brought to you by:

THE AGENCY’S GUIDE TO

CommissionsProcessing

Start organizing, automating & growing your agency right now!

2

AgencyBloc helps life and health insurance agencies grow their business by organizing

and automating their operations using a combination of an industry-specific CRM, commissions processing, and integrated

marketing automation.

What is ?

Let’s talk commissions

In this eBook, we’ll discuss how agencies are currently processing and tracking commissions, how to find missed commissions (and why that may happen in the first place), and why your agency should be projecting commissions (and how to do it).

page 4 | The World of Commissions

page 5 | How are Agencies Processing/Tracking Commissions?

page 7 | Why do Agencies Track Commissions?

page 10 | Why do Agencies Project Commissions?

page 13 | How to Project Commissions

page 15 | AgencyBloc’s Commission Module

page 22 | Check Out AgencyBloc

In this eBook...

3

Commissions are complicated

The world of commissions processing can be confusing and frustrating. Even for agencies who have been in the business for decades.

Agencies deal with extremely complex commissions schedules, each with different splits and rates. No matter if you’re a broker, agency owner, or single agent, com-missions are an integral part of the job, and processing and tracking those commissions has never been simple—agencies still struggle with how best to handle them.

On top of that, some agencies still can’t be sure the com-missions coming from their carriers are even accurate. Though unintentional, carriers do make mistakes, and sometimes commissions are missed.

Lastly, agencies have a desire to project their revenue and better understand their commissions data. With this in-formation, they can identify inaccuracies and better plan for the future financially.

The World of Commissions

4

The ugly reality of commissions

The world of insurance commissions is an ever-changing, often confusing one. It’s no wonder that we hear from agencies how much they despise processing or reconcil-ing commissions each pay period. For one broker agen-cy, it was a 48-hour process of flipping through papers and writing checks each month before they switched to an agency management system (AgencyBloc). Does this sound at all like your situation? Let’s take a look at how agencies are currently processing and tracking commis-sions and see which method might best fit your agency.

How Agencies Are Processing/Tracking Commissions

• They aren’t. Unfortunately, some agencies still aren’t track-ing their commissions. They’re receiving carrier payments and paying the necessary agents, but they can’t be sure any of it is accurate without tracking. This is usually only the case for smaller agencies or one to two-man operations that don’t have complicated commission splits.

• Using Excel spreadsheets. Using Excel to process and track commissions requires you to have a person dedicated to main-taining the organization of the sheet and ensuring accuracy in the calculations. Using Excel is a line-by-line tactic that takes time—though Excel is very powerful, it isn’t always straightfor-

How are agencies processing/tracking commissions?

5

ward. Not to mention, the way carriers are paying commissions are constantly changing. Seriously, it’s complicated enough that some agencies are paying freelancers to build Excel spread-sheets for processing commissions.

• Using a third-party commissions tool. If an agency is al-ready using a generic CRM without commissions processing capabilities, they sometimes utilize an external resource that (hopefully) integrates with their CRM. Some agencies are using third-party commissions processing tools to fill the gap where their generic CRM can’t perform. However, these third-party solutions can be expensive and time-consuming—and the last thing your agency has is spare time.

• Using an industry-specific agency management system (AMS). This is the best case scenario for an agency. You have all of your information—individuals, groups, agents, policies, carri-ers AND commissions data—all in one system. When it’s in one central location, it can all work together requiring you to do less manually. Not to mention, any changes to rates are much easier to update in an automated system vs. flipping through papers or a complicated Excel spreadsheet.

Even if agencies are processing commissions in one of these ways, sometimes they still struggle with tracking their commissions—it does take some effort. But, there are serious benefits to finding a way to start effectively tracking your agency’s commissions and learning from the data.

The Agency’s Guide to Commissions Processing

6

Why do agencies track commissions?

As we’ve seen, agencies are either not tracking commis-sions at all, or they have software in place to help them out. Either way, there is some effort involved in tracking commissions, so why do agencies do it? Even if you’re a small agency, there are benefits to tracking your commis-sions. Two important benefits are finding missed commis-sions and ensuring accuracy.

Finding Missed CommissionsThough it’s unintentional, carriers can and do miss com-mission payments for several reasons. A couple examples are:

• They’re 2-3 months behind on their payments, so it’ll appear in your books that you haven’t gotten paid yet. Most agencies don’t worry for the first few months, but if you’re tracking it closely, you’ll know when you might have a deeper problem.

• One of your clients canceled his/her policy and didn’t notify your agency. That will appear to you as a “missed” payment from the carrier and will cause you to investigate the situation.

So, how does tracking commissions allow you to find missed commissions? You’ll have to be using an AMS with this reporting capability to do it easily, but some agencies

Why do agencies track commissions?

7

have found tens of thousands of dollars in missed com-missions within their first year of using AgencyBloc. With-out going into too much detail of the calculations, Agen-cyBloc will look for commission payments not received by statement date or by bill from date. Bottom line: if you ar-en’t tracking commissions at all, it’s less likely you’ll catch missed commissions.

Why do agencies track commissions?

AgencyBloc Policy Example with Commissions Data

8

Ensuring AccuracyWhen you aren’t tracking commissions or using Excel spreadsheets to manage it all, accuracy becomes a con-cern. Just like missed commissions, mistakes can be made. If you’re manually processing commissions, like in an Excel spreadsheet, it can be difficult to identify pat-terns. Consequently, it’ll be harder to find inaccuracies. This can be most troubling when you’re hiring new agents or when the rates that you pay out change. Any time you’re changing or adding new data to a large spread-sheet, mistakes can be made.

Inaccuracies can occur when you have complex commis-sion splits, as well. Being sure all of your math formulas within Excel are referencing the right cells, or that its cal-culating correctly in the first place, can be a major head-ache. Excel spreadsheets simply aren’t built for agencies paying multiple agents per policy.

On the other hand, when you’re processing commissions in an AMS with rates tied to policies and your splits set up with your agents, you have a model to compare your carrier statements against. It immediately makes it easier to see what you should be receiving from the carrier and paying out to agents, allowing you to catch any mistakes made and fix them quickly.

Why do agencies track commissions?

9

Why do agencies project commissions?In any industry, monitoring where your business currently is and where it’s headed is imperative. If you want to be a genuinely proactive business, you need to look continually at the revenue you have coming in now and your expec-tations for revenue in the future. For insurance agencies, this is done by projecting commissions.

In an internal survey, agencies indicated that projecting revenue and examining commissions received against what they projected would be beneficial in order to:

• Hire support staff—when will the agency need to and finan-cially be able to hire more staff?

• Expand or maintain current client base—how much does an agent need to sell to reach their financial goal?

• Decide which products to sell—what products bring the agency substantial revenue? Does the agency need to expand into other areas of business?

• Identify new sales opportunities—how will expanding into a new market or simply selling more of the current products affect revenue?

• Find missed or inaccurate commissions—what did the agen-cy expect to receive vs. what was actually received? How does that effect future plans?

Why do agencies project commissions?

10

Overall, the ability to project commissions helps agencies make smart business decisions, budget, and plan for the future financially.

Make Smart Business DecisionsUnless you’re tracking your current business, you’ll likely never identify areas of potential improvement. The sooner you begin tracking, the sooner you can start identifying patterns and wholly understanding your commissions data.

From tracking your commissions data, you can find answers to questions like:

• Did I receive the amount I was expecting?• How accurate are the commissions we are

receiving from carriers?• How do my projected commissions affect future

growth plans?• Who are my top performing agents?• Which carriers do I receive the most commissions from?• Which coverage types bring in the most commission?

Why do agencies project commissions?

Rebeckah Blewett, Dundas Data Visualization

“Informed decision making is the foundation upon which successful businesses are built. As a decision maker for your business, you need access to highly visual business intelligence tools that can help you make the right decisions quickly.”

11

These are only a few examples, but you get the point. I al-ways relate this back to when I first got a Fitbit (wearable fitness tracker). After I graduated college, I moved to my current desk job at AgencyBloc. I knew I wasn’t walking as much as I used to, but I still considered myself “in shape” (I workout on a regular basis and eat somewhat healthy).

While setting up my Fitbit, the device told me I should be taking 10,000 steps a day. I thought I probably was getting close to that, but by the end of day one, I only had 3,000 to 4,000 steps.

Until I got my Fitbit to track my steps, I had been guessing about my fitness — guessing completely wrong. So I took that knowledge and started walking my dog during my lunch break or walking at night with my family. Before I knew it, I was back on track.

Apply this situation to your business. If you aren’t consis-tently tracking all aspects of your business, you’re guess-ing. It’s that simple. And you could be guessing incorrectly, just as I was.

Your commissions data is precious insight, so that’s why agencies are deciding to use software solutions to ade-quately track and analyze that information.

Why do agencies project commissions?

12

Budgeting & Financial PlanningBudgeting and financially planning for future events is crucial for any business. In the insurance industry, this is done via projecting commissions. Within some agency management systems, agencies have the ability to projec-tion commissions and continuously monitor their actual commissions coming in vs. project commissions. Financial monitoring like this is important for any agency looking to grow.

If you’re looking for a good resource to get started on budgeting and financial planning in general for your agen-cy, check out Agency Brokerage Consultants’ presenta-tion, “Best Practices for Growing an Insurance Agency.”

How do you project commissions?To project commissions, an agency takes its current com-missions and forecasts them out over a set number of years. Commissions change year-to-year, so there lies the importance of being able to see how those changes affect future revenue.

The difficulty, however, is that this process can be ex-tremely labor intensive if you’re doing it manually, like in an Excel spreadsheet. An agency has to take each of its policies and their respective commissions (often tied to more than one agent or agency) and forecast each based

How do you project commissions?

13

on its terms. Then, to get a whole agency view of total commissions, the agency has to add up all of those sep-arate commissions. Not to mention, the agency would likely be interested in viewing the commissions split out between product types like health, life, Medicare sup-plement or dental. Or even further, the agency would be interested in seeing individual policies vs. group policies.

So, because the information is extremely vital but getting the information manually takes too much time, it needs to be available within the agency management system that already contains valuable commissions data.When this data is housed in the same system, whole-agency analy-zation and understanding can then occur.

Why do agencies project commissions?

Client & policy information

Commissiondata

+

14

AgencyBloc’s Commission Module

AgencyBloc’s Commission Module is built to save you time and money—and make your life easier overall. The infographic below is a quick glimpse into how AgencyBloc helps your agency process commissions:

AgencyBloc Commission Module

“How AgencyBloc’s Commissions Processing Works”, AgencyBloc

In-house Agents

SubAgencies

Sub Agents

15

AgencyBloc is an agency management system that helps life and health insurance agencies grow their business by organizing and automating their operations using a com-bination of an industry-specific CRM, commissions pro-cessing, and integrated marketing automation.

Processing Commissions in AgencyBlocWithin AgencyBloc, your agency can begin to feel in con-trol of your commissions processing. In our system, we have 6 basic steps to processing commissions. These steps are an excerpt from another eBook we wrote, How to Streamline Your Commissions Processing:

Processing Commissions in AgencyBloc

Setup Commissions

Input/Import Policies

Setup RateSchedules

Tie PayeesTo Policies

1 2 3

16

Step 1: Setup PoliciesThe first step is to setup your clients and their policies. This can be done either via our import process or manually. AgencyBloc fully supports both individual and group business.

Step 2: Setup Rate TablesWe encourage agencies to utilize rate tables that can then be ref-erenced by multiple policies. Rate tables can be configured with multiple rates - using percent of premium, percent of commission received, per life, or as a flat amount. They can also specify pay-outs based on carrier, coverage type, or even plan code. If com-pensation adjustments need to be made, rate schedules offer a convenient way to quickly adjust payouts for hundreds of policies.

Step 3: Tie Payees to PoliciesPolicies can have an unlimited number of agents assigned for commissions. Typical scenarios include paying a referral fee, train-er fee, manager override, or agency override. Each of these agents can be paid differently. Typically, a rate schedule will be utilized for each payee; however, if a unique payout is required, a manual amount can be specified.

We’ve also created payee schedules that allow you to add more than one payee to a policy. You’re able to add these people to a hierarchy, each with their individual respective commissions, and then add them to a group. Then, you’re able to add them to a policy as a whole group to policies.

Processing Commissions in AgencyBloc

17

The last three steps are the magic of AgencyBloc. We have over 1,000 carrier statements mapped, so we know what they are paying your agency when you go out to the carri-er website and grab that statement. All you have to do is import the statement and let it do the work for you:

Step 4: Import Carrier FileOur commissions module was built to save time and improve ac-curacy. With these two goals in mind, the most appreciated aspect of our system hinges on Carrier Imports. If your agency is receiv-ing electronic commission statements, we can build import maps for directly importing that information into AgencyBloc. When these files are uploaded, AgencyBloc will match the information to the policies you have setup and automatically calculate com-missions. This import process significantly reduces the amount of time spent manually inputting data.

Processing Commissions in AgencyBloc

Process Commissions

Import CarrierFile

CalculateCommissions

GenerateStatements

4 5 6

18

Step 5: Calculate/Reconcile CommissionsReconciliation is a simple process. When commissions are import-ed, you’ll see which policies were linked to the carrier’s statement, each payment that was calculated and any policies that didn’t match. AgencyBloc displays any exceptions that require further investigation as well as a quick snapshot of total premiums, total commissions payable and net commissions.

Step 6: Calculate/Reconcile CommissionsOnce all your carrier commissions are reconciled for the payment period, you’re ready to generate commission statements. State-ments can be run in spreadsheet or PDF format. You can run statements monthly, bi-weekly or daily if you choose. Statements can be organized by sub-agency in order to facilitate paying multi-ple companies under your agency.

As you can see, only steps 1-3 require work from you. The rest is taken care of automatically, saving you time and resources. Now, let’s look at tracking capabilities within AgencyBloc.

Tracking & Analyzing Commissions in AgencyBloc Beyond reconciling or processing commissions, Agency-Bloc helps you utilize that data to make smarter business decisions for your agency. The results of all of your hard work can viewed, tracked, and analyzed by getting a look into your commissions. View your commissions by carrier, top agents, and gain insight into where you’re most

Processing Commissions in AgencyBloc

19

profitable. See and gain insight into your commissions us-ing these real-time graphs created in AgencyBloc:

• Top Commissions Received - by Carrier• Top Commissions Received - by Agent• Net Commissions - by Carrier• Net vs Received Commissions - by Coverage Type• Actual vs. Projected - by Month• Actual vs. Projected - by Coverage Type

Projecting Commissions in AgencyBlocAgencyBloc allows agencies to project commissions, ana-lyze current vs. future revenue, and find missing commis-sions within its Commissions Module.

Tracking & Projecting Commissions in AgencyBloc

AgencyBloc Showing Projected Commissions Data

20

As you can see, the Commissions tab gives a quick over-view of any missed commissions, any difference in actual vs. projected commissions and future yearly projections. You can also see a more “bird’s eye” view of your commis-sions data, like this:

Tracking & Projecting Commissions in AgencyBloc

AgencyBloc Showing Real-Time Commission Data Charts

21

Let’s wrap this up...

Commissions processing is no small feat, but it’s a huge part of your everyday business at your agency. And if you’re still using Excel spreadsheets to process and/or track commissions, you might be experiencing some frus-tration.

In order to feel in control of your commissions and truly learn from the data, we suggest using an all-in-one agen-cy management system—house your book-of-business and your commissions data in the same system.

We recommend this for ease-of-use purposes, but also for financial reasons. As we discussed, third-party soft-ware for commissions processing can be expensive and requires some upfront time resources to get it set up. If you’re using the same system to manage your entire agency from prospecting to commissions processing, you’ll find that the data simply works better together.

Check Out AgencyBlocIf you’re considering taking a look at AgencyBloc for your commissions processing needs, chatting with someone on our team about your agency’s specific needs is easy—

Check Out AgencyBloc

22

simply schedule a live, 1-on-1 demo. A little nervous about moving your data? At AgencyBloc, once you’re a client, you’re assigned a client success specialist who will help you through the process. And you’ll speak to this same person any time you call in.

Find this eBook useful? Share it:

Sign up for a live, one-on-one demo of AgencyBloc.

You’ll be able to discuss your agency’s specific needs and see the application in action.

Check Out AgencyBloc

23

Take a Look at AgencyBloc

AgencyBloc helps life and health insurance agencies grow their business by organizing and automating their operations using a combination of an industry-specific CRM, commissions processing, and integrated marketing automation.

Check out our overview video to learn more:

Check Out AgencyBloc

24

Ready to see if AgencyBloc is a good fit for you?

Sign up for a live, one-on-one demo of AgencyBloc.

You’ll be able to discuss your agency’s specific needs and see the application in action.