How to Automate Direct Bill Commission Calculations

The insurance industry has been going through major digital transformations in recent years, but there are still manual processes that should be added to the list for automation. One of those is calculating and putting together commission statements for insurance agents.

Insurance agents earn commission selling new, and renewing existing, insurance policies and actioning endorsements on existing policies. Those commission statements which don’t download, are calculated by accessing multiple carrier websites, manually downloading the commission statements into reports, and then converting the data into a format that imports into the agency’s AMS. This is a very manual, tedious, and time-consuming process, and because each task has to be completed manually it opens the door to human errors and omissions.

Challenges involved in Calculating Commissions

Agents for independent agencies sell different types of insurance products for multiple insurance carriers. They work on commission percentages, with the percentage depending on the contract with the insurance company and the type of insurance policy. P&C agents who sell auto and homeowners insurance typically earn a commission based on the policy premium. The commission ranges from 5 to 20 percent on the first year premium with a reduced amount often paid for renewals.

Insurance agency managers have been following the same process to calculate Direct Bill Commission statements for years. Once a month managers must:

  1. Source statements from multiple carriers  
  1. Calculate commissions based on a large variety of commission options
  1. Create an importable commission statement for each agent
  1. Import the file
  1. Email each agent their commission statement

Statements from the carriers are downloaded in different formats, from physical paper documents, to excel documents, to electronic documents like PDFs. Because the process is so manually intensive, errors can occur, and the wrong data can be captured in the Agency Management System (AMS). Inaccurate commission calculations can lead to overpayment for some agents and underpayment for others, leading to unhappy agents and agencies that are unable to accurately keep track of commissions.

Automating the Commission Calculation Process

The manual activities required to calculate commission statements are not complex and therefore they can be automated. The steps that need to be automated include:

  1. Accessing carrier website  
  1. Extracting Direct Bill commission statements
  1. Converting data in carrier statements to a standard data format
  1. Implementing a rules engine to calculate commissions. (Data is extracted from the AMS to achieve this)
  1. Running a commission report for each agent
  1. Emailing reports to agents
  1. Updating the AMS

How Synatic Automates Commission Calculation

Synatic is a Data Integration Hub (DIH) that can automate the entire commission calculation process from end-to-end.  

Synatic has pre-built and fully customizable integrations and solutions for accessing a wide range of data sources, such as carrier websites and their commission statements. The data from these sources is loaded into a staging area where a rules engine can be built to automatically calculate Direct Bill Commission (DBC). This rules engine can be customized to the specific requirements of the insurance agency. The output from this can be converted into a file format the AMS can read (e.g. AL3 or XLS). It can also be sent in an email format to the agent, or the final commission report can be generated in the AMS.

Benefits of using Synatic for Commission Calculation

The Synatic DIH is a single unified solution to handle the entire DBC calculation process. Agencies no longer need to invest in multiple solutions to collect the data, verify it, integrate the data with their AMS, and calculate commissions. This saves agencies from jumping between different tools to get commission statements.

Synatic offers several benefits:

  • Synatic ensures that accurate data is always used to calculate DBCs.
  • More accurate data provides greater trust in the reports, which ensures agencies have accurate insight to drive business decisions.
  • Synatic automates a number of commission statement calculation tasks, reducing errors and omissions.
  • Automating data with Synatic reduces the amount of time staff spend working on commission statements, boosting staff productivity.

Synatic’s DIH has all the tools needed for agencies to automate the entire DBC calculation process from end-to-end. This ensures commission reports are provided more quickly and accurately. To learn more about how Synatic can fast-track your DBC statement calculations contact Synatic today.

Marah Henning
March 27, 2023
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