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Processing insurance agent commissions is an onerous task that requires attention to detail, a rich understanding of hierarchies, and persistent quality control.  Brokerage General Agencies, Insurance Marketing Organizations, and Carriers themselves spend vast amounts of time and energy ensuring the commission process is smooth and seamless.  In an effort to streamline commissions and save valuable human resources, some companies opt to outsource their commissions writing process altogether.  When it comes to letting a 3rd party handle one of the most important aspects of their business, there are really 2 choices:  Live, trained, professionals, or specially designed programs. What are the pros and cons of each and why choose one path over the other?

John Henry or the Steam Engine?

One day his captain told him,

How he had bet a man

That John Henry would beat his steam drill down,

Cause John Henry was the best in the land,

In the classic American myth of John Henry and the Steam Engine, the future of the railroad industry was coming to grips with the realities of technology versus human resources.  You may remember from your childhood that in this myth, a powerful railroad steel driver named John Henry competed in a contest with a steam engine that was said to be able to drill into rock faster than any man.  John Henry, with a 10-pound hammer in each hand, was able to beat the steam engine on that day, driving holes deeper and more efficiently than the machine.

But while folklore of John Henry speaks to the dignity of human labor and the inherent limitations of emerging technology, it may seem as though the script has been flipped in the digital age. 

Today, we trust machines, computers, and programs to perform a vast majority of our daily tasks.  When everything is working, it can be magical.  When one system or another fails, it is disastrous.  Artificial Intelligence further complicates this relationship.  

Outsourcing Complex Insurance Commissions Processes requires Trust, Accuracy, and Accountability

The reality is that machines and humans are both fallible.  The decision to outsource your commissions processing comes down to 3 major factors: Trust, Accuracy, and Accountability.

Let’s address each of these:

Trust the 3rd party to handle your sensitive commission information

• Machine – In most cases it’s easy to trust a program.  A person will demo it for you, show you it’s capability, and you will see it in action performing the task it was designed for.  We have grown accustomed to outsourcing our work to reliable programs.
• Humans – With human based outsourcing, we need to be reassured that the people handling our commissions are highly trained, are able to adjust to changes made to our structure, and have a staff that are capable of scaling alongside the company’s growth. 

In this instance, provided that the program was well designed and maintained and that the team of human resources are highly skilled and reliable, the issue of trust is equal.  

Accuracy: Errors in commission processing can cause damage

• Machine – In this modern age, we tend to consider machines more reliably accurate than human resources.  When we send an email, we expect the program to deliver it.  When we analyze data, we expect the algorithms to run correctly.  While this is often the case, commissions processing still relies on a layer of data generated by people entering information.  Human error on the front end can still cause errors in the output.  Additionally, programmatic systems are not infallible.  They break down, code updates crash programs, data can be lost, etc.  
• Humans – Human outsourcing, on the other hand, is only as accurate as the humans entering the data, checking and double-checking the data, and reliably sending accurate results and reports.  At first glance, you might think that a large staff of people processing thousands of commissions would present a host of inaccuracies.  But let’s put that into perspective.  At Employee Pooling, our vast team of highly trained commission processors yield incredibly accurate results.  In fact, our last report showed an accuracy of 99.5% over 30,000 processed commissions!  When properly trained, and with robust oversight, a team of people can perform as reliably as any machine.  And perhaps most importantly, they can be held accountable to quickly correct errors should they arise.  This brings us to our third, and most important deciding factor when outsourcing complex processes.

Accountability:  People answer to people.  Machines answer to…?

• Machine vs Human – The most significant advantage a human resource-driven process has over a programmatic process is accountability!  When a machine errs, who is responsible?  When a commission check is off, who handles the error?  A team of people will always be faster to remediate errors because, as humans, they are inherently accountable.  They can personally address the mistake with the client, reassure them of what happened, and rectify the problem to the client’s satisfaction.  

When a program breaks down or commits an error, a group of developers have to interface with the program to understand the problem, then a customer rep needs to reach out to the client to address it.  The immediate chain of custody from an accountability standpoint, leaves the end user at the mercy of the machine.  

The Ability to Spend More Time Giving Value to Your Client is the Fastest Route Toward Growth

Outsourcing any time-draining aspect of your business should always stem from the desire to provide more value to your clients.  Ours is an industry of relationships.  This fact is the genesis of every service that Employee Pooling offers.  Whether it’s processing 10s of thousands of commissions, underwriting, contracting, or case management, the heart of each of our services is a real, beating, heart.  We leverage technology and talent to save our clients hundreds of thousands of dollars every year.  Human capital is not just our value-driver, it’s our ethos.  

For our clients, a phone call is met with a real voice.  An email is met with a hand-typed response.  In a world increasingly disconnected from the end user, Employee Pooling reaches out with understanding, expertise, and accountability.  As our team has grown across 2 continents over the years, our ability to navigate the systems of our industry for the benefit of our clients has only become sharper and more connected.  

It is not about John Henry and the Steam Engine or People vs Programs, instead, as always, success lies in-between.  Leveraging the greatest tool ever created, our mind, with the efficiencies of modern technology can increase productivity while enhancing relationships