The producer onboarding process is critical for both agencies and carriers. Weeks, sometimes months or even years of recruiting efforts pay off when a producer inks an agreement with an insurance agency.
For Directors of Operations and Chief Compliance Officers, however, this handshake is where the team’s real work begins. Onboarding a producer—or a whole class of producers—is an intensive process, during which an agency and all their partnering carriers or MGAs have to:
- Collect producer information
- Fact-check the producer’s data
- Transmit that data across relevant teams and distribution partners
- …All while creating a fantastic producer experience and accelerating time to first commission
At AgentSync, our products are purpose-built to support the insurance industry’s various challenges, opportunities, and mandates of the entire producer lifecycle, which begins most especially with producer onboarding.
What is producer onboarding in insurance?
Producer onboarding is the process of initiating a licensed insurance producer in the ready-to-sell process for an agency and/or an insurance carrier. For insurance agencies, this could involve getting someone an insurance license and running them through a background check. For an insurance carrier or MGA, this could involve a background check, license validation, and filing an insurance appointment with the appropriate state regulators.
Carriers and agencies have different requirements for what they need to do with the producer data they collect. But there’s so much overlap in their responsibilities that these insurance businesses can have the most productive relationships when they conceptualize “onboarding” as a shared workflow across their business types.
Challenges of insurance producer onboarding
Producer onboarding for both insurance carriers and insurance agencies comes with many challenges, but they boil down into five core hurdles.
Producer onboarding and the producer experience
Agencies spend a lot of money trying to recruit quality insurance producers, or new faces to insurance who can pass the insurance licensing exam in their resident states and get started in the industry. So if onboarding is then a painful experience of repetitive data entry or—gasp—actual paperwork for those producers, you’re creating friction for the agency to overcome. Poor onboarding experiences directly impact talent attraction and retention-critical factors in competitive differentiation.
For carriers, too, agencies and firms are essential for distributing their products. Carriers that can be part of a start-to-finish positive onboarding experience for producers will make it easier to find and maintain quality distributor relationships.
Producer onboarding and data accuracy
If you’ve ever mistyped your own name, you can appreciate the struggles inherent to producers and operations and compliance teams for insurance agencies and carriers in this process. Onboarding is often the point in time when insurance compliance gets the most attention, and every other challenge of onboarding—producer experience, speed, etc.—can be exponentially impacted by the quality and accuracy of data your team can obtain during onboarding.
For carriers and agencies that want a friction-free onboarding process, a few best practices can make a significant difference:
- Validate all producer data against the industry source of truth, the National Insurance Producer Registry
- Use a compliance management software to serve as the single source for your onboarding and producer data with real-time dashboards and audit trails
- Leverage robust integrations to pull data from that source of truth and eliminate manual data entry
Producer onboarding and speeeeeed
Producers are ready to be onboarded now. And every day that they have to wait costs your agency or carrier real dollars in premium they could have been writing faster if your onboarding process had less friction. The ability to reduce onboarding timelines directly impacts revenue velocity and ROI on recruitment investments.
Unfortunately, many agencies are comfortable with an onboarding process that takes days or even weeks. And insurance carriers often cite weeks or even months as the turn time to fully process their state-required appointments and get the producer ready to sell. With the right enterprise-grade platform and implementation support, onboarding timelines can be radically compressed—some organizations achieve compliance-ready status in as little as 48 hours.
Producer onboarding and the agency-to-carrier workflow
One of the quiet challenges of producer onboarding is that it’s typically a shared workflow between agencies and carriers. Unfortunately, it often goes unacknowledged. But for insurance producer onboarding to be its most successful, agencies and carriers must work together to simplify things for their shared producers.
Streamlined multi-carrier coordination eliminates bottlenecks, reduces manual work, and allows operations teams to manage by exception—freeing FTEs for strategic priorities.
Nowhere is this more apparent than in the carrier appointment and contracting process, when agencies pass their producers over to carrier partners only to wait weeks or months to find out if their producers have been appointed, if they’re ready to sell, or if an error slipped the agency operations team and the producer has to resubmit the contract packet anew.
Producer onboarding, contracts, and commission hierarchies
Data accuracy is a huge part of producer onboarding, but the way different records relate to each other and how they ladder up under parent contracts and commissions hierarchies matters, too. Things like whether an agent has a direct upline or works through a subagency, or whether they were recruited by a marketer, or whether they’re physically located in Florida: All of these factors could make a difference in where a producer sits in a hierarchy for commission purposes or how their onboarding flow should be handled. Scalable hierarchy management ensures accurate commission calculations and supports rapid expansion across sub-agencies and multiple producer tiers.
What are the duties of producer onboarding for insurance carriers and agencies?
Carriers and agencies fundamentally must validate a producer’s license, ensure they’re properly appointed with any carrier whose products they’re selling, and make sure they’re fit to be in front of consumers representing insurance products. Risk mitigation through comprehensive background checks and compliance validation is a non-negotiable operational safeguard.
The National Association of Insurance Commissioners’ model regulation stipulates:
“An insurance company or insurance producer shall not pay a commission, service fee, brokerage or other valuable consideration to a person for selling, soliciting or negotiating insurance in this state if that person is required to be licensed under this Act and is not so licensed.”
Additionally, in states that require carrier appointments…
“An insurance producer shall not act as an agent of an insurer unless the insurance producer becomes an appointed agent of that insurer.”
Practically, this can involve duties such as:
- Verifying or obtaining the right licenses for the producer across all relevant states.
- Getting a copy of a producer’s E&O policy to ensure they have one properly in place.
- Fingerprinting or getting a background check on the producer.
- Getting a copy of the producer’s W-9 or relevant tax document.
- Having the producer sign the agency’s contract and the agency’s contracts with each insurance carrier.
- Complete the requisite training to sell a carrier’s products.
- Ensure all relevant carriers have an appointment with the producer in all relevant states.
Whether you’re an agency, an MGA, or a carrier or anything in between, you may have to do any or all of the things on that list. For agencies and carriers, however, many of these duties are duplicative or overlapping. Integrated platforms that coordinate agency-carrier workflows reduce redundancy, lower compliance risk, and dramatically reduce cost per onboarding. Agencies and carriers that can share this workflow and avoid putting producers through repetitive data entry will have an easier time finding recruits that stick through the process.
Producer Onboarding FAQs
1. What is the industry average timeline to onboard a new insurance producer?
Many agencies take two to three weeks to get a new producer up and running, although with the right tools, that process can be cut down to as little as a single day–or as fast as the relevant states can process their license transactions.
MGAs, which require less extensive processes, typically take two or so days.
Carriers may take two to three weeks to completely onboard new producers, but, like agencies, may see that timeline radically reduced by automated digital tools.
2. Don’t most insurance businesses need more or less the same pieces of information from prospects and agents?
Yes. Although the Association for Cooperative Operations Research and Development (ACORD) sets global standards for best practices and standardized electronic forms and processes aimed to enable better cooperation and communication between agencies, carriers, MGAs, and the agents they serve, most of these businesses still have unique requirements and and information they request from new agents.
3. Does my insurance business need to run background checks on insurance agents?
Running a background check on someone who may have a direct impact on a consumer’s financial decisions is a best practice.
4. What is a typical insurance commission structure?
There is no such thing as typical in insurance, but insurance producers in the life and health space could see 10 percent to 40 percent of the first year’s premiums paid as a commission, with far less of a return on renewed contracts. P&C producers might see more like 5 percent to 20 percent of the first year’s premium, but with similar payments on subsequent years and renewals. This calculus doesn’t include the various levels of individuals or organizations that may be taking a slice of that commission, however. An organization could see 30 or more different hierarchies of producers, subagencies, and marketing or recruiting teams.
5. How do I help producers get through onboarding quickly?
A few ways to help speed your producer onboarding: adopting best practices such as the ACORD processes, offering incentives to complete paperwork within a certain timeframe, using technology that autofills information and validates it against the industry source of truth (NIPR), and integrating your tech stack so producers can fill information in one single system.
The AgentSync Difference
AgentSync’s product suite makes onboarding a better, more reliable experience for everyone involved by validating producer data against the industry source of truth, streamlining the process, and automating workflows. The AgentSync suite leaves compliance and operations teams free to manage their producers by exception, only touching complicated applications or getting hands-on involvement when it’s necessary.
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Matt Brockmeier
Business Development Specialist
