Incentives and Commissions in Insurance

Incentives and Commissions in Insurance

Insurance is one of the most complicated and dynamic sectors. It has a strong reliance on on-the-ground employees such as in-house salespeople and external agent channels. It’s critical for salespeople to connect with the company’s goals while also having a drive to reach their own ambitions. Solid incentive plans/schemes that provide the sales team a long-term goal can make this happen. The incentive plans set up for this frequency struggle to maintain the same degree of motivation on a daily basis. This happens despite aligning their sales conduct with the organization’s goals. That’s where the strategy and finance teams come into play. They collaborate to create innovative contests or bonanzas with the goal of bringing short-term focus. This instills a healthy feeling of competition within the team. Salespeople can achieve their individual, team, and the organizational goal with a combination of contests and core incentive plans. Yet, this may not always result in the expected outcomes. Someone who is on the go requires direction and an environment they can trust to stay on track and avoid getting lost.

A good tool for this is an incentive management solution that captures the spirit of an incentive plan. It provides transparency to the field in terms of how rewards get computed. It also provides them with useful information on a regular basis. This assists them in planning and executing their day-to-day sales efforts. Here is a short rundown: How do incentive plans differ in the insurance sector? Why have a few of the industry’s top brands selected Incentivate as their partner?

Common Data Sources Integrated

Are you an insurance company that serves customers all across the country? You’ll inundate yourself with structured and disorganized transaction data daily. SAP, Oracle, SAIBA and tele-calling-related sales data in Bitrix24 and Nextiva are few examples of systems used for maintaining such data. This necessitates a strong and scalable system that enables real-time computing. HRMSs such as Oracle, Workday, Darwinbox, and others are critical as well. They store information for incentive-eligible employees. Furthermore, life insurance has always had convoluted hierarchies. These must be managed with care when it comes to incentive plans that roll up from associates or relationship managers.

Incentivate manages these easily by establishing a pull-push relationship with such systems. It may work on-demand or according to predefined schedules. You can experience seamless connections with these platforms and simplify your life.

Typical Components in an Insurance Incentive Plan

Premium is generally the most important factor for a life insurance company. The frequency of premium payments might vary and it may become challenging to use it as is as a metric to pay incentives upon. As a result, Weighted First Year Premium (WFYP) is used as one of the major indicators to create incentive plans. It standardizes and makes it easier for everyone. Incentives for salespeople may also include metrics like 13th-month persistency and persistency ratio. These measure how long clients have been with the insurance organization. Furthermore, various organizations may opt to provide incentives based on different measures. These may include net policies-in-force and team premium for managers, etc.

Things may appear differently for a general insurance company or an insurance broker. For example, a car insurance broker may create incentive plans based on different metrics. The OD (Own Damage), TPA (Third Party), Comprehensive, or Standalone sections of the premium are used the most. There are also metrics such as RTO locations, vehicle type, and vehicle class that can be used to incentivize based on the insurance broker’s goals and IRDA requirements. When it comes to health insurance, incentive plans compensate sales agents on the grounds if sum insured or premiums for individual, family, or floater health plans. Additionally, there might be different commission structures for new plans vs ones that are being renewed.

Regardless of Life insurance or General Insurance, organizations may define on-target earnings for in-house sales employees for almost every metric. They may also apply weights depending on the products they wish to promote more in the market. The majority of these metrics may be applicable to insurance agents (consultants who are not on the payroll of the insurance company) as well. In addition to this, organizations may choose to pay them flat commissions as against setting targets and paying on achievement. They may also pay on extra metrics such as agent recruitment, active agent count, and so on. Finally, there are exceptions, just as there are in every other organization. A customer may quit in the middle of the process and stop paying their premium while the salesperson would still be compensated. In such circumstances, insurance companies use reversals or clawbacks. Loss of income from ex-customers could lead to reversals, clawbacks, or incentives. These are reclaimed from the salesperson for different reasons. This is where Incentivate’s no-code engine comes into play. It helps set up these metrics and complex rules around them easily. The administration team can finally focus on the bigger things at hand.

Typical Components in an Insurance Sales Contest / Bonanza

Life insurance as well as general insurance organizations use sales contests as one of the most important tools for success. While quarter-long incentive plans are more strategic, sales contests are more tactical and motivate the right behaviors on a day-to-day basis. They also assist in providing the correct motivation for causing a spike in critical metrics that you may want to focus on for a shorter period of time, such as 2 to 4 weeks. Contests such as ‘The Highest Premium Achiever,’ ‘Top 3 Salespeople to race to 10 Policies,’ ‘Recruitment of 5 Agents every month,’ and even ‘Activation of Orphaned Policies,’ are all widespread in the life insurance industry. General insurance companies may also implement others like ‘Highest comprehensive premium’ and ‘highest premium in 15 days’. There is also always a possibility of creating new policies and contests that instill a healthy competition in the salesforce.

Incentivate makes it easy to build up these contests on the fly. It also allows you to construct leaderboards to monitor contests. You may monitor on the basis of certain teams/cohorts, specific regions, specific goods, and so on.

Processing & Payout Frequency

Insurance is a fast-paced industry, and its salesmen are similarly geared. They spend almost all their time on the field yet are deprived of performance-focused insights. This causes misalignment with their targets and organizational direction.

Incentivate assists in the creation of dashboards for the whole sales team. These dashboards update on a regular basis. They provide relevant information and updates, assisting individuals in meeting their sales goals. They also keep track of their progress and earnings to date as well as create simulations to achieve a desired target or payout. Furthermore, organizational leadership requires a unique set of reports and dashboards. These are more strategic, displaying overall corporate performance over specific periods. Periods vary depending on how your incentive programmes are set up. Few insurance companies opt to provide rewards every month. Even fewer choose to pay incentives every quarter or even over a longer time. There can be scenarios where some metrics are paid on a monthly basis while others are paid annually. Such complexities can lead to major operational challenges for the team executing the payouts.

Incentivate can manage these levels of complication in your incentive plans with ease. In fact, it also offers frequent actionable data for your sales staff. This keeps them ahead of the competition.

Challenges Addressed

No doubt all insurance companies sell similar products. Their issues are still likely to be different. Over the last decade, we’ve handled a variety of issues for some insurance companies.

Insurance companies have only grown in size but not their infrastructure. Sales data keeps pouring in from a variety of sources. Mergers and acquisitions are happening at an unprecedented rate. This is resulting in several systems holding data in various forms. It is difficult to handle such a massive volume of data which causes payout delays. That’s the last thing a company wants: their salesmen do not get paid for laying down those vast yards in the field. Other challenges include the difficulty to produce contests quickly enough. The modern buzzword is data analytics. Your ability to slice and dice data to derive decision-making insights sets you apart from the competition in terms of speed and accuracy. However, Insurance companies have struggled to quickly establish this and produce correct sorts of contests. The salesforce has been robbed of tactical inputs, leaving them stranded on the field with no direction. Furthermore, in addition to the metrics presented in this article, there are hundreds of others that may be used to create incentive plans. There is no way of using these metrics to adjust incentive plans without requiring days of testing. Insurance companies of today lack the flexibility to create these sets. All of this contributes to a longer time to market and, as a result, an organizational loss. When you realize these issues lead to employee attrition, they become even minor.

Incentivate’s Builder functionality quickly resolves these challenges. It allows you to go through several data items, normalize them, and put them into a common format. This results in simply building up new incentive plans, contests, and allows for more frequent processing. Furthermore, you can quickly set up parameters that can be changed and used for a given length of time. You can even design intuitive dashboards and what-if calculators. This will motivate the salespeople and reduce your attrition rates.

Jumpstart your agency channel performance today. Let us show you how Incentivate can help.