This post is part of a series sponsored by AgentSync.
The hidden costs of manual license verification
Complying with insurance company licenses and appointments is a key responsibility shared by nearly everyone in the insurance distribution channel. However, many insurance companies are bogged down each year by inefficiencies in the license and reservation renewal process. Add distribution partners who sell variable insurance (such as variable annuities and variable life insurance) to the mix. The challenges are doubled.
If a carrier’s renewal process is full of outdated manual workflows, it can fail to process hundreds of thousands of renewals, delaying revenue and causing frustration for both creators and customers.
Producer license renewal process for carriers
License and appointment renewals occur on an annual, biennial, or other basis depending on the state in which the producer operates. I wish you luck. AgentSync has already spent time 2024 Carrier Reservation Renewal and Termination Deadlines For your convenience. Side note: Many of the 2024 deadlines have already passed, but renewal deadlines still remain and next year’s updated list will be published soon.
The renewal process itself is a thing of the past. It all starts with the state creating a list of producers and organizations currently designated by each carrier. It is then the carrier’s job to review the contract and decide which producers they want to continue doing business with and which producers they want to terminate. To avoid paying to name producers who no longer want to do business with, carriers must file termination notices by their home state deadlines.
After the termination deadline has passed, airlines typically take several days to begin paying state reservation renewal invoices. It’s not always easy to make changes once a state begins a billing period, so it’s important for carriers to proactively terminate inactive producers to reduce unnecessary costs.
License validation is an important step in the renewal process
There are many things to consider when deciding which downstream partners to reappoint or fire. While the general idea is quite simple – to terminate a producer whose license is no longer valid – there are many other factors at play.
First, carriers need to know which of their producers and broker-dealers are allowed to sell insurance and securities in which states. There are many reasons why an insurance or securities license may be invalidated. Therefore, carriers need to know that their resellers have not engaged in any behavior since their last visit that could result in non-compliance or loss of license.
Beyond license validation, renewals are a great opportunity for carriers to “cut the fat,” so to speak, and terminate producers who impose costs that exceed the value of partnering with them. Paying to appoint hundreds of producers when only a dozen or so actually write the business, or writing the business in only a select few states but one person in every state. Paying to appoint a producer is just a waste of money.
Challenges of manually updating licenses and reservations
1. Data collection
As mentioned earlier, validating licenses requires collecting and comparing large amounts of data. To accomplish this mission, insurance companies often employ multiple full-time employees dedicated to checking and cross-checking state DOI websites, producer databases, FINRA records, background check results, CE credentials, etc. We have staff in place.
For carriers with only a few producers or broker-dealers, this manual method may be viable, but it is still not ideal. You can also forget about trying to manage validation at scale manually. It’s almost certainly a waste of time, a waste of money, and an overall headache-inducing one.
2. Data validation
Once carriers have collected the data they need, how can they be sure it’s accurate and up-to-date? Manual data tracking and collection means that an organization can transfer internal data sources from one internal data source to another. Although we often try to verify it by comparing it to the source, there is no guarantee that either record contains the correct information.
Additionally, when multiple people are manually entering producer data into one or more different systems, the potential for human error increases. Without a single source of truth, it is almost inevitable that the accuracy of your data will be less than perfect.
3. Data analysis
If your producer license and reservations data is in one spreadsheet or system, your policy data is in another spreadsheet or system, and your commission data is in yet another different location, you can manually consolidate all your data into a single unified location. It’s difficult to say…to say the least. When data is locked in manual, siled systems, it’s nearly impossible to determine the true cost carriers pay to individual producers and what producers offer in return on a state-by-state basis. is.
Creating a list of who to lay off in which state and by what deadline requires hours of manual labor. This left the carriers with no option but to appoint all producers who raised their hands in all states. As a result, insurance companies end up paying large fees to people who do not sell on their behalf.
Cost of manual license verification and renewal process for carriers
Manual producer and broker-dealer license verification and reservation updates cost more than organizations realize. First, there is the obvious and direct cost of hiring multiple full-time employees to collect and verify data. Automated solutions can free up these employees for more revenue-generating tasks.
But that’s just the beginning. Consider the following direct and indirect costs of doing it manually:
- In case of loss due to NIGO application
- The cost of appointing a producer who doesn’t actually sell
- Lost revenue opportunities due to backlog of updates
- missed partnership opportunity
At first glance, it’s easy to overlook how much inefficiencies in update cycles are actually costing you. But when you really break down the problem, it’s clear that relying on manual workflows for critical aspects of distribution channel management adds unnecessary costs to your bottom line and negatively impacts your ability to grow.
Overcome update inefficiencies with automated solutions
Employing a modern solution that automates the flow of producer license and compliance data across all systems reduces manual effort for your team and eliminates inefficiencies in the renewal and reservation process. Best of all, doing so eliminates many of the costs associated with manually managing these workflows. Consider the following benefits of using automation:
Free your team from manual data collection and analysis.
No one wants to be buried in reams of paperwork or spend time sifting through state web pages, internal spreadsheets, and external databases just to get a license verified or an appointment renewed. Not only is it frustrating and time consuming, but it’s also a very poor use of talent.
Automated distribution channel management solutions can provide carriers with real-time broker information directly from the industry’s trusted sources at the click of a button, eliminating data silos and providing real-time, accurate information whenever you need it. The data will be accessible.
reduce backlog
Bottlenecks in the update process create backlogs and prevent distribution by resellers. This can be a source of frustration for producers who want to sell the carrier’s products but cannot do so without valid reservations. If producers cannot sell their products, consumers will look elsewhere for their policy needs and they will lose important business.
Using an automated solution to speed up the update process can move growers through the process quickly with little to no disruption. When choosing who to partner with, producers prioritize carriers that can sell faster rather than carriers that interfere with their work.
cost reduction
With automated solutions that feed accurate, up-to-date producer data into the system, you can generate reports on who is doing business in which states with the push of a few buttons. This allows carriers with high-volume distribution to save thousands of dollars in reservation fees and focus time, money and resources on the best performing companies. Just think how much easier renewal times would be for carriers who have this level of visibility into the ROI of their downstream distributors.
Streamline your reservation updates to drive your business forward
By accurately tracking active producer schedules throughout the year, carriers can make better business decisions around renewal time and effectively scale their business. If you want to make the reservation renewal cycle easier for yourself and your downstream reseller partners, AgentSync can help.
Our state-of-the-art distribution channel management solution gives carriers access to accurate producer data when and where they need it, speeds up the license validation process, and simplifies and backs up reservation renewals. Logs are reduced. Are you ready to become more efficient in your daily operations and become a better partner to your downstream distribution partners? See how our solutions can help carriers accelerate growth or Contact an AgentSync expert today.
