The Insurance Industry is one of heavy regulation, steeped in silos of legacy technologies that take unnecessary time to import, calculate, and aggregate the millions of data points required to manage the agents and brokers of your sales channels for Medicare, ACA and Commercial lines of business.

Most of these technologies are not capable of handling expansive data sets and the changing payment and producer criteria that come with the insurance industry. Software ranges from slow, unwieldy Access databases, to updating Excel spreadsheets hundreds, or even thousands of times by hand every month.

Excel specifically is a very pervasive force in the industry. While it may have been a simple and cheap option in the past years, the size and scope of calculations, as well as the increasing importance of managing producers, have outgrown its capabilities. Canidium team member Caitlin Randall wrote a blog detailing the time and money lost to simple mistakes in the myriad of cell based, handwritten calculations. “Research done by the University of Hawaii's College of Business, shows approximately 88% of all professional spreadsheets contain errors. A sales representative whose annual bonus was off by a factor of 10 would end up with $80,000 rather than the intended annual bonus of $8,000. Hopefully, your rep would report an error this large, but that isn’t always the case. Errors like this trigger an increase in time spent shadow accounting and problem resolution by both sales representatives and compensation analysts, which decreases the productivity of both parties.”

The challenge is underscored by the fact there are exhaustive points where the insurance pipeline has unique data changes to brokers, enrollments, memberships, rates, premiums, and billing data which cause down and upline changes to other data in the system.

•  A broker has been onboarded and needs to be assigned a vendor number and transactions generated for the current and previous periods.
• A vendor’s listed address, contact and payment information has changed.
• Rapid Disenrollment has occurred for a member and transactions need to be recouped from the producer.
• CMS has dictated a change from the ‘HICN’ field to ‘MBI’ etc. and fields associated with this unique point must be changed or cross walked.
• As writing agent ownership of policies change, accurate commission calculations are needed for the old and new writing agents.

Such data updates have cascading effects as payments, hierarchies, bonuses, clawbacks, etc. all must be adjusted accordingly to accommodate. Doing this by hand in Excel or by querying millions of records in an Access database is just asking for timelines to slip and incorrect calculations to be made. Not to mention the frustration and hassle employees go through wrangling their own systems into line, or the producers waiting to be paid correctly.

Specifically, what does ICM offer?

This is where SAP Insurance and Incentive Compensation Management (ICM) enters the picture, as it resolves all computation and producer management challenges from one platform that automatically integrates, calculates, and outputs the unique payroll data in a single system.

Compensation Configuration 

ICM is built to handle the various iterations of compensation calculations that occur from entity to entity. Which means being configurable in terms of compensation plans, rates, overrides, bonuses, holds, and manual adjustments. 

Some example compensation plans typically created in ICM are as follows:

• Per Member Per Month (PMPM)
• Percent of Premium
• Flat Fee
• Negotiated Rate per Group

A main attraction of the software is upon initial implementation, these compensation calculations do not require significant hands on time to adjust to new changes. Parameters of calculation are set once during implementation and then small changes, such as entering a new rate for a new year, adding in a new bonus, or adjusting transaction hold criteria, are automatically re-reviewed and accounted for in the payout.

Bonus calculations are also a key requirement for many sales representatives. ICM allows these to be extensively customized at multiple levels, from the rates themselves, to the application of the bonuses tied to specific hierarchy structures, to line of business or payment periods. The same customization applies for manual adjustments, with the ability to go in after the fact and create specific transactions for producers meeting the criteria, or set them to generate when conditions are met.

Automation

While almost all parts of ICM are customizable, there are two main pillars that make a major impact on day to day business. The first being retroactivity and second, general integration and automation.

Retroactivity refers to the act of adjusting payments to account for changes made in other areas of the system. Take our previous examples of entering new rates for the year, or a new bonus. Normally this undertaking would require a massive endeavor to re-calculate commissions and apply your new rules for any past transactions that should have used it in that time frame. With ICM’s retroactivity, the system will automatically mark the entities that have been changed in the system, and upon subsequent payout, will recalculate all affected transactions according to the new rule. 

In terms of integration, importing data of all forms can be configured to integrate into ICM on a set custom schedule or manually on demand. A single file, or multiple sets of files, can be integrated per each customer’s set of import rules and timings. This expands to outbound data files as well. 

For Standard Medicare implementations, ICM has a pre-packaged module to integrate files from CMS, and will update/insert the necessary records in the system based on CMS’s regulatory criteria. Simply placing the daily DTRR files and Compensation Report on the SAP provided FTP server will integrate into ICM and automatically update the latest broker and policy information per regulatory standards. In addition, the integration and automation can be extended and configured for the various membership files coming from the carrier, as well as any other file an organization would like to bring in.

In addition, payroll data exported as statements or reports can be automatically emailed and or delivered to a secure custom destination. Email reminders for Licenses and appointments can be automatically sent to agents and brokers reminding them when to renew.

Producer Experience and Management

Up till now we have focused on the ease of configuration and automation provided by ICM. Let’s take a step back again and also view the current Insurance landscape from the agent and broker perspective.

Between carriers and agencies, the rates of which producers are paid remain closely aligned between businesses. Carriers have to find other ways to differentiate themselves in the brokerage market besides their payment model. This is where a producer’s ‘experience’, or their level of satisfaction of your service comes into play. 

Producers will gravitate towards the business that provides them clarity, timeliness, and ease of use when it comes to receiving their Payroll data. As well as their administrative and onboarding experience with their brokerage. ICM provides a business with the computation and configuration tools to manage their products efficiently, as well as provide a broker's environment and criteria to view their information at will.

Management

ICM addresses producer management within the same environment as your calculations. This means that all of your producer information can be entered, configured, and subsequently checked for validity, all while seamlessly transitioning these changes to payout calculations. Such producer management values include:

• Demographics – Name, Contact Information, etc.
• Hierarchies – Date Banded, Multiple Hierarchies at Once
• Payee Relationships – Separate from Hierarchy, Date Banded & Multiple Relationships at Once
• Compliance – Date Banded, Track Multiple Compliance Rules (License, Appointment, Education/Certification & Insurance) & Define Compensation Hold Logic when Requirement Not Met
• Payee Information – Banking Info, Separate Payroll ID, etc.
• Producer of Record – Define Negotiated Rates at the BOR Level

The advantage stemming from this management is the ability to provide that timely, accurate, and efficient source of broker information readily available for a producer. And as we will discuss below, the most current information will be available for a broker to view at their own leisure.

Standalone Broker Portal

ICM offers a standalone online portal that producers may access to view a myriad of payment information and producer administration material, all customizable to your organization's goals. 

These include but are not limited to:

• Payee Statements 
• Payment History
• Book of Business Reports
• Custom SQL reports and Extracts
• Ability to view commission-related transactional data
• Ability to download noted Extract, Statements, and Reports
• External links for general producer information

This bastion of information, integrated directly into ICM, eliminates many of the continual inquiries coming from producers desiring to view their commission data, payee information, or just don’t want to be sent all over the place to view standard information.

On the administration side, producers can be limited or expanded in the scope of documents and data they can see on the portal. A producer may see as much of their (and others) information or as little as dictated from a security role side. 

Reporting 

ICM also allows for custom statements and reports to be created and simultaneously populated during the payout process. This means from a reporting side, all data in ICM is available for output in both numeric and graphical forms. From the amount of brokers on payroll, to held commissions by reason, to a customizable book of business that can show a broker’s commissions, and also any downline brokers if needed, can all be provided through a customizable web-based portal catering to your organization’s needs, and more specifically, your brokers, who will have the option of incredibly detailed visualizations of their income, or standard payment statements.

Conclusion

This is the reason so many companies in the Insurance Industry have chosen ICM as their producer management and payment calculation software of choice. The ability to customize your payments, make changes periodically, and have all parts of the system continue to automatically integrate those changes, provides a software service that is unmatched in the industry. If you would like to know more about this product or how it can transform your business please contact our Canidium team member Charles Brickey using the following scheduler!

To learn more about Canidium's Insurance Incentive Compensation Management, visit our website here!

Learn more about the author, Casey Clark.