniel and I are here. I mean, we are both very passionate about giving back to the industry because it's been so good to us, right?

Right, absolutely.

Yeah, and so we want to give back in the best way we know how. And so that's why we encourage everybody here every single week to build your infrastructure, build your foundation, and let's reposition. Because I find myself saying this a lot this week, Daniel. Daniel, if you're gonna build your dream home, would you build your dream home on a shaky foundation? Of course not. Of course not, right? So why would somebody consider building possibly the greatest financial asset of their life on a shaky foundation?

Well, I mean, maybe they didn't know how to put a strong foundation up to begin with. There isn't there isn't always a roadmap all in front of us to say, right, how do I build a business with a very solid foundation?

That's right. That's right. And so that's where we come in. Uh, we we have the roadmap, we have built the foundational roadmap to help agencies build that solid foundation. I asked a very successful agency owner, five million plus revenue agency on the way to 10 um recently that question. And he said, if I knew I was doing it, in other words, not building on a strong foundation, I would stop construction immediately. And it was also his position that possibly as much as 60% of agencies out there in the industry, the 38, 39,000 agencies are not building their agency on a solid foundation. I mean, nothing but opportunity, right? Absolutely. So I found in front of me, Daniel, and I want you to comment on this with your greatest wisdom and thoughts, which you have tons of it, the AI and organizational readiness. What do agencies need to do in today's marketplace? And based on what you see, and I know it's really hard to see anything with regard to automation technology and AI, even what next month, right? Right. But based on your long history, maybe you know, in the coming months, by the end of the year, maybe even 2027. With a caution. So strong foundation regarding automation technology powered by I powered by AI. And this is from the Reagan Best Practices 2025 report, and they did deep study on this from real independent insurance agency. They said technology alone does not create value. And when I say value, I want you to think about your valuation and what is your long-term plan and what is your end game look like. More importantly, do you know? Technology alone does not create value. Organizational readiness does. Studies consistently show that the success rate of AI implementations correlates directly with upfront planning, structural alignment, and change management strategies. Brokerages agencies looking to adapt generative AI must start with internal alignment and a clear eyed view of what readiness entails. And as I read that again, I started thinking about you know what we have to offer in the Onyx platform because we have a lot of those things, and that's part of the reason that we built it. But Daniel, when I say that to help agencies out there get ready, if they're not, from a vision standpoint, from a cultural mindset standpoint, and more, what are you thinking and feeling?

I think that organizations have dabbled in using artificial intelligence as a very smart chat partner. I think that's what the majority of them have used it for. Um, I think that they've spent some time looking at, okay, how do I automate my do some automations with CRMs and AMSs and maybe there's some other third-party tools, um, you know, from assault to a you know, Canopy Connect or whatever it might look like as far as you know, what can I use for automation? But they haven't actually looked and roadmap out how their business operates, what's their unique value proposition, what tools should I be using to execute on this, what AI and automation should be forefront in order to enhance and scale and make effective what I'm doing. So that's the foundation, the organizational foundation. The difficult nature is if you already have an agency that's been doing it the same way for 20 some plus years, and this is the way that we've done it, and we're trying to piecemeal in technology and put some automations in, it's it's becoming a difficult conversation because that's unwinding a lot of things, right? That's unwinding a lot of uh in one of the companies I used to work at, we used to call it old tapes, right? The old tapes of how we were, we, we would, we did things. And so then change management has to come in. That's what it's talking about on the right, is that hey, the value is that as an organization, right? Again, when they look at the valuation of a of a of an agency, how are they determining, Mike, how valuable an agency is? So if we're talking about value, how do they determine the value of an agency, the dollar value of an agency?

I'm gonna go back to something that I heard three to four years ago from our our great friend to the industry, Carrie Wallace. And when I asked her that question, and I still believe it's the right answer, as of today, to correct myself from earlier, never's a long time. But today, and I think it's business period, right? Because anybody that's going to invest in any business, they want to be able to see, and the answer to your question, Daniel, is predictability. How predictable is income?

Yep, and I there's a caveat to that also. How predictable is the income, how profitable is the income, and how predictable and profitable is it when the owner isn't there.

Exactly.

Because when I purchase this, most likely the owner isn't going to be available. Will this still stay as predictable and profitable when the owner is no longer there? That is how they're measuring the value of multiples of what's going on with those businesses. If that's your if that's your goal is to sell it and or scale to sell or sell it, that's what they're looking at, right? And so when we talk about, so parts of that is you have to have a really good change management in place. That means there's a leadership, right? There's a team of people who want to organizationally change artificial intelligence and automation, right? If it's just the owner coming in saying, this is what we're going to do, and there's going to be there's good, you know, and there's not a team of people behind it, and there's not a change management plan, and there isn't what's going on, you're just going to end up in the same spot you're in today. But if you've already put in the infrastructure and the foundation in place to say, hey, this is where we're going, this is how we're going to do it. We want to compete, we want to scale, get your your leadership has to be on board, and your leadership has to have those change management skills to be able to make those when we make those changes in somebody's day-to-day work, have to be prepared for that. I'll give you an example. First, one of the we were kicking off. We are going to build some AI automation forward into this agency. We're doing the kickoff call. We were talking to a few of the managers. So we already had the leaders, we're already on board, we already had the roadmap leaders on board. Now we're talking to the managers, and the one of the managers says, There's no way Pam's gonna do this. No way. Because Pam's whole job is data entry. Pam's whole job is data entry. What we're looking at here is we won't need data entry because it's gonna be taking the transcripts and it's automatically gonna fill out the forms based on the transcripts that are being recorded. It's already gonna fill out the forms for us automatically. That's what we have Pam do. And I didn't have to say it, right? I didn't have to say it. The owner didn't have to, the CEO, if you will, didn't have to say it. One of the other leaders stepped up and said, that's because we have to work with Pam on what she's going to do here now because she's still valuable to the organization. Number one, we need her managing, we're we're gonna have to teach her how to manage the agent that does the download the transcription, put it into the automatically put the data entry into the where it's supposed to go and make sure that's actually going into there. And how is the results of that going to be like that's the change, and so that is what we're talking about, having that change management. Didn't have to come from the owner, didn't or the CEO didn't have to come from you know that direct manager, another one of the leaders stepped up and said, Hey, that's on us as a team as we have to start working through some of this change management as well. And that's that's not on the tech team, right? That was the first thing that they said was like, hey, don't hang that on the tech team. Like they're the ones just building the infrastructure for it, right? Helping us build this. That's on us as a leadership team. And then a and then a larger organization that's gonna purchase this, right? Or you know, a merger situation, whatever, they're gonna look and they're gonna look behind the covers and they're gonna say, wow, they've they've got the organizational structure there. Wow, they have change management, they got a strong leadership team. So if we end up purchasing this thing, it's worth way more than the one that doesn't have it. And that just happens to use ChatGPT and maybe some automations with agency Zoom or Agency Revolution or whatever it is, just has some automations. There, there's a difference in value there.

And that's what that that study is really saying structured, predictable income from the gross standpoint and the net standpoint, also vitally important.

So I have another I have a random question that just came up. I just was thinking about this. I want to kind of go back. I was just thinking about when you were saying on the artificial intelligence making sales a certain size, right? Yep. What happens? How is artificial intelligence gonna handle it if when someone either gets dropped from their current coverage has to find a new market? How are they gonna handle it if the price goes up by double? Right? So there's a 30% or 40% increase in their premium amount from one year to the next at renewal, or down 30%, and now you can go talk to four or five other different places about what that insurance is gonna be. How is artificial intelligence gonna handle that?

It's no accident that this came up in a conversation with one of our members yesterday because one of our members was in this exact situation, submitted an application to a carrier, the carrier's AI system evaluated it and declined it. Now the agent knew good and well that it was acceptable to that company, that's why he sent it there. And so he was able to get a hold of somebody at the carrier level, finally, and said, Hey, what's going on? You know what they told them, Daniel?

What's that?

Just resubmit it. Sure. Right? Sure, no problem. But there's there's two things that's going through my mind. That's a great question, by the way. They're just pushing it back to somebody else, meaning the carriers, God bless them.

Right.

I think most of the time there are our partners. I'll pause right there. By the way, I love the independent insurance agency business, and I know why we exist, is why I said that. And and our carrier partners are the financial infrastructure that ultimately pays claims. I get that, I get that. But back to our conversation, Daniel. Yep. So that was that's my as of yesterday analogy of what you just said.

Yeah, and even on the flip side, so how are they gonna have that conversation? How are they gonna have the conversation with the client on hey, your rate's going up by 50%? Do you want to sign this? Like, is that what it's gonna like? Here's your new rate.

Yeah, just go ahead and sign here and make sure your credit card information is up to date or whatever, whatever. Right.

I mean, yeah, that that's what I'm getting. Like that that's where you need to have that to build that relationship in the middle, right? Or or have the ability to, again, why independent agencies exist, is like have the ability to go and find, help them, right? Help them make sure that they get the coverage that they need, right? Hey, we've had a lot of losses, I understand that, but we still need to have the coverage. Can you help me find? You know, I might have to pay more, but can you help me find an alternative to whatever this might be? Artificial intelligence might be able to look around and do, you know, look around on, you know, crawl some websites, crawl some some quotes, but it can't have that personal relationship to know what you're dealing with and maybe some ways that we can we can make this work for you, right? And so that's what we're trying to talk about, building out AI automation infrastructure is more or less on the how to collect, collect the data, how to analyze the data, how to make sure that you have everything correct, making sure that um doing research, any of those kinds of things that take energy and take time that can be done 24 hours, 365 with no breaks, no doesn't need to, you know, doesn't need a vacation, doesn't need to eat, any of those kind of things. That's how we have to start building out that infrastructure, not making decisions, not building relationships. We still have to spend the time to be able to do that. That is where we need to focus the people on. And then the other ones that are doing non-licensed work are going to be the ones that have to manage the agents, the agents that are being built, the AI agents, I right, I call them the robots when we're talking about insurance. The the the who's going to run the robots. So it still has to have a human in the loop to help make sure that the robot's working. Because like I said, I'll just resubmit it. Or what? What if there was no human there to tell them to resubmit it?

Yep. 100%.

So I don't always so that's where I'm trying to express the whole idea of like, don't put your head in the sand, start to build out, start to think through what your role is and how we can maximize that role, the role in the industry.

Fantastic conversation. I've loved this conversation. I hope everybody's taking copious notes because there was a lot to unpack here. But if you're not sure what the next steps are or you want to learn more about making sure that your agency is organizationally ready to implement all possible forms of technology automation powered by AI and your agency and what the future looks like in the proper next steps. There's a link around the show notes of this podcast. Go ahead and click that link. We will jump on a session and we will get into a custom conversation about the unique situation at your agency and help you. I mean, that's why we exist. We want to teach you and train you uh about the proper next steps based on your unique circumstances. Daniel Metcalf, it's been a pleasure again, sir. Great information. You too.

No, uh wish everybody good luck and uh um keep your eye on the news.

The right news.

Yeah, the right news.

The right news. And don't believe everything you say. That's why we exist. That's right. Confirm or say, no, that's a bunch of hogwash.

That's right.

That's right. So make sure that you're not playing in the hogwash area in your agency. We we don't want that for anybody. Thank you for joining us on this episode of the Scaling Your Insurance Agency podcast. We will see you in the next episode. Until then, improve, get better every single day. We'll see you in the next episode.

That's a wrap on this week's episode of Scale Your Insurance Agency. Quick reminder: everything we talk about on this show is built to do one thing: turn your time into profit, more revenue, more margin, more freedom without adding headcount to make it happen. If something landed for you today, please share it with another agency owner who needs to hear it. This community only grows when good operators help each other level up. Please subscribe, download, and share our podcast and all your other favorite podcast engines. And if you're ready to stop figuring this out alone, Mike and I are both in the field working with agencies right now. Please reach out, find us on LinkedIn or on our websites, and we'll tell you exactly where your biggest opportunity is to scale. Until next week, build the system, protect your time, and scale the right way. See you next week.