The complex web of compensation schedules that has evolved over time is reaching a critical mass. The demand for simplicity and transparency in producer compensation is arising from demographic, industry, and regulatory factors.
We have observed carriers struggling with a proliferation of schedules and incentives that are not aligned with strategy, while leading carriers are establishing the flexibility to craft compensation that aligns with corporate goals. Once this flexibility is established, carriers are better able to distinguish themselves from competitors in agents’ eyes. In our view, carriers should reduce the overall number of plans offered before replacing the underlying systems supporting incentive compensation. Without simplification before system transformation, carriers will re-platform legacy problems and miss out on many possible benefits.
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