How to use relational data to end insurance committee rebates

This post is part of a series sponsored by Actentsync.

The strength of insurance partnerships is not just a good resonance, but about the money. A strong partnership provides real bottom line value for both parties; a weak person often feels like a one-way street.

For insurance companies and agents in the distribution chain, the status of your distribution channel management starts to focus on when commission time. Many accounting departments fall on either side of a better gap. On the left, we have people who would rather pay their partner faster, knowing that the speed of the check helps the relationship trust. These insurance businesses have the potential to pay inappropriate commissions, face state insurance regulators, or have to crack down on commission kickbacks. The person on the right is the safe one, who maintains commissions in a “pending” or “stay” identity until they thoroughly review the agency’s license and appointment at any time during the sales cycle. These companies that follow the rules have different risks. By delaying payments, they can anger distributors and even undermine labor wage payment rules.

Complex insurance committee hierarchy

Commission accuracy is complex because there are various differences between the relationships between operators. There may be multiple ways for a single agent to receive commissions from the carrier, and the business or agency structures are different between them, all of which are affected by the following:

• Product specific commission
• Relationships between agents and other business entities such as financial marketing organizations (FMOs), insurance marketing organizations (IMOs), national marketing organizations (NMOs), brokerage general agents or agents (MGAs) or conventional underwriters (MGUs)
• Agent to agency relationships such as online and offline, brokers and captive agents, recommendations and W-2 or 1099 employees
• Geographic and regional factors

The current ICM method is insufficient

Many incentive compensation management (ICM) approaches face the same problems unique to other traditional insurance infrastructures: they are manual, labor-intensive, slow and prone to human error. This means missing payments or rebates, which is generally a business risk.

• Old system Includes everything from pen and paper to multiple (usually outdated) technical systems. Even with some “modern technology”, systems don’t connect to each other, but instead let employees take the time to check and cross-reference information.
• Shadow Accounting This happens when troubles occur in the history of the legacy system and human errors make institutions and agents start to doubt their salary is correct and start math. This is what you expect. Instead of focusing on sales, insurance agents and insurer leaders take the time to recalculate their compensation and compare it to their salary.
• Audit and compliance checks If those in your distribution channels are usually wondering if they receive the right commission payment, it may be more necessary and frequent. Not only are these audits time consuming, but if you use an old system, time is multiplied by the time when people work hard to collect information to get audits from many different, different sources.
• Trust vacuum Arising from incorrect or slow commission payments. Payment errors or delays can eventually erode your working relationships and reputation.

Digital ICM upgrade is not enough

It’s easy to see the hassle of managing this complexity by hand, and Ashley and Jim desperately try to save all their data on spreadsheets (or, honestly, a lot of different spreadsheets, web browser tabs, and PDF documents). Using digital ICM solutions to implement payment structures and state regulations is a solid first step in solving accurate commissions. In ActentSync, we happen to integrate with several ICMs that can do this. But just one ICM is not enough. There is no way to connect these different relationships to the merged sum Responsive Hierarchy, then every change in the relationship can have a cascading impact on the committee of each downstream person or entity. This means your commission may be delayed or errored if:

• Operators update the compensation structure, contract or product of downstream institutions
• Agents Mobile Agency, Add or Give Up Dating, Move Status or Promotion
• Agents are part of a merger or acquisition, changing their designated License Personnel (DRLP), expanding the state or increasing or discarding carrier relationships

If you don’t have a way to reflect the exact hierarchy in the commission payment system, each of these changes can cause Moore’s efforts to update every place where you store your data.

On the committee side, the risk of poor distribution channel management

One of the worst risks of automating everything in a “set and forget it” way without an accurate hierarchy is that someone gets a commission in case of compliance breach.

Whether it is an institution whose designated responsible licensors (DRLPs) make their license renewal mistakes (often denying the validity of each sales agent’s license), or individual agents that do not continue to pay child support, but these things happen to the other 20 agents! But they pose legal, financial and reputational hazards to your business.

How Acentsync Hierarchy Management Can Stop Money from Destroying Your Relationships

Imagine a world where one of your agent partners sells branches, changing the commission structure and hierarchy relationships of 200 agents. For operators and agencies with high M&A partners, these data shots occur regularly. This is the case with the commission’s kickbacks.

Now, imagine it takes 10 minutes or less for your team to update this new information in the system. Imagine that once the team changes a single structure in the core system, that information automatically synchronizes other affected agents and proxy records up and down, and since you have integrated the distribution channel management system data with ICM, you’re done. This is accurate. No other manual rotation, change, spreadsheet shuffle or necessary actions.

This is the power of proxy hierarchy management. It’s not about “doing more and less”, but about Do less although Get more.

Accurately reflecting complex insurance relationship networks is more than just a good one to own. This means that inaccurate commissions are almost eliminated, greatly reducing your risk, and having a data log that saves time and money audits.

To learn more about how management hierarchies can improve your commission management, check out our page or schedule a personalized consultation.

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