Move Over Mainframes: What Modern Hierarchy Management Looks Like and Why It Matters

Not long ago, the insurance industry was ripe with areas of opportunity for digital transformation.  Nowadays, from electronic signature tools to AI customer service chatbots to full-scale distribution channel management solutions, there’s no shortage of tech tools to help insurers increase their efficiencies, improve their processes, and reduce their risks. 

However, one area of insurance distribution that’s still stuck in the past is hierarchy management. Without a solution for visualizing and updating an organization’s structure and commission payouts, carriers and agencies are left spending unnecessary time and money chasing down the most accurate data. With a modern solution for hierarchy management, insurance enterprises can manage even the most complex producer hierarchies with confidence and simplicity, ensuring compliance, accuracy, and efficiency as they scale. 

Current solutions for hierarchy management leave much to be desired

When we think of past hierarchy management solutions, legacy technology like mainframes, spreadsheets, and digital change logs are what come to mind. Presently, not a whole lot of progress has been made to move beyond these approaches, and a number of carriers and agencies still use siloed, highly manual methods to represent their org structure. 

Of the modern, digital solutions that do currently exist, finding one that accounts for the insurance industry’s specific needs can be a challenge. Any solution claiming to modernize hierarchy management for insurance organizations can’t make a true difference without solving for insurance specific use cases like effective date tracking, change request and approval logging, and multi-level commission management.

3 ways traditional hierarchy management falls flat

1. Poor data visibility 

The networks of relationships that form a distribution channel and ultimately connect underwriters to policyholders can be multi-level and complex. Some businesses operate with hierarchies that span 30-plus levels, thousands of producers, hundreds of products, and dozens of commission structures. From a visibility standpoint, using spreadsheets and change logs housed on mainframes isn’t a very effective way to manage these complexities. It is, however, an effective way to create data silos in your processes that impact your ability to make well-informed decisions about your distribution channels. Without full visibility into your org structure and commission payouts, how can you accurately assess how your partners are performing? How can you know which distribution partners are critical to your success and which ones cost you more than their worth in annual appointment fees? 

2. Inefficient and impossible to manage at scale

Imagine this: You’re an insurance carrier with multiple downstream agency partners. One of your longer-standing partners has a change in structure, and now the onus is on you to update years-worth of records and hundreds of contracts to accurately reflect the change in your system. Because you’re using manual methods for hierarchy management, it takes your admin hours to track down any inconsistencies and make the necessary changes. Hours they could be spending on other higher-value work. Inefficiencies like this increase costs and stall innovation, making it pretty much impossible to operate effectively at scale. 

3. Increased compliance risk

The manual nature of traditional hierarchy management puts insurance carriers and agencies at a higher risk for errors in their records. Just one inaccuracy in the documentation of your organization’s structure can cause incorrect, missed, delayed, or clawed-back commission payments. Not only does commission mismanagement impact your distribution partners’ trust in you—which could result in some producers feeling the need to spend their own time calculating their payouts to ensure they’re being properly compensated—but it could also trigger a regulatory audit. And because last we checked, manual hierarchy management wasn’t very effective at generating time-stamped, automatic reports at the click of a button, that audit’s going to cost you hundreds of hours in data tracking and verification. 

The future of hierarchy management is automated, integrated, and intuitive

As insurtech innovates beyond the inefficient and highly manual legacy tools of the past, finding a modern solution to hierarchy management shouldn’t be an afterthought. The right solution will meld modern automation capabilities with easy-to-use workflows, cloud-native infrastructure, and API driven data to turn hierarchy management from a bottleneck into a growth driver. 

Any solution to insurance hierarchy management should overcome the challenges of traditional methods and grant carriers and agencies: 

Full visibility into their hierarchies and commission structures: Not just immediate uplines and downlines. We’re talking full visibility into who in your distribution network is licensed in which states and for which products. And, with the rate of change growing insurance businesses experience, effective dating and historical data retrieval capabilities are a must-have to enable your team to access accurate snapshots of your organization and commission structures both presently and historically.  

Agile workflows for greater efficiency at scale: One small change in the organizational structure or licensing status of any of your distribution partners could impact thousands of records. How transformational would it be to see those changes reflected across your systems automatically, instead of spending hours manually documenting them? Modern hierarchy management should leverage API-backed automations to eliminate the administrative nightmare that is manual change management. That way any changes made to your org structure or commission levels are automatically reflected in every instance, whether your hierarchy includes a handful of distribution partners and payment structures or encompasses thousands of downlines and dozens of commission levels. 

Proven time and cost savings: How does that saying go again…something about time being money? The bottom line is that a modern hierarchy management solution can save your insurance enterprise both. Here are just a few examples of how:

• Comprehensive historical tracking with effective dating makes pulling an accurate report of present and historical data for a state audit quick, painless, and efficient at scale.
• Intuitive approval workflows for hierarchy modifications save you and your distribution partners time that’d otherwise be spent sifting through email threads and paperwork for the correct information and waiting for changes to be approved. 
• Greater visibility into commission levels and payouts means fewer commission clawbacks and regulatory fines for commission mismanagement.

A reputation as a modern, compliant organization: No business wants a reputation for being hard to work with, untrustworthy, or stuck in the past. By using modern, intuitive, hierarchy management to power your distribution channel management, you can secure your place in the 21st century and delight your distribution partners with a more modern, seamless experience. Where manual hierarchy management can be a lesson in patience, a modern solution can offer intuitive approval workflows that automatically direct requests straight to the necessary stakeholders, speeding up the process and eliminating frustration. And forget antiquated mainframes and spreadsheets. Any present-day solution will be built on cloud-native infrastructure and leverage API-driven integrations to deliver a modern, tech-forward user experience. 

Drive digital transformation at your organization with AgentSync Hierarchy Management 

AgentSync Hierarchy Management brings the core functions of a modern hierarchy management solution to life. Built on a modern, cloud-based platform, AgentSync Hierarchy Management leverages API integrations to flow distribution partner data seamlessly through your existing tech infrastructure, eliminating the need to maintain parallel mainframe systems. With AgentSync Hierarchy Management, insurance carriers and agencies with even the most complex organizational structures can:

• Handle insurance-specific hierarchy needs like multi-level overrides, effective dating, and required approvals with ease
• Ensure correct commission payments by aligning payouts with an always accurate, real-time hierarchy
• Onboard producers faster by automatically routing approval requests to the appropriate stakeholders and reducing time spent completing slow, manual workflows
• Maintain unified producer data throughout their distribution channel management workflows from licensing through contracting with API-backed integrations

To learn more about how AgentSync Hierarchy Management can take this crucial aspect of your distribution channel management workflows from inefficient and time-consuming to agile, seamless, and modern, get in touch with one of our experts today.