This post is part of a series sponsored by AgentSync.
The Hidden Cost of Manual License Verifications
Keeping insurance producers’ licenses and appointments compliant is a critical responsibility shared by nearly everyone in the insurance distribution channel. However, plenty of insurance carriers get bogged down each year by inefficiencies in the license and appointment renewal process. Add distribution partners who sell variable lines of insurance (like variable annuities and variable life insurance) to the mix, and the challenges are multiplied.
If a carrier’s renewal process is full of outdated manual workflows, they may find themselves unable to process hundreds of thousands of renewals, delaying their revenue and stirring up frustration for both producers and customers.
The producer license renewal process for carriers
License and appointment renewals occur either annually, biennially, or on some other basis, depending on the state or states a producer operates in. As luck would have it. AgentSync has already taken the time to compile a list of the 2024 carrier appointment renewal and termination deadlines for your convenience. Side note: Many of the 2024 termination deadlines have already passed, renewal deadlines are still to come, and we’ll have an updated list for next year coming soon.
The renewal process itself is a tale as old as time. It all starts with the states compiling a list of the producers and organizations each carrier currently appoints with. Next, it’s the carrier’s job to review their appointments and decide which producers they want to continue doing business with and which ones they want to terminate. To avoid paying to appoint producers they no longer wish to do business with, carriers must submit their terminations by their home state’s deadline.
After the termination deadline passes, carriers typically have a few days before their state’s appointment renewal invoice payments open. Once a state opens the invoice period, making changes isn’t exactly easy, so it’s important that carriers terminate any inactive producers in advance to cut unnecessary costs.
License verification is a critical step in the renewal process
When it comes to deciding which downstream partners to reappoint or terminate, there’s a lot to consider. While the general idea is simple enough – terminate any producer whose license is no longer valid – there are a number of other factors at play.
For starters, 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 an insurance or securities license may be invalid, so carriers need to know that their distribution partners haven’t done anything that could cause them to fall out of compliance or lose their license in the time since they last checked.
Beyond license validation, renewal is a great time for carriers to “trim the fat” so to speak, and terminate any producers who cost more than they’re worth to partner with. Paying to appoint hundreds of producers when only a dozen or so actually write business for you, or paying to appoint a single producer in every state when they only write business in a select few states is just a waste of money.
The challenges of manual license and appointment renewals
1. Data collection
As we alluded to, license verification requires collecting and comparing A LOT of data. To accomplish the task, insurance carriers often have multiple full-time employees dedicated to checking and cross-checking state DOI websites, producer databases, FINRA records, background check results, CE credentials, and so much more.
For carriers with only a handful of producers or broker-dealers, this manual way of doing things may be doable, but it’s still not ideal. And you can forget about trying to manage verifications by hand at scale. That’s pretty much a guaranteed time-suck, waste of money, and overall headache inducer.
2. Data validation
Once a carrier has collected the necessary data, how can they be sure it’s accurate and up-to-date? Manual data tracking and collection means often organizations find themselves trying to verify one internal data source against another, with no guarantee that either record even has the right information.
Plus, when you have multiple people manually inputting producer data into one or more different systems, there’s a high chance for human error. Without a single source of truth, it’s pretty much inevitable that your data’s accuracy will be less than perfect.
3. Data analysis
When a producer’s license and appointment data is in one spreadsheet or system, their policy data is in another, and their commissions data in yet another disparate location, manually pulling all that data into a single, unified view is…difficult to say the least. It’s nearly impossible to determine the real cost a carrier pays for each individual producer and what the producer delivers in return on a state-by-state basis when the data is locked in manual, siloed systems.
Generating a list of who to terminate in which states before what deadlines takes hours and hours of manual work. This leaves carriers no choice but to appoint every producer who raises their hand in every state. As a result, insurers end up paying a bunch of fees for people who might not ever write business for them.
What a manual license verification and renewal process costs carriers
Manual producer and broker-dealer license verification and appointment renewals cost organizations more than they may realize. To start, there’s the obvious and direct cost of retaining multiple full-time employees for data collection and verification. With an automated solution, these employees can be redirected to more revenue-generating work.
But that’s just the beginning. Consider the following direct and indirect costs of doing things by hand:
- Money lost on NIGO applications
- The cost of appointing producers who aren’t actually selling
- Lost revenue opportunities due to renewal backlogs
- Missed partnership opportunities
At first glance, it’s easy to overlook just how much inefficiencies in your renewal cycle are actually costing you. But, when you break it out, it’s clear that relying on manual workflows for critical aspects of your distribution channel management 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 producer license and compliance data across all of your systems, reduces the manual effort on your team and eliminates inefficiencies in the renewal and appointment processes. Best of all, doing so will eliminate many of the costs associated with managing these workflows by hand. Consider the benefits of using automation to:
Free your team from manual data collection and analysis
Nobody wants to spend their time buried in heaps of paperwork or scrambling through state web pages, internal spreadsheets, and external databases just to validate a license or renew an appointment. Not only is it frustrating and time-consuming, but it’s also a pretty poor use of talent.
An automated distribution channel management solution can provide carriers with real-time broker information directly from the industry’s source of truth at the click of a button, eliminating data silos and ensuring you have access to real-time, accurate data whenever you need it.
Reduce backlogs
Bottlenecks in your renewal processes cause backlogs that prevent your distribution partners from, well, distributing. This causes frustration for producers who want to sell a carrier’s products but are unable to do so without a valid appointment. If a producer is unable to sell your products, consumers will look elsewhere for their policy needs, causing you to lose out on key business.
Speeding up the renewal process with an automated solution allows you to move producers through the process quickly and with little to no roadblocks. When it comes to choosing who to partner with, producers will prioritize carriers that enable them to sell faster, not ones that block them from doing their job.
Cut costs
With an automated solution that weaves accurate, up-to-date producer data up and down your systems, generating a report of who writes business and in which states is as simple as pressing a few buttons. This saves carriers with large distribution forces thousands of dollars in appointment fees and allows them to focus their time, money, and resources on their highest performers. Just think how much easier renewal time is for carriers with that level of visibility into the ROI of their downstream distributors.
Streamline appointment renewals to keep your business moving forward
Accurately tracking active producer appointments throughout the year allows carriers to make better business decisions come renewal time and scale their business effectively. If you want to make the appointment renewal cycle easier on yourself and your downstream distribution partners, AgentSync can help.
Our modern distribution channel management solutions give carriers access to accurate producer 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 daily operations and become a better partner to your downstream distribution partners, learn how our solutions help carriers power their growth or contact an AgentSync expert today.