3 Ways Inefficient Producer Contracting Impacts a Carrier’s Bottom Line

Complex, but necessary. It’s a phrase that could describe many of the distribution channel management processes required of insurance carriers, including one of the most vital steps: producer contracting. Nestled between the agency-led producer lifecycle processes of hiring, onboarding, and licensing and the carrier-led processes of appointing, selling, and renewing, producer contracting brings together the three main entities involved in insurance distribution: carriers, distributors, and producers. However, a few challenges in the process mean what could be a seamless shared workflow between three key stakeholders often ends up a fragmented, friction-filled process that tends to leave a bad taste in the mouth of everyone involved. 

To learn about the challenges of contracting from the agency side of the house, check out “Top 4 Challenges Insurance Agencies Face with Producer-to-Carrier Contracting”.

3 reasons insurance producer-to-carrier contracting is so complicated 

No. 1: Nonstandardized formats and delivery methods

Carriers receive contract requests from multiple agencies. That’s standard and shouldn’t come as a challenge for most. What does tend to muck things up are the various formats and delivery methods agencies use to get those contracts in front of carriers. For example, one carrier we spoke with told us they receive about 60 percent of all contract requests through third-party industry-accepted subscription services (think SureLC and DTCC LNA), with the other 40 percent coming through less modern formats including email, carrier portals, Secure File Transfer Protocols (SFTP), and, in rare cases, good ol’ paper forms. 

How this impacts a carrier’s bottom line: Inconsistent intake methods create data silos that add unnecessary friction to the producer onboarding process, ultimately delaying revenue for the carrier. Without a way to standardize the data, compliance staff are left doing the manual work of validating producer data and ensuring it’s accurately reflected in the correct systems. Each hour a compliance admin has to spend triaging data is an hour a producer spends in onboarding limbo, unable to sell products and generate revenue. 

No. 2: Lack of transparency in shared workflows

While collaboration between insurance carriers, agencies, and producers is what ultimately makes insurance distribution possible, achieving seamless shared workflows between the three players can be difficult. The multiple back-and-forths required for producer contracting leave everyone waiting for the correct party to complete the next step with no visibility into what may be holding things up. Is the contract still with the producer? Is it sitting in an agency admin’s inbox waiting to be sent to the carrier? Onboarding delays are frustrating enough as-is, but with no visibility into what’s causing the bottleneck, discontent builds and relationships begin to fracture. 

How this impacts a carrier’s bottom line: Successful insurance distribution relies on successful relationships. As in any relationship, communication is key. In one survey conducted by Carrier Management, as many as 78 percent of independent agents listed improving ease of communication as a priority for carriers looking to gain their business. Frustrating producers right out the gate with a clunky contracting experience doesn’t bode well for a carrier’s reputation and could increase the risk of churn. Each lost agent contributes to a loss of investment and potential revenue for the carrier. 

No. 3: The ever-dreaded manual data entry 

The different formats and delivery methods by which carriers receive contract requests can make the simple act of getting necessary producer data into their systems a full time job. While keying in information manually may feel manageable when we’re talking about a handful of contracts per day, larger carriers that need to process something like 80 contracts a day, could be relying on multiple full-time employees just to get the job done. Not only is this a poor use of employee time, but it also increases the chance of incomplete or incorrect data flowing through your systems.

How this impacts a carrier’s bottom line: While it may seem like a small thing, manual data entry in the producer contracting process can impact a carrier’s bottom line in several ways. First, there’s the higher operational costs that come with paying employees to key data into your systems by hand. Then there’s the costs associated with the higher risk of human error. These include the obvious financial burden of any fines you incur, plus the not as obvious, but often more detrimental, cost of business interruption during an audit. Whatever way you slice it, manual processing time and double data entry has a direct impact on a carrier’s bottom line. 

Transform your shared workflows with a modern approach to producer contracting 

Without an integrated system to manage producer contracting processes, carriers and their distribution partners face unnecessary delays and operational risks that, if left unchecked, take a toll on your bottom line. AgentSync builds modern solutions that streamline the shared contracting workflows for carriers and distributors and accelerate producers to ready-to-sell status without all the hurry-up and wait. Our Contract Request Service (CRS) automates the contract request process so carriers can provide producers with faster, simpler, error-proof onboarding and contracting. By adding CRS to their AgentSync Manage instance, carriers gain:

• Source-agnostic data normalization 
• Improved workflow automation
• Accelerated producer onboarding
• Improved visibility and communication throughout the entire contracting process

Learn more about CRS or talk to an AgentSync expert about our full suite of carrier solutions today.