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Why You Need Happy Producers (Part 2)

In our previous post, we addressed the reasons for transforming producer management and compensation processes. In this post, we will cover key considerations when planning a transformation.

The transformation process begins with defining a clear and comprehensive compensation strategy to confirm the key functions of producer lifecycle and compensation management. Licensing, reporting hierarchies, contracting, commissions plan rationalization and debt management are some of the most critical functions that require enterprise level alignment and can lead to a significant change in the producer experience. Early discovery of such complexities can help you identify areas that may require strategic enterprise alignment and business champions. It also can help you identify your organization’s top priorities and pain points.

Take the contracting process. At face value, onboarding producers to sell your products is seemingly straightforward: recruit, onboard, appoint and help sell. However, upon closer examination, many organizations find this process cumbersome for both field and back office employees because it burdens them with a highly manual, paper-based data entry workflow that is subject to human error and inefficiencies.

See also: Agents: Here’s How to Differentiate  

One of the the first touchpoints with your organization for producers is the onboarding process, which sets the tone for the field’s expectations of how easy it is to do business with you. Looking just a little beyond the producer experience, onboarding and contracting processes are anchored by licensing and appointment criteria that have immediate compliance implications. When taking into account the regulatory and state-specific rules governing insurance producer eligibility, as well as your organization’s own requirements and offerings (e.g., backdating appointments, just-in-time appointments), the contracting process typically is quite nuanced and complex. Neither a technology solution nor an operating model adjustment is a silver bullet to improve vague, inconsistent, poorly documented or non-compliant rules and processes.

The same concerns hold true for other aspects of producer lifecycle management, like reconciling producers’ debt or maintaining a producer’s reporting and compensation hierarchy. For example, when a producer is advanced for business with one line of service, do you recoup earnings from other lines of service to repay company debt? Is there a time window or debt threshold before cross-company recoupment occurs? Are there legal limitations? And, at an even more basic level, how do you want to manage debt, and is it something the field is interested in or concerned about? And, for hierarchies, do production and compensation follow the same arrangement? What exceptions do you currently allow, and what will you permit in the future? Without first answering such questions, incorporating field perspective or the organization’s long-term roadmap, you run the risk of 1) limiting the impact and quality of transformation you will ultimately undertake and 2) replicating current functionality in future-state platforms as a quick fix.

Before looking to the vendor marketplace for ideas on available products and services, take the time to fundamentally understand how your organization operates today and, perhaps more importantly, how you’d like to operate in the future. In doing so, you can first define where your organization is going and how you will differentiate yourself with producer servicing before selecting the best solution to get you there. Transformation partners can be especially helpful during this strategic phase, offering market insights that can help your organization plan for the future while promoting enterprise alignment and exceeding market parity. This type of holistic, forward-thinking, business-led exercise can prepare your organization to make the most of a transformative journey without feeling rushed into strategic decision making in the midst of implementation.

See also: The New Agent-Customer Relationship  

In summary, the entire insurance industry is undergoing disruption from changing producer demographics, decreasing agent population, tighter margins, greater pressure on expense reduction, increasing producer expectations for service resulting from digital disruption and evolving customer segments that are always on the lookout for the “cheapest and best” way to buy insurance. Accordingly, the need to differentiate yourself with producers is more crucial than ever and managing the vital producer and compensation management function is critical.

After all, doesn’t a happy producer get you a happy customer? What are the other key areas within producer management and compensation that you think will improve your producer experience?

Happy Producers, Happy Customers

Producer management and compensation is an essential downstream process and a critical component of the insurance value chain. It is in place before a policy is even sold and extends all the way into billing and claims. It occupies a unique place in insurance organizations, connecting data, processes and people in distribution, marketing, actuarial, operations, finance, servicing and even human resources. To attract and retain producers and encourage more sales, insurers must:

–Meet evolving producer expectations to increase the ease of doing business and service them in an on-demand, omni-channel manner.

–Design attractive and flexible compensation plans, administer them accurately and ensure timely payments via preferred modes.

Historically, transforming this integral function hasn’t been top of mind at insurance companies. However, producer management and compensation transformation has recently become a hot topic. In this two-part blog series, we’ll lay out the current landscape and share what we’ve seen in successful transformations.

See also: 5 Rules for Hiring Quality Producers  

First and foremost, transformation is all about what matters to you most and where you, as an insurance leader, want to create the biggest impact for the function and the producers you serve. Contrary to popular belief, not all transformations require platform replacements; in fact, many can be surgical enhancements to your current state (e.g., service-focused operating model improvements and enhancement of distribution capabilities for the field through digital portals). However, there exist key business drivers that can significantly affect your business and help anchor these efforts. These drivers, which we list below, answer the fundamental question, “Why transform?” and can help you make the case for change:

  • Service-oriented operating model, to deliver differentiated experiences and effectively manage demand via a producer-focused, service-centric operating model.
  • Producer self-service, to increase access, transparency and visibility through a service-centric platform with producer portals that enable easy viewing and generation of reports and statements.
  • Optimized operational efficiency, to create efficiencies throughout the organization and provide flexibility to administer and manage compensation.
  • Increased process automation, to provide operational efficiency and accuracy with centralized automated processing and administration.
  • Data-driven decision making, to provide insights that can generate greater productivity from producers and operational teams, as well as explore analytic endeavors like incentive analytics and penetration models.

See also: Key to Digitizing Customer Experience  

If these drivers resonate, then you know the “Why?” Your next question is likely, “How?” This is where most insurers are tempted to issue an RFP, start a vendor bake-off, mobilize teams and start implementing. However, as we address in the next post, there are key considerations before starting this journey that will help you create an overall vision, establish guiding principles and provide a framework to stay true to your business drivers and transformation goals.