In many industries sales commissions are relatively simple. A sales person is paid a percentage of the sale, perhaps with incentives when they reach particular thresholds such as hotel weekends, golf trips, or new laptop computers.
The life insurance industry has extended that model by making it more complicated with innovations such as overrides, overrides on overrides, and a variety of bonuses. And that was back in the days when life insurance came in individual or group flavors and was sold by life insurance salespersons.
Compensation executives at carriers might be forgiven for waxing nostalgic for those good old days.
Because it has only gotten more complex.
“Insurance companies have gone through dramatic change over the last 10 years,” explained Don Campbell, vice president of sales and marketing at DSPA Software which has developed a life insurance sales compensation application. “Life insurance used to be very straightforward in its products and channels. One sales organization sold individual life insurance policies, and another sold group. Now they are trying to position themselves to sell everything to everyone through every channel, and they don’t have the systems to support that.”
For a long time life insurance was a pretty stable industry, he added. The companies sold the same products through captive or independent agents. Now they are selling through banks, brokerage houses, auto dealerships and funeral homes. In addition to traditional term and whole life products, they offer packages that are based on stocks, investment products, and guaranteed return offerings.
With a variety of products flowing through multiple channels, keeping track of what is working and what isn’t is vital for refining a carriers’ product and sales strategy.
Toronto-based Manulife Financial, one of the most progressive global insurance companies, uses DSPA’s Field Administration Support and Tracking (FASAT) software running on Microsoft Windows Server System to manage its compensation program and improve the service it provides to agents and brokers.
FASAT replaced a legacy mainframe system whose assorted manual processes were limiting Manulife’s ability to provide the service its distributors wanted. “Maximizing business-process efficiencies was our number one goal for replacing our existing legacy channel management systems with FASAT,” said Doug Powers, AVP, distribution systems for Manulife Financial. “The solution helped to improve the service levels to our managing general agents (MGA) to the point where our channel sales leaders were able to market the new FASAT-based system as a value-add. It has enhanced our overall offering and helped our Canadian sales force. ”
FASAT met most of Manulife’s business requirements out of the box which allowed for rapid implementation – its MGA channel was up and running in seven months. Following the deployment, Manulife was able to deliver easy-to-read commission statements and better advisor support by improving its response time to advisor inquiries. FASAT also has enabled Manulife to increase the frequency of compensation payments to its managing general agents. Manulife has now delivered the FASAT application to its national accounts channels and is rolling it out for independent advisors.
Like many insurance companies, Manulife has multiple administrative systems. FASAT sits between them and the field, takes in information about sales and does the consolidated processing for compensation.
From the salesperson’s point of view, fast and proper payment is the paramount outcome. But for Manulife, the information it can obtain from the system is at least as important. The company can see an individual’s compensation and production information, which allows them to see which agents are the most productive. FASAT also provides up-to-date information on what is selling, who is selling it, and which channels are working best.
“This is information they couldn’t get before,” said Campbell. “We can collect information from multiple systems – which is required for compensation – and at the same time provide vital sales information across the company’s lines of business.”
They also use ACORD standards when communicating sales information to their business partners, providing data in a form that their partners can deal with directly. As part of Manulife’s recent acquisition of John Hancock, Manulife acquired Maritime Life in Canada. They were able to bring this new sales organization into the Manulife FASAT system in a matter of months, dramatically simplifying the integration of the two organizations.
DSPA, a member of Microsoft’s Insurance Value Chain (IVC) program, built its solution entirely on Microsoft technologies.
“In order to remain competitive in this quickly evolving industry, organizations need to be equipped with a more agile infrastructure – one that will allow them to change sales tactics frequently and respond rapidly to market drivers,” said Campbell. “Working in conjunction with Microsoft, we are able to provide customers with the flexibility they need to achieve better results and a foundation that they can continue to build upon.”
“Our goal is to help financial services organizations streamline their core business operations and make transactions more efficient,” said Randy Lenaghan, director of Financial Services Group for Microsoft Canada. “Working with leading software vendors like DSPA, we are able to help organizations reduce processing time from end-to-end, making it as seamless as possible.”
www.dspasoftware.com
www.manulife.com