The customer is an independent risk management and insurance brokerage firm providing market leading service in traditional commercial insurance, employee benefits, alternative risk financing, and structured solutions. Operating across the US, the customer strives to meet the demands of its clients and provide innovative and creative solutions to enhance its clients’ experience.
The Insurance Brokerage Firm has seen massive growth in the past few months after merging with several independent insurance agencies. The customer went from a firm that had 30 producers to about 150 producers. Initially, auditing commission agreements and ensuring that each producer received the correct commission percentage on each policy sold among 30 insurance producers was a manageable task. However, after its workforce’s rapid expansion, the auditing process became considerably complex and more challenging to manage.
Essentially, once a policy is rated and then bound back from the carrier, the producers would receive a portion of the premium linked to each policy. The customer's finance team was required to manually verify each policy’s commission agreement and structure, and ensure that the commission statement had been correctly calculated.
Commission agreements vary based on multiple factors including the type of policy sold, the line of business the policy is associated with, whether the commission needs to be split between multiple agents, whether the policy is new or being renewed, and if any bonuses have been agreed upon between the customer and the insurance carriers with which they work, to name a few. The producers are responsible for managing these factors and ensuring that the right options and commission criteria are selected. If the incorrect options are selected, which they often are, the error zeros off the commission. Essentially, The producer would receive 0% Commission for that specific transaction.
In order to address commission agreement errors, the customer’s finance team would resort to manually auditing transactions. The process involved creating credit notes to adjust invoices and then re-invoicing the carrier with the correct commission amount. To do this the customer’s finance team had to identify errors in commission rates and agreements using Excel pivot tables and then cross-reference commission data from the carrier with the data in the brokerage firms Agency Management System (Applied Epic). This extremely time-consuming and laborious process had to be carried out for thousands of transactions.
What's more, at the end of each month the customer wasn't adjusting the commission within Applied Epic itself, filling the AMS with inaccurate commission data. To compound the issue, some producers weren’t simply paid monthly, others were paid on a 3-month, 6-month, or even annual basis. This meant that if an error was made calculating a producer’s commission for a single month, the inaccuracy would trickle down for the rest of the period for which the producer was paid. Small errors could result in a producer being under –or overpaid by thousands of dollars.
The Synatic team promptly examined the customer’s commission agreement auditing process and identified the gaps in the agency’s systems. Using DataFix the team put together a comprehensive strategy to streamline and simplify error identification and commission reconciliation.
Synatic built a solution aimed at reviewing commission agreements within the Brokerage Firm’s AMS
and flagging transactions that have discrepancies. The solution will then update agreements and percentages automatically or notify producers of necessary corrections directly in Applied Epic.
DataFix performs constant audits on the commission percentage, type, and line of business and then fires a message to the producer to notify them if something is incorrect, allowing the producer to take a proactive stance toward commission agreement errors. In addition, the platform can also send an alert to notify the finance team of adjustments that need to be made.
This solution aims to “true-up” the customer’s commission agreement auditing process at its center by creating a single record of truth for each transaction inside the agency’s AMS.
By working with Synatic, The Brokerage Firm was able to solve its commission agreement auditing challenges and pull data together to create a clear, precise, and holistic view of policy commission agreements and rates with speed and accuracy. DataFix does more than just automate the data cleansing process, it proactively adjusts producer behavior prompting them to pay more attention to commission agreement options. DataFix also creates greater visibility into commission structure and calculation building trust between the customer, its producers, and the financial team.
“DataFix is doing what I call, the dirty plumbing between all our systems. End users can simply click on a button and obtain accurate policy agreement data and commission percentages while Synatic works in the background cleansing, verifying, and integrating data without them having a clue of the 'technical heavy lifting' that goes on in the background.”
