By Tim Owen, vice president, producer lifecyclemanagement, Vertafore

Making sure producers can sell multiple lines of businessthrough many carrier partners in one or more states is a complexweb of back-and-forth communication. When performed manually,getting and keeping each of your producers properly credentialed tosell can take days or even weeks to complete. Although agencies areresponsible for ensuring their producers are licensed andappropriately appointed with their carrier partners for thebusiness they sell, carriers are responsible for staying informedof producer status changes. Not keeping all parties informed andup-to-date can come at great regulatory risk and cost.

Simultaneously, the state and federal regulatory climatecontinues to heat up, as we've seen most recently with healthcareand financial reform, and shows no signs of slowing. Recent annuitysuitability and long-term care training and suitability educationrequirements, as well as new disclosure requirements for investmentadvisors, are just two more examples of accelerating regulation.Industry and regulatory analysts believe more regulatory changesare coming as healthcare and financial reforms are fullyimplemented.

Regulators are also stepping up regulatory reviews andenforcement activities. For example, in January 2012,the Financial IndustryRegulatory Authority (FINRA) reported 97 SEC violations,citations and decisions, with 18 corporate officers and compliancepersonnel held personally responsible for compliance miscues.Increased scrutiny from regulators to protect their constituentswill drive up the cost of complying for all industry stakeholdersif current standard compliance practices remain in place.

Most agencies manage producer sales authorization compliance inmanual, time-consuming and unnecessarily expensive ways. Thesemanual processes subject the firm to human error and costlyfines.

Read related: “The Real-Time Divide: Small Agencies That Don't Cross It CouldDie.”

But today's producer lifecycle management technology allowsagencies to shift their focus from manual, reactive credentialingand compliance practices to an automated, proactive approach andbecome more competitive as a result. Getting producers authorizedto sell faster and reducing the time they spend maintaining theirauthorization to sell means they have more time to sell. Everyselling minute matters.

The challenging variables of compliance

If you are managing compliance manually, you know how much timeand communication is required to get your producers onboard, and toensure they get and remain properly licensed and appointed. Toensure that all of your producers and customer servicerepresentatives who sell, solicit or negotiate business areauthorized to sell, you need constant communication with yourcarrier partners, state and federal regulators and educationproviders.

A proactive, automated approach to compliance is critical toreducing compliance and reputational risks. Mistakes in managingcompliance can lead to fines, which not only hurt financially butnegatively affect the growth of your business. Your agency'sreputation is your most valuable asset. When determining whichagency will win a prospective client's business, a Google searchthat results in regulatory issue or fines could cost you thebusiness. So there is a high cost of doing nothing to protect yourreputation.

Establishing a more strategic approach to compliance will keepyou ahead of potential risks, save hundreds of thousands of dollarsin potential fines and protect your valuable reputation to avoidloss of business.

Prioritize a proactive approach tocompliance

When talking with agencies about producer compliance, we oftenhear how they struggle to balance keeping their producers andagency compliant while growing their business. The struggle comesdown to reducing costs while ensuring producers are authorized tosell.

Read related: “Agency Technology Today and Tomorrow.”

Through a single solution, versus disparate tools andapplications, agencies can overcome the compliance/growth quandary.A comprehensive, automated solution will help agencies make betterbusiness decisions faster, get their producers authorized tosell more efficiently and avoid reputation-damaging fines. In turn,they can optimize their other investments to focus on growingrevenue.

In evaluating the different technology options available,agencies should consider these key differentiators to efficiently and effectively help them manage the administrativetasks and back-end processes required to keep their distributionchannel authorized to sell products so they can achieve bothcompliance and growth.

Does the technology provider have:

• A strong regulatory domain knowledge and understands all of thechanging regulations, communication needs and requirements to keepproducers authorized to sell business?
• Partnerships and direct connections with the state departmentsof insurance?
• Connections to all the stakeholders in the industry?
• A streamlined and automated process for managing the entiresales authorization?
• A history of innovation?
• The flexibility to automate your unique business processeswhile integrating your existing applications?
• A proven track record for automating the process of getting andmaintaining producer credentials and selling relationships?

Making the change

The strategic impact gained from using automation to supportyour producers' relationships and compliance can be, and often is,overlooked. Agencies and carriers most commonly use technology toautomate high-frequency activities, such as renewals, compensationand other routine processes. They less commonly automate activitiesthat are subject to regulatory scrutiny, such as agent onboarding,licensing, registration, appointments and education.

As you consider how you will grow and comply, investsome time to learn how you can avoid reputation risking errors, aswell as the unnecessarily high cost of managing compliancemanually. Leverage proven producer lifecycle management technologyand services to reduce your compliance risks, and keep yourreputation strong.