For decades BGAs have adhered to a traditional approach when it comes to commission accounting. They have relied on their Agency Management Systems to manage commissions, sourcing commission data feeds from certain carriers and manually visiting carrier websites for additional commission statements. Despite potential outsourcing of some tasks, the technological method has remained largely unchanged—until now. Within this article, you will be introduced to two solution providers who have crafted technologies designed to automate many of the current manual processes involved in commission processing for insurance distributors. By the conclusion of the article, you will also gain insight into an upcoming innovation poised to disrupt and revolutionize BGA commission accounting practices.
Processing your Commissions Outside of your AMS
In the ever-evolving world of insurance, commission accounting is a cornerstone of success for agencies and financial advisors. Embracing innovation is no longer a choice, it’s a necessity for staying ahead in a competitive landscape. At the forefront of this transformation are InsurTech companies like GreenWave, that redefines commission accounting with its forward-thinking approach.
Breaking free from traditional Agency Management Systems (AMS), GreenWave liberates insurance professionals from dependencies and associated risks. Commissions are safeguarded in a separate, secure system, empowering advisors to operate with confidence knowing their
earnings are protected. Relying solely on AMS can introduce risks associated with commission tracking. Discrepancies, manual errors, and lack of real-time data can lead to financial inconsistencies and trust issues between BGAs and their partners.
Leveraging the power of automation, GreenWave unlocks a new era of data collection. Gone are the days of manual struggles. Through advanced technology, agents access real-time data from manual sources effortlessly. This data-driven approach empowers them with comprehensive insights for informed decision making, driving success for their clients and themselves.
One of the key advantages lies in its seamless outsourcing services. Commission reconciliation becomes a breeze, freeing up valuable time that can be used to focus on nurturing client relationships and growing their businesses. When choosing an outsourced partner it is always vital to understand the capabilities of people, process and technology. By partnering with companies like GreenWave who have enterprise software, dedicated commission experts and world class technology the decision becomes simple.
Complementing their innovative services is the industry’s leading book by CEO Slava Isayev—Commissions Management Secrets. A valuable resource for industry professionals seeking to optimize their commission strategies, Slava’s insights provide invaluable knowledge for navigating the dynamic landscape of commission accounting helping clients achieve their goals. However, GreenWave’s vision extends beyond the present. It pioneers the future with its embrace of blockchain technology. By leveraging this decentralized ledger system, GreenWave and others will enhance commission transparency, trust, and speed of processing in the insurance industry. Such forward-thinking ensures that their clients are prepared for the digital transformation of tomorrow. GreenWave is committed to revolutionizing commission accounting. As they lead the charge into a new era, GreenWave’s services transcend the ordinary and set them apart as pioneers in the field.
With a dedication to a future-oriented mindset and a focus on client success, GreenWave pioneers the path for commission accounting’s evolution. As the insurance industry navigates unprecedented changes GreenWave is the guiding force, propelling their clients towards a secure and prosperous future. By embracing innovation, automating data collection, and empowering advisors, GreenWave leaves an indelible mark on the commission accounting landscape. Clients, partners, and industry professionals alike are eager to explore the possibilities that GreenWave’s vision offers.
With the dynamic insurance landscape and InsurTech constantly evolving, GreenWave’s commitment to staying at the forefront of technology and industry trends ensures their clients always receive the best service possible. In embracing the new era of commission accounting, GreenWave sets a benchmark for the industry. Their vision for a more efficient, secure, and prosperous future for insurance professionals is truly transformative. With each innovative step they take, GreenWave reinforces their position as leaders, trailblazers, and partners in their clients’ success.
To get a copy of Commission Management Secrets or learn more about how you can benefit from a new approach to commission accounting, visit https://greenwavecommisions.com or purchase the book on Amazon.
New Method of Getting your Commission Data
PaperClip this year launched Mojo for Commissions. Known for their document management and document exchange technology used by life BGAs, PaperClip has made significant traction in the industry with their Mojo product. Mojo is an innovative platform that turns documents into data using machine learning and crowdsourcing.
For years, the consolidation of commission reports across product companies has been a laborious process lending itself to human error. Commission statements are unstructured reports, variable in nature, with different presentations and nomenclatures across manufacturers and products. Populating commission databases is labor intensive, requires training personnel for data entry, is subject to human errors, and lacks scalability requiring higher human capital costs. This results in delayed reporting and payout of commissions.
Example: An organization processes on average 725 commission statements per month for 45,000 transactions. Each commission statement is manually downloaded from their respective sources. Using three FTEs, the entire process takes 104 days to achieve reporting and pay out. Estimate $40K ($16/hr.) cost in labor.
PaperClip’s Mojo takes their proven “straight-through process” model to a new level of automation and accuracy for unstructured documents. With Mojo you can onboard commission statements seamlessly, eliminating the need for facilities, human resources, security, training, and more. Estimate—$8K Mojo cost for the same volume. Mojo offers an 80 percent cost saving and a 95 percent reduction in time to process (minutes not days), and near real time flow of commission data ready to report and pay out.
- Mojo saves valuable resources by capturing data across disparate commission statements and normalizing it into a single format for ingestion.
- Organizations avoid typing, indexing, and human errors in favor of having Mojo automatically file both data and images into the Paperclip Virtual Client Folder document management system.
- Mojo processes commission statements near real-time giving a higher level of service to your producers.
- Mojo’s machine learning technology digitizes, transcribes, and interprets data fields supported by human verification to achieve true accuracy.
- Mojo offers the Zero Trust Architecture highest level of data security with SAFE, beyond encryption.
Agencies who have used Mojo for commissions have had great success in saving time and money. An example of what an agency said (summarized): “The biggest benefit for us is that this process cuts some of the time we spend manipulating the csv/pdf that is provided to us by the carrier. All statements from the carriers need to be in a similar format so we can import it into our AMS so this is a big help.” Visit PaperClip.com for more information on Mojo for Commissions.
The Future of Commission Accounting Creating a New Ecosystem
The biggest issue with commission accounting for insurance carriers, distributors and advisors today is that the ecosystem is broken specifically in the independent brokerage space. Let’s start at the beginning of the process which is to contract agencies and agents. This is mostly a paper process with no workflow or rules. Building hierarchies and assigning commission levels has no approval or validation process today. If you walk back a step further, both carriers and distributors need to build these commission schedules into their commission systems. Carriers need commission schedules to pay commissions and distributors need commission schedules for commission reconciliation to verify they got paid correctly. If the average life BGA works with 30 carriers, and an average of 10 products per carrier, working with about four hierarchy levels per carrier equates to a lot of data that needs to be input and maintained to keep these commission schedules up-to-date. If the carriers and the BGAs both need to create these schedules into their respective systems, that looks like a lot of redundancy.
The second problem is validating the commission data. A carrier sends commission statements in multiple formats either directly to the AMS vendors (in multiple formats like an ACORD 1206 transaction or CSV), to their websites or in a PDF document. It’s like the Wild West, there are no controls or validation processes. This results in mistrust between the carrier and their distributors.
The solution is building an ecosystem that uses Blockchain technology and SmartContracts: For reduced cost and speed-to-market a private Blockchain should be built on existing technology such as IBM. Executing SmartContracts, commission statements, commission detailed transactions, and payment information will be the workflow on the Blockchain. The Blockchain nodes would be modeled in groups such as carriers, distributors, and groups of advisors. SmartContracts with commission schedules for carriers to run micro services to validate commission payments, and distributors to do commission reconciliation. The SmartContracts which is programming code that has rules for hierarchies, onboarding agents, will have an approval process. These SmartContracts will be reusable templates. The process will have the ability to attach and send contract documents. A Blockchain Viewer will include features such as viewing agency/agent contracts, commission schedules, hierarchies, commission statements, commission transactions, reporting, and accounting functionality. Commission data will be validated before it is put on the Blockchain. The data is very secure with specific permissions of what data the user can access.
All vendors, carriers, distributors, and advisors will benefit and participate on the Insurance Commission Blockchain. This has been a pet peeve of mine for many years. This is why I have designed this solution at InsurTech Express calling it the “IE Commission Blockchain for Insurance.” We are seeking funding to build out this new ecosystem for commission accounting. Learn more by visiting InsurTechExpress.com.