By Tim Owen, vice president, producer lifecycle management, Vertafore

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

Simultaneously, the state and federal regulatory climate continues to heat up, as we've seen most recently with healthcare and financial reform, and shows no signs of slowing. Recent annuity suitability and long-term care training and suitability education requirements, as well as new disclosure requirements for investment advisors, are just two more examples of accelerating regulation. Industry and regulatory analysts believe more regulatory changes are coming as healthcare and financial reforms are fully implemented.

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

Most agencies manage producer sales authorization compliance in manual, time-consuming and unnecessarily expensive ways. These manual processes subject the firm to human error and costly fines.

But today's producer lifecycle management technology allows agencies to shift their focus from manual, reactive credentialing and compliance practices to an automated, proactive approach and become more competitive as a result. Getting producers authorized to sell faster and reducing the time they spend maintaining their authorization to sell means they have more time to sell. Every selling minute matters.

The challenging variables of compliance

If you are managing compliance manually, you know how much time and communication is required to get your producers onboard, and to ensure they get and remain properly licensed and appointed. To ensure that all of your producers and customer service representatives who sell, solicit or negotiate business are authorized to sell, you need constant communication with your carrier partners, state and federal regulators and education providers.

A proactive, automated approach to compliance is critical to reducing compliance and reputational risks. Mistakes in managing compliance can lead to fines, which not only hurt financially but negatively affect the growth of your business. Your agency's reputation is your most valuable asset. When determining which agency will win a prospective client's business, a Google search that results in regulatory issue or fines could cost you the business. So there is a high cost of doing nothing to protect your reputation.

Establishing a more strategic approach to compliance will keep you ahead of potential risks, save hundreds of thousands of dollars in potential fines and protect your valuable reputation to avoid loss of business.

Prioritize a proactive approach to compliance

When talking with agencies about producer compliance, we often hear how they struggle to balance keeping their producers and agency compliant while growing their business. The struggle comes down to reducing costs while ensuring producers are authorized to sell.

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

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

Does the technology provider have:

A strong regulatory domain knowledge and understands all of the changing regulations, communication needs and requirements to keep producers authorized to sell business?
Partnerships and direct connections with the state departments of insurance?
Connections to all the stakeholders in the industry?
A streamlined and automated process for managing the entire sales authorization?
A history of innovation?
The flexibility to automate your unique business processes while integrating your existing applications?
A proven track record for automating the process of getting and maintaining producer credentials and selling relationships?

Making the change

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

As you consider how you will grow and comply, invest some time to learn how you can avoid reputation risking errors, as well as the unnecessarily high cost of managing compliance manually. Leverage proven producer lifecycle management technology and services to reduce your compliance risks, and keep your reputation strong.

Special Reports /

Lifecycle Technology Simplifies Producer Compliance

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