pitfalls to avoid in outsourcing insurance commissions management
TRANSCRIPT
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Pitfalls to Avoid in Outsourcing Insurance Commissions Management
Optimising 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 others
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 insurance commissions. 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
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management so tricky and is one of the reasons why it is generally always
outsourced.
Nevertheless, there are certain pitfalls to avoid in outsourcing insurance
commissions management and a detailed research should be made for the
following reasons on the shortlisted outsourced agencies before one is finalised–
Need for Specialised Infrastructure – It has to be understood that not all
outsourced agencies handling commissions management can tackle business
of all scales. Many insurance companies outsource without verifying this
aspect. This results in 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
occur when this aspect is not given importance. It has to be made sure that
the outsourced organisation is using the comprehensive Commissions
Management package. This system takes care of the total commissions
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
finalised. Data security is of utmost importance as the personal details of
agents of an insurance company as well that of their policy holders 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 insurance commission management.