Insurance carriers today are wondering: How can they lower fixed costs? Meanwhile, their distribution partners are looking for greater transparency and ease of doing business. We maintain that by addressing fragmented legacy operating environments, carriers can address both of these challenges.
The typical multi-line insurance carrier today maintains many different systems to pay compensation to distribution partners, usually as a result of M&A activity without subsequent consolidation. As a result, when partners deal with multiple business units across the company, their experience is inconsistent and disjointed. These partners are now demanding an improved experience, and arguably the most important touchpoint between a carrier and its partners is compensation.
In discussing these challenges with PwC clients, we’ve found that many firms are interested in shaking things up and revitalizing their processes. But they find themselves hampered by limitations imposed by their legacy platforms, some of which have been in service for 30 years or more.
In essence, technology is driving process rather than enabling business objectives. Basic administrative interactions, for example, often turn out to be cumbersome, manual processes that can’t be executed without phone calls to the home office. In the future, these routine interactions can use partner self-service through digital channels to free up time for partners to focus on driving new business.
We believe that carriers can address both customer experience and legacy system modernization by establishing a shared service operating model for compensation on a single platform serving each individual line of business. Here’s how:
We recommend that you start by performing a strategic assessment of your company’s current state compensation management organization, processes, and technology to identify opportunities to simplify and consolidate processes. Companies should strive to consolidate and standardize compensation processes within a shared service organization that administers compensation for partners across lines of business.
We see significant benefits in the consolidation of operations and platforms.
You can improve the partner experience by delivering clear, consolidated statements, and digital portals that enable them to drill down into earnings from business lines. At the same time, you’ll gain administrative efficiencies by consolidating partner compensation operational support in one team, on one platform. And by using more reliable and effective access methods, you’ll enable partners to boost efficiency and effectiveness in their sales efforts.
By addressing aging technology platforms you’ll enhance your capabilities and mitigate the risk posed by retiring legacy system specialists. Simultaneously, you can sidestep business disruption by capturing highly valuable tribal knowledge via compensation transformation before those key resources retire. Modernization also enhances flexibility as new platforms are nimble enough to handle a wide variety of compensation structures while delivering speed-to-market and high-volume processing.
Principal, PwC US
Director, Advisory Services, PwC US