Digitalization in the insurance sector continues to forge ahead. In this situation, a 360-degree view of the customer is essential to identify needs and sales opportunities and to optimize relationships with customers. But what has become of agent management and commission systems over the years? Often, not much more than what was prescribed by law. The old systems still work, but only in outdated versions and programming languages, to some extent. In-house development is expensive to continue to develop, and it is hard to raise enthusiasm among young programmers for languages like Cobol.
At the same time, the requirements for commission calculations and settlement, as well as variable compensation and bonuses, are becoming more and more extensive. Settlement systems are supposed to make things easier for insurance companies, not add additional work. In times when the number of agents is on a constant decline, transparency, the ability to provide information, and speed are indispensable links between companies and sales partners. After all, it is not just about money, but about trust as well. This is just the situation in which one can and should get support from the right software. Debt positions are calculated automatically, agents with their sales structure including the cancellation liability period and the amounts in liability are identified and reported.
Agent management, settlement & IDD – a contradiction!?
The first important and indispensable points are still the legislator's regulation requirements and the IDD (Insurance Distribution Directive). They should not be seen just as a necessary evil, but as an opportunity, too. A modern commission calculation and settlement system can serve as support to insurance companies and their diversified sales structure. For example, it makes sense to be able to access agent information already in the application registration process. This makes it possible to check first whether all legal and other internal company conditions for agents are fulfilled by the agent, regardless of which sales channel was used to win over the customer. This offers customers, companies, and agents a high degree of consulting security. If an agent does not fulfill the requirements at some point, a specialist can get involved in the clarification.
Structural and human resources changes also have an impact on the requirements, which need to be met by a modern commission system. It is not rare for complete customer bases or parts thereof to be given up or taken over together with the agents assigned to them for a variety of reasons, be it temporarily or permanently. In addition, there are the professional developments of individual agents: new career levels, time off, further training or the decision to change the distribution channel. The resulting contractual changes and partial and complete cancellations need to be settled in a comprehensible and correct manner and/or subjected to a closer risk analysis. In addition, there are other contractual amendments such as changed commission rates and cancellation reserves. Legally irrefutable evidence must be provided for this purpose, too. If the agent receives settlements from different systems, this leads to confusion and extra work. Often, this occurs after just a simple change of the agent's sales channel. In such everyday scenarios, software should serve as support to companies and, in the best case, the execution should be highly automated. This too is a reason to closely interlink agent settlement and agent management. Ideally, both of these components can be covered by one system.
In line with customer demands, the product range has an influence on the requirements of a commission system as well. More and more customized products are in demand, and the more customized the products, the broader and bigger the entire range. In addition, there are often third-party and/or cooperation products such as banking products, investments or products from other sectors entirely. With them come new product features: currencies and associated country-specific VAT codes, liability thresholds, changed commission and cancellation rules, etc. If the commission system in use is not prepared for these aspects, the calculation and settlement processes are made more complicated. Therefore, comprehensive and flexible mapping of entire processes is indispensable for the system in question in order to keep in-house costs and time expenditures as low as possible.
A 360-degree view of the agent
The advantage of a 360-degree view is that an agent can find all stages of a sales career, all hierarchies, permits, licenses and authorizations, as well as invoices in one single system. The most important parameter is the software's capacity to support multiple channels, i.e. all sales channels and cooperation partnerships are settled in a single system. This solution must be able to reflect all sales characteristics, sales types, bonuses, and complex remuneration scenarios. But this in itself is not enough. It is important for the processing status to be logged and traceable in order to be completely audit-proof and capable of providing extracts from the books.
Along with all the requirements of a commission system, it is ultimately also advantageous if integration in the existing system landscape takes place as quickly and easily as possible. The best prerequisite for this is, of course, a team that provides expertise and technical support. This saves on costs and resources.
In any case, an introduction of a new settlement software is also a great opportunity to rethink compensation scenarios and optimize and harmonize processes. And perhaps, this will put an end on the infamous extras and Excel spreadsheets, who knows? The time is ripe for it!
