BLOG: Book of Business Management and Agent Loyalty

As a carrier or large broker-dealer, you already track and manage your agents’ books of business – the links between producers and the policies they service – because, after all is said and done, you have to.  It’s a compliance issue, and it has tentacles extending into your sales operations, incentives, and reporting.  But how many carriers treat the process with the respect it deserves?  In our experience, the answer is, not very many.  It’s a necessary evil, but you don’t have to be enthusiastic about it, and most aren’t.

BobTrak was founded on the principle that this process doesn’t have to be a second-class citizen in the insurance ecosystem, and that there are great reasons why it shouldn’t be.  One big reason is that a well-managed book of business management process can have a huge positive impact on the producer experience, especially for carriers that use independent agents.  Simply – if you give your agents the tools they need to get complete visibility into their books, they will lean towards selling your products instead of your competitors’.

Independent agents see their books as their most valuable asset.  Yet how many can get a full accounting of their books’ policies and policy values from the carriers whose products they sell?  Certainly the carriers have that data in a more or less accurate form – as I said, they have to – but the information tends to be buried pretty deeply in multiple legacy systems into which there is nearly no visibility.

This makes selling either their complete book or just a subset of their policies a hit-or-miss operation for the agents.  And because they don’t have tools to manage the transfer, the carriers are often left in the dark when book of business transfers occur as well, resulting in mis-paid incentives, bad reporting, and compliance issues.

And what is a producer’s book of business worth when they do decide to sell?  How easily can an agent calculate the value of the collection of policies?  If a system to track the servicing of policies also enables reporting of business events over time, a producer can easily see the aggregation of net written premium, commissions, persistency, or profitability of her book – and incidentally, so can the carrier!

Independent producers can have literally dozens of contract relationships with a carrier over their careers, and each must be tracked and managed separately.  This can lead to situations in which a carrier can’t do an agent’s tax reporting accurately.  It’s not unusual to see a scenario in which no single relationship earns more than $600 in incentives during a fiscal year, but the combined amount across multiple relationships is more than $600, a situation that should trigger the generation of a 1099.  When the book of business management is buried in numerous, silo-ed systems, joining the many contract relationships under a single human entity is difficult or impossible.  A thoughtfully-designed book of business management system can alleviate that problem and make it easier for your producers to manage their finances.  Again, an enhanced producer experience comes from rethinking current operational processes.

With the best will in the world, silo-ed, legacy systems that don’t communicate with each other create a producer experience that dis-incents agents from selling a carrier’s products.  Improved operational efficiency is a great goal in itself, but it’s especially desirable if doing it makes your agents more loyal to you.

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