This post is part of a series sponsored by AgentSync.
Hidden Costs of Manual License Verification
Maintaining insurance producer licensing and designation compliance is an important responsibility shared by almost everyone in the insurance distribution channel. However, dozens of insurance carriers get stuck year after year due to inefficient licensing and appointment renewal procedures. Add distribution partners who sell variable lines of insurance (such as variable annuities and variable life insurance) to the mix, and the challenges multiply.
If a carrier’s renewal process is riddled with outdated workflows, they may find themselves unable to process hundreds of thousands of renewals, delaying their revenue and causing frustration for both manufacturers and customers.
Manufacturer’s license renewal process for carriers
License and employment renewals occur annually, biennially, or in other ways, depending on the state or states in which the manufacturer operates. As luck would have it. AgentSync has already taken the time to compile a list of 2024 carrier appointment renewal and termination deadlines for your convenience. Side note: Most of the 2024 deadlines have passed, renewal dates are still to come, and we will have an updated list for next year soon.
The renewal process itself is a myth as old as time. It all starts with the states putting together a list of the manufacturers and organizations that each company is currently partnering with. Next, it’s the carrier’s job to review their appointments and decide which manufacturers they want to continue doing business with and which ones they want to cut. To avoid paying for nominating manufacturers they no longer want to do business with, carriers must submit their termination date by their country’s deadline.
After the termination deadline has passed, carriers usually have a few days before invoice payments are opened to renew their appointment. Once the country has opened the invoicing period, making changes is not exactly easy, so it is important that carriers terminate any inactive manufacturers early to reduce unnecessary costs.
License verification is an important step in the renewal process
When it comes to deciding which partners to reappoint or terminate, there is a lot to consider. While the general idea is simple enough – terminate any licensed manufacturer that no longer works – there are a number of other factors at play.
First, carriers need to know which of their producers and broker-dealers are licensed to sell insurance and securities, and in which states. There are more than a few reasons that an insurance or securities license may be invalid, so carriers need to know that their distribution partners have not done anything that could cause them to fail to comply or lose their license in the time since their last inspection. .
Beyond license verification, renewal is a good time for carriers to “trim the fat” so to speak, and cut out any manufacturers that cost more than they should be dealing with. Paying to nominate hundreds of producers when only a dozen write business for you, or paying to nominate one producer in every state when they only write business in a few select states is just a waste of money.
In-person license challenges and appointment renewals
1. Data collection
As we’ve said before, license verification requires a LOT of data collection and comparison. To get the job done, insurance carriers often have multiple full-time employees dedicated to checking and checking regional DOI websites, manufacturer databases, FINRA records, background check results, CE certifications, and more.
For carriers with only a few manufacturers or brokers, this manual approach is possible, but still not ideal. And don’t forget about trying to handle validation manually at scale. That’s pretty much a guaranteed time sink, waste of money, and a complete head shooter.
2. Data validation
Once a carrier has collected the necessary data, how can it be sure it is accurate and up-to-date? Manual data tracking and collection means that organizations often find themselves trying to verify one internal data source, with no assurance that even a record has the correct information.
Also, if you have multiple people manually entering manufacturer data into one or more systems, there is a greater chance of human error. Without a single source of truth, it is inevitable that the accuracy of your data will be less than perfect.
3. Data analysis
If a manufacturer’s license and appointment data is in a spreadsheet or program, their policy data is in one, and their commission data is in a different place, manually pulling all that data into a single, unified view…is difficult to say the least. It is almost impossible to determine the actual cost that a carrier pays to each manufacturer and what the manufacturer delivers in return on a country-by-country basis when data is locked in encrypted systems.
Generating a to-do list before which deadlines take hours and hours of manual work. This leaves carriers with no choice but to designate every manufacturer that raises their hand in every state. As a result, insurers end up paying a lot of money to people who may never write business for them.
How costly is the manual license verification and renewal process for carriers
Manual manufacturer and dealer license verification and appointment renewals cost organizations more than they realize. To begin with, there are obvious and direct costs to maintaining multiple full-time employees to be recruited and certified. With an automated solution, these employees can be redirected to more profitable work.
But that’s just the beginning. Consider the following direct and indirect costs of manual labor:
- Money lost in NIGO applications
- The cost of appointing producers who do not actually sell
- Income opportunities are lost due to delays in renovations
- Missed partnership opportunities
At first glance, it’s easy to overlook how much inefficiency in your renewal cycle is really costing you. But, when you break it down, it’s clear that relying on manual workflows for key aspects of managing your distribution channel adds unnecessary costs to your bottom line and negatively impacts your ability to grow.
Overcome renewal inefficiencies with automated solutions
Adopting a modern solution that automates the flow of manufacturer’s license and compliance data across your systems, reduces effort on your team and eliminates inefficiencies in renewal and appointment processes. Best of all, doing so will eliminate many of the costs associated with managing this workflow manually. Consider the benefits of using automation to:
Free your team from manual data collection and analysis
No one wants to waste their time buried in piles of paperwork or scouring government web pages, internal spreadsheets, and external databases just to confirm a license or renew an appointment. Not only is it frustrating and time-consuming, but it’s also a waste of talent.
An automated distribution channel management solution can provide carriers with real-time vendor information directly from a true industry source at the click of a button, eliminating data silos and ensuring you have access to real-time, accurate data whenever you need it.
Reduce the backlog
Bottlenecks in your innovation processes create backlogs that prevent your distribution partners from, well, distributing. This causes frustration for manufacturers who want to sell carrier products but cannot do so without a valid appointment. If the manufacturer can’t sell your products, consumers will look elsewhere for their policy needs, causing you to lose valuable business.
Speeding up the renewal process with an automated solution allows you to move manufacturers through the process quickly and with little or no cost. When it comes to choosing a partner, manufacturers will prioritize carriers that enable them to sell quickly, not those that prevent them from doing their job.
Cut costs
With an automated solution that integrates accurate, up-to-date producer data across your systems, generating a report on who’s writing business and in which regions is as easy as pressing a few buttons. This saves carriers with large deployments thousands of dollars in appointment fees and allows them to focus their time, money, and resources on their top performers. Imagine how much easier the turnaround time is for carriers who have that level of visibility into the ROI of their downstream distributors.
Schedule appointment renewals to keep your business moving forward
Accurately tracking active manufacturer appointments throughout the year allows carriers to make better business decisions come renewal time and grow their business more effectively. If you want to simplify the appointment renewal cycle for you and your downstream distribution partners, AgentSync can help.
Our modern distribution channel management solutions give carriers access to accurate manufacturer data when and where they need it, speeding up the license verification process and simplifying appointment renewals to reduce backlogs. If you’re ready to unlock greater efficiencies in your day-to-day operations and become a better partner to your downstream distribution partners, learn how our solutions help carriers accelerate their growth or contact an AgentSync expert today.
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