4 Strategies to Make Producer Lifecycle Management a Priority

Maintaining a top-notch sales organization is harder than ever. One key reason is the growing challenge of keeping up with state and federal insurance regulations that focus on sales. The multiple tasks involved – changing regulations across all 50 states, agents vs. brokers, licenses that need to be renewed – can be confusing and require constant updating. It’s easy to get lost in the details, making producer lifecycle management (PLM) systems more important than ever to agencies, agents and carriers.

To operate at peak efficiency and profitability, it’s essential for producers and carriers to stay focused on one key question: are my sales channels perpetually authorized to sell business?

Judging from a 2012 survey of 40 insurance businesses, the answer is a definite no. Nearly 60 percent of respondents say their PLM effort “needs improvement,” according to the Vertafore Producer Lifecycle Management Survey. Looking closer, it becomes apparent where improvement is needed. While 85 percent of carriers and agencies report verifying producer authorization during producer onboarding, only 40 percent are authorizing at the time that it really matters – when new business is being submitted. Furthermore, when authorization errors are detected, only 5 percent are able to automate the resolution.

While every business needs efficient, reliable and fast PLM, the reality is that many don’t have what they need. Managing the producer lifecycle often involves disjointed processes, manual and redundant data entry, and inefficient transactions across multiple internal systems. The consequences of inadequate PLM can be serious, including lost revenue, compliance gaps, exposure to audits and fines, lost commissions (for agencies and brokers) and reputational risks.

A lack of appropriate credentials and relationships can cause serious delays. In an April 2013 survey of insurance professionals, nearly 20 percent said between 16 percent to more than 21 percent of their business had been held up because of authorization gaps. Forty-three percent said 6 to 15 percent of their business had been delayed.

With so much at stake, why has PLM not emerged as an urgent priority and, more importantly, what can be done to ensure that every producer is fully authorized for each sales opportunity that arises?

One barrier to implementing better PLM systems, according to the survey, is that business decision makers don’t see projects aimed at making producer sales authorizations more efficient as important as other initiatives and expenditures. Respondents listed a number of projects that were placed ahead of PLM, including agency management systems, compensation systems, agency portals, claims, and policy administration applications.

Licensing, compliance and contracting team members also acknowledge being largely siloed within their respective businesses. PLM functions are often spread across functions in multiple departments, including sales, marketing, underwriting, policy administration and claims. Purchasing decisions are similarly spread across departments, making it even more difficult to generate a critical mass of support.

But there are a number of strategies that can give PLM more visibility and help move it to the front of the priority list. They include:

1. Prove the value of PLM to the rest of the organization. PLM purchasing decisions aren’t made in a vacuum. The teams tasked with enabling sales authorizations must be well prepared to articulate the hard dollar impact and other benefits of their PLM project recommendations. They should also include the quantifiable impact on other departments outside of their function.

2. Speak about PLM in terms of the overall agent experience. Speaking the language of the business, rather than the language of regulators and individual departments, will help convey the strategic urgency of making PLM procedures more efficient, enabling the business to meet its bottom-line objectives.

3. Incorporate Producer Lifecycle Management as a driver toward strategic growth initiatives. PLM functions within carriers, agencies and brokers offer tremendous potential for delivering substantial cost savings while mitigating reputational risk to the organization. Implementing efficient, automated, exceptions-based producer lifecycle management processes should be strongly considered as part of strategic growth initiatives. Whether launching new products, expanding geographically, completing mergers and acquisitions, or adding new distribution channels, it is critical that producer authorization activities are planned and managed well.

4. Seek the backing of IT. The IT departments of carriers and agencies have traditionally been given the charter to conduct independent research to support their internal business user. They will be more outspoken supporters of PLM projects if:

• Their application, services, and support and recovery systems are technically sound
• The addition of this project/product will not unduly burden their resource-constrained staff
• The application and/or service will not cause long-term maintenance issues
• They will be viewed favorably should they recommend it

Carriers and agencies must evolve from the current reactive approach, where they respond ad hoc to changing regulations and use an often-piecemeal approach to keeping producers authorized to sell. Instead, by adopting an automated, PLM initiative, they have the opportunity to transform their business, productivity and profitability.

Topics Agencies Legislation