Commission Software for Health & Life Insurance Agencies
When it comes to commissions for the life and health insurance industry, not all software is equally made. Your goal is to find a solution that makes the job of tracking, processing, managing, and recovering commissions simpler and more efficient. However, commissions tracking and commissions processing don’t always mean the same thing, and the type of software you decide to partner with matters.
Usually, you’ll come across three main types of commissions software:
- Industry-specific agency management systems (AMS)
- Customizable customer relationship management (CRM) software
- Commission-specific software
In this blog, we’re going to discuss the difference between commissions tracking and commissions processing to discern what exactly you need and what type of system your agency requires.
Commissions Tracking vs. Commissions Processing
Like I said, not all commissions management software is built alike. Some are more robust, some are geared towards specific industries, and some are solely for commissions. The sweet spot for most insurance agencies is a system that is both industry-specific and provides a robust commissions system.
As you search, you’ll likely come across these terms regularly:
- Commissions Tracking
- Commissions Processing
For many systems, this is their way of letting you know that they have commission capabilities. Let’s dive into the differences between the two terms.
Commissions tracking will likely be the most common term you’ll run across during your search for commission software. If the system is commission-capable, then it’s reasonable to assume that you’re able to track commissions.
For the most part, commissions tracking is the bare basics of commissions needs. It’s like a checklist ensuring that you indeed received the payment based upon the agreement with the carrier for that particular product. It tracks when policies go live, when the payment comes in from the carrier, and how much the payment is.
The whole process is rather simplistic but a good start for those dealing with commissions. However, a big problem with only tracking commissions is that you can’t be 100% confident you’ve been paid what you’re due. You aren’t able to compare what you’ve received against what you expected. You can’t really see how these payments will translate to the future and how those payments will affect future critical business decisions.
Bottom line: You do not want to solely rely on the carrier to always be right in the payments they issue.
A commissions processing system can track commissions, plus a whole lot more. When we talk about commissions processing software, it’s referencing software that can do the following:
- Tracks commission payments
- Manages commissions—includes splitting and distributing payments
- Provides agent statements
- Contains industry-specific reports to gain revenue insight, view top agents/top carriers, run reconciliation reports, etc.
- Performs commission splits and has hierarchy established at the policy level
- Has the ability to determine revenue type (overrides and bonuses) and split on each unique policy
Tracking commissions is one thing—checking it off as you were paid. Processing them is a whole other level.
It ensures that you not only got paid but provides you the flexibility to split those payments out to your other agents, payees, and the house. You’ll have a better understanding of what you’re missing and have access to commission-specific analytics and reports. Using this insight, you can make informed business decisions critical to the growth you desire and are crucial steps in achieving your goals.
These decisions include:
- Diversifying in product offerings
- Diversifying in carrier partnerships
- Eliminating existing carrier partnerships that aren’t successful
- Expanding into new areas and territories
Commission Management Systems
I can’t iterate enough how important it is to remember that not all commission management systems are built the same.
When speaking to potential vendors, make sure to ask about the full extent of their commissions software. Is it just basic tracking? Does it go a bit further and provide additional processing capabilities? Does it run the whole gambit giving you a full commission service model that includes everything from tracking to processing to analytics?
Not knowing the system’s full capabilities means you’re not fully prepared for the partnership you’re creating, and it can lead to surprises down the road.
Another area to ask about is enhancements.
- How often do they upgrade their commission system?
- What’s coming down the pipeline or roadmap for future commission-specific enhancements?
- How will those enhancements affect you/fulfill your needs?
If you’re on a live demo, ask them to walk you through the processes so you get the gist of how it would work for your agency. If the vendor offers a free trial, then take them up on it! This is your opportunity to get into the system on your own.
It’s essential to ask about each feature to ensure the system can perform those necessary tasks and that it doesn’t require workarounds, additional customizations, etc. If it does require additional customizations, then be sure to ask the price for that.
Read more: Check out our blog about how generic and overly customized systems can impede your day-to-day: 4 Downfalls of Generic, Overly Customized Software.
Especially when it comes to generic CRMs, customizations can become costly quickly. They can also take a substantial amount of time. And, to add insult to injury, they’re not always upheld or supported when newer versions of the software are released—so bring that up as well. These are things you want to know before you invest any money.
So, a quick refresh of the questions to ask:
- What are the full capabilities of the commission software?
- How often is the commission software upgraded?
- What are the planned enhancements currently for the commission software?
- Does the system require workarounds for your specific business needs?
- Does the system require additional customizations to fit your needs?
- What do those customizations require in time, money, and guidance?
- Will these customizations come with a warranty that they’ll stay supported as newer versions of the software are launched?
Once you have those answers, you can make an informed decision about who the vendor is, if it’s beneficial for your business to partner with them, and how their software could enhance the way you do business.
When it comes down to it, those who process, manage, and issue commissions need a system that they can rely on to make their jobs easier, ensure your team is paid, and have time to continually focus on other revenue-generating projects.
Agencies moving to AgencyBloc have spent 75% less time processing commissions, have uncovered tens of thousands of dollars in missed commission payments from carriers, and have saved thousands of dollars in employee time.
The efficiencies alone can more than pay for a subscription to a system and give your commissions team time back to focus on other parts of their job and help your agency continually work towards your goals.
If you’re curious what commissions processing in AgencyBloc looks like, check out our Infographic: The 6 Steps to Processing Commissions or schedule a time to meet 1-on-1 with someone from our team. Do your due diligence and ask all of the questions above to ensure the partnerships you’re creating are the right fit for your agency.
This blog was originally published on April 3, 2018. It has been updated and republished on March 9, 2021.