Top 4 Challenges Insurance Agencies, IMOs, and FMOs Face with Producer-to-Carrier Contracting

For agencies, MGAs, MGUs, BGAs, NMOs, IMOs, FMOs, and the rest of the alphabet soup of wholesalers and insurance resellers, connecting producers with carriers for the contracting and appointment piece of the business is vital and risky. Done well, you’ve proved your worth as a middle man to both ends of stakeholders. Done poorly, you risk producer churn and reputational floundering with the carriers whose exclusive contracts you hope to obtain.

Managing contracts is difficult on a good day. You may have producers assigned to different strata of contracts depending on the carrier or sales region, and keeping clauses up-to-date at scale as carrier appetites change or producers write more or less business is like a neverending shell game if you’re doing it manually. And the more complex your business becomes, the worse it gets.

4 challenges to insurance distributors contracting at scale

‌Whether you’re starting a new relationship with an insurance carrier and need to onboard all your agents to your new partner, or whether your newest recruiting class is signing up with a longtime carrier partner, getting producers contracted and appointed can be one of the hardest and most bottlenecked pieces of the onboarding process.

We’re going to cover the top four reasons this process is a challenge, but they all come down to the fundamental of control: For agencies, FMOs, and other insurance distributors, even if you’ve dialed in the rest of your onboarding, handing your producers over to external carrier stakeholders means sending them into a process that’s outside of your control.

No. 1: Nonstandardized data

One of the biggest, if not the biggest, challenges to an ideal carrier contracting and appointment process is that your insurance carrier partners don’t follow a single standard for producer data collection. This means that, whether you contract with 10 or 30 or more insurance carriers, every single one is an ad hoc motion for your producers.

Without a structured, standardized approach to the onboarding data needed for each carrier’s contracting and appointment process, each producer faces the risk of missing essential information and having to engage in the back-and-forth of a paperwork chase. From “paper licenses” to copies of E&O, managing the requirements easily becomes a trial of carrier-to-agency-to-producer-to-carrier communication.

No. 2: The black box: Where transparency goes to die

You collected your producer’s paperwork and sent it over, and now … you wait. 

Does someone have your producer data sitting in an inbox? Does the carrier have all of the information they need?

Submission is a black box. Distributors don’t have the visibility to report back to the stakeholders in their organization, and the accountability for who “owns” the process is lost. Further complicating this process is that many carriers and agencies handle some portions of the contracting and appointing process quite manually. As one agent pointed out in Insurance Business Magazine, “Carriers must be transparent. If we say we offer a fully digital experience, it needs to actually be that.”

No. 3: Unpredictable timelines

For insurance distributors, the black box of producer data rolls into another challenge: Without visibility into a producer’s progress through the contracting and appointment process, you also can’t give your producers predictable timelines for when they’re ready to sell.

Many FMOs, IMOs, MGAs, and other distributors have worked to get their producer onboarding process down to a matter of hours, not days. But your efforts are undermined when you’re at the mercy of your insurance carrier. You want to assume you’re submitting only contracts that are in-good-order, but, if every one is a one-off motion, then your operations team will struggle to help set timelines and expectations with both your agents and the internal stakeholders who recruited them.

To underscore the difficulty in establishing a predictable timeline for completing the producer-to-carrier contracting and appointment process, industry estimates for carrier contracting range from a few days to several weeks.

No. 4: Trouble setting producer expectations

If you can’t offer predictability for how quickly a producer can move from onboarding to ready to sell, you may struggle to retain your producers, something that’s already a pain point for many distributors, as 30 percent of agents quit in the first 90 days of joining the industry and 90 percent leave within the first three years.

While there are nearly 1 million insurance agents in the U.S., about 200,000 join or leave annually. So, unnecessary churn could spell real trouble for you and for the carrier partners you hope to attract. 

When insurance producer-to-carrier contracting goes poorly

If you aren’t able to quickly and predictably add your producers to your carrier contracts during onboarding  or as they change sales territories, your challenges could cascade into five very avoidable consequences:

• Lost revenue
• Increased operating costs
• Frustration and producer attrition
• Fractured relationships with carriers
• Gaps in sales coverage

Controlling your risks with better contract management

Hopefully you know that a manual process with spreadsheets and some esignature tools as a sidecar isn’t enough to cut through the hassle of the status quo. In fact, half of producers in one McKinsey survey reported being “dissatisfied with the level and function of signature capabilities at their primary carrier.”

The first step for agencies, FMOs, IMOs, MGAs, BGAs, and other insurance distributors that want to reduce friction for their agents is to rethink contracting as a shared data workflow. You’re not merely adding an agent to your carrier contract. You’re using your connection to your producers to serve as a source of truth in connecting accurate data to your carrier partner.

The next generation of contracting and appointment request management for agencies is here, with AgentSync’s Contracting solution.

Contracting allows you to manage your carrier contracts and all their variations in one platform, with the ability to add or remove producers and send their onboarding data—validated against the National Insurance Producer Registry (NIPR), the industry source of truth—to carriers based on each of your carriers’ requirements and preferred data structure. 

Our Contracting solution comes with features such as:

• Standardized ingestion, with files you can send via email or a single packaging process that has your insurer’s requirements built-in.
• Autopopulated producer data across multiple contracts so you can prefill based on sales territories.
• Reduced time to submission since you can edit and send contracts in the same workflow.
• Bulk submissions allow you to send entire onboarding classes to your carriers.
• Data mapping allows you to give stakeholders across the organization visibility into your process, increasing transparency and bringing down silos.
• Data excellence means your contracting workflows become the source of truth for paperwork in your business.
• Connected workflows allow producers to see where they are in the process in their existing agent portal, giving them more predictability and control, and overall making for a better, more white-glove experience.

If you’re ready to reimagine the producer-to-carrier contracting process for your insurance distribution company, watch a demo today or contact us to speak with one of our knowledgeable insurance compliance and operations consultants.