3 Key Life Insurance Agency Challenges

Manual processes, a lack of centralized data and ineffective commissions processes consume valuable time and introduce risks for human error. 

Two Yellow Flowers Surrounded by Rocks

Life insurance distributors are more important now than ever before! They play a pivotal role in the industry, acting as a bridge between carriers, clients and potential policyholders. However, despite technological advancements and an abundance of solutions, many distributors continue to grapple with outdated manual processes that impede efficiency and hinder growth. From commission calculation to policy submission tracking and sales follow-ups, these agency-critical tasks are often mired in ad hoc methods and manual, spreadsheet-based workflows.

Manual processes, a lack of centralized data and ineffective commissions processes are all challenges that not only consume valuable time and resources but also introduce a significant risk of human error, leading to dissatisfaction among advisers and clients alike. These challenges can affect an agency’s ability to function and can hinder industry-wide success.

In the following sections, we’ll take a closer look at all three of these critical life insurance agency management challenges and detail how they can be resolved. 

Challenge #1 – Manual processes degrade visibility into the policy approval process. 

Managing new business applications as they move from adviser to distributor to carrier is a process that still relies on too many manual steps. This ultimately delays the time to issuance and creates frustration among clients, a sentiment that then gets passed through the rest of the chain, with advisers flustered over being left in the dark about where an application is in the process and why it’s been held up. Manual workflows are more error-prone, not often well-documented or updated and filled with inefficiencies, which create an abundance of preventable frustration. 

This is an issue that can easily be addressed through technology. Many other industries have already digitized similar manual processes. It’s time for life insurance carriers and agencies to catch up by accelerating their adoption of integrated solutions that streamline the application process and increase policy status visibility. 

Challenge #2 – Lack of centralized data causes inefficiencies.

Unfortunately, many distributors still don’t have automated access to the carrier data that’s vital to their business. That lack damages their ability to track and manage policy submission status. And when manual processes must be used to move data where it needs to go, inefficiencies multiply.

For advisers, the lack of centralized client data from multiple carriers makes it difficult and time-consuming to get a full 360-degree picture of a client’s insurance products. Often, advisers need to log in to each carrier’s portal and flip back and forth to find the information they need, wasting time that could be spent on solving client challenges, acquiring new business or providing essential client consultation support. 

The clear solution to these challenges is to centralize all carrier data feeds in the agency management systems to provide an exhaustive view of a client’s insurance portfolio and build on the visibility created by automating manual agency processes. 

Challenge #3 – Commission frustrations erode financial adviser trust.

Commissions are a continuing sore spot for advisers. Quick and accurate payment isn’t as universal as one might think. When distributors and carriers don’t share commission feeds, and distributors lack robust commission management systems, significant obstacles can arise. 

According to Equisoft-commissioned Forrester research, one of the top four challenging aspects of a broker's relationship with a carrier is their inability to track compensation and performance in real time. Only 14% of broker respondents said digital commission accounting capabilities are fully integrated into their agency management systems, and 11% of carriers said it takes them more than 60 days to pay brokers. Additionally, brokers said that carriers’ compensation plans are overly complicated. 

Administering complex commission splits among all parties involved in a sale can be hard, and reconciling expected commissions with actual payouts is also challenging. But advisoers are just like everyone else. They expect to have transparency and visibility into their commissions and payments, and they’re frustrated by any errors, delays or complications. 

To win adviser trust, build stronger relationships and attract new advisers into the industry, distributors need to take back control of their commissions by implementing robust systems that automatically calculate and pay advisers — accurately and on time.

The solution: an effective agency management system, complete with a data management process.

Distributors’ unique position in the insurance ecosystem makes it essential for them to have a panoramic view of data from all sources. They need to be able to access, leverage and present a comprehensive data overview to give advisers and stakeholders transparency into every step of the policy lifecycle. To solve the issues detailed above and enable agency staff to focus on higher-value, customer-centric activities, life insurance distributors must tackle their challenges head on with an agency management system (AMS) and a strong data management strategy. 

Not only does an AMS provide a full scope of prospect and client data to help advisers streamline their process and manage the service aspect of their client interactions, but when leveraged properly, the system can provide updates on applications in underwriting, allowing advisers to manage client expectations. An AMS can also help open opportunities to cross-sell and up-sell and enhance compliance actions like client review meetings. 

See also: Predictions for Life Insurance in 2024

State-of-the-art agency management starts with centralized data feeds and good data management.

The data that distributors need to digitally transform their operations and increase efficiency and adviser effectiveness exists; the issue is consolidating it, getting it into the system and being able to share it with all the other necessary stakeholders. 

For some insurance distributors, their data’s true potential isn’t being harnessed because they’re continuing to operate with an outdated mindset. In some cases, even with an AMS in place, they’re still relying on the same types of manual processes they have always used, even though technology now makes it possible to automate and streamline many workflows. 

New business models and systems provide the opportunity for insurance distributors to re-think their approach to operations and optimize their organizations. That means leaving behind legacy thinking. Distributors should ask themselves how they can eliminate old processes, like data entry and manual review, and shift their resources to higher-value work within their organization.

Accessing a consolidated 360-degree view of clients’ data doesn’t need to be difficult. It just takes the adoption of an agency management system that has built in integrations to the relevant carrier feeds and rich data sources from all value chain stakeholders. 

See also: Revolutionizing Life Insurance Uptake in Younger Markets

A new approach to centralizing data and overseeing agency management is needed. 

To compete in the evolving independent channel and current digital era, distributors need to find AMS solutions that will speed the digitalization of their business. They need solutions that automate all core processes, enhance transparency and productivity among agents and staff, reduce errors and costs and create efficiencies. 

AMS solutions can be management workhorses that give distributors complete visibility into data and activity throughout the value chain. But this can only work when the AMS is coupled with a strong data management process. Implementing a comprehensive approach to centralizing, storing, and managing data will position distributors for success. 

Grace Apea

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Grace Apea

Grace Apea is AVP, product development, at Equisoft

She has led the development of several game-changing digital transformation initiatives within the automotive lending sector and insurance and wealth management industries in North America. 

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