Optimizing modern business efficiencies is primarily about concentrating on core business activities and strengthening the bottom line. Anything that facilitates this process is encouraged in the modern business scenario. One of the sectors where this is given a lot of importance is the insurance industry where the main activity is devising and structuring new policies with competitive prices and then selling them. But to sustain this task there is a need for huge investments in infrastructure and manpower, something that they can ill afford if they have to bring in products at attractive rates.
The range of support services for the insurance business includes amongst other data processing, payroll and administrative functions, claims management, policy management, and commission management. All these are today being outsourced to specialist agencies in an effort to cut the flab and make the business more lean and viable. However, the insurance companies are benefitted the most when they decide to Outsource Commission Management. This is because of its inherent unique features.
Commissions are based on business generated by the agents and hence unlike regular salaries differ from month to month. Again, all schemes do not yield the same amount of commissions so calculations of the total monthly amount payable can be extremely complex. This lack of uniformity is what makes commissions management so tricky and is one of the reasons why it is generally always outsourced.
Nevertheless, there are certain pitfalls to avoid in outsourcing commissions management and detailed research should be made for the following reasons on the shortlisted outsourced agencies before one is finalized–
Need for Specialised Infrastructure – It has to be understood that not all outsourced agencies handling commissions management can tackle the business of all scales. Many insurance companies outsource without verifying this aspect. This results in the delay in settling commissions payable to agents and compromises with accuracy. To avoid this pitfall the antecedents of the agency, their past track record and the testimonials of previous clients should be thoroughly looked into.
Software and packages in use – When insurance companies outsource insurance commissions management they have to ensure that the outsourced agency is making use of the latest software and relevant packages so that this recurring task is completed every month without delay. One of the pitfalls occurs when this aspect is not given importance. It has to be made sure that the outsourced organization is using the comprehensive Commissions Management package. This system takes care of the total commission’s payable process in detail and all the data therein is supplied by the insurance company. Those that do not incorporate this package will not be able to provide top end commission payable results.
Data security – This angle has to be looked into before the decision to outsource insurance commissions management to a particular agency is finalized. Data security is of utmost importance as the personal details of agents of an insurance company as well that of their policyholders is at stake. Not ensuring this can have disastrous consequences in case of breach of security.
These then are the factors that should be looked into if pitfalls are to be avoided for outsourcing commission management.