This post is part of a series of sponsored by Agent Sync.
For insurance agencies and airlines with high growth, acquisitions are a core part of business expansion. But if you do not keep your acquisition strategy streamlined and efficient, you end up with a reverse revenue model.
The best way to control your costs and reach your target profit margin is to centralize the core functions of your acquisitions. This does not mean that all your manufacturers have to carry the same logo – for some companies it will always make the most sense for each downstream business unit to maintain its own culture, taste or “local” feeling. But even though branding and offices remain separated, observance and distribution channel management services are something you need to centralize.
5 Risks of Decentral Compliance and Distribution Partner Management Strategy
If you do not centralize some core functions in your business and all your subsidiaries (such as coughing cough, compliance and producer management), handcuffs the benefits of your acquisitions. Of course, new acquisitions will result in profit potential, but if there are no efficiency gains, this relationship will coast on a fixed earnings plan and it will take years for you to actually see the return on your original investment.
If you do not centralize your compliance and distribution partner management, you specifically face five key rates:
Risk # 1: Disorder Risk of Business Disorders
Each acquisition is a fire exercise of paperwork – some of it is inevitable. But if producer licenses, appointment and observational functions all remain at the local business level, your downstream producers get a feeling that “this is the new boss, the same as the old boss.” The experience can feel meaningless and cause disruption of your selling agents with a little payout or gain for them, and the risk of them hovering or the information transfer will introduce new errors to you. This danger of churning or slowing down your processes when you on board your new manufacturers also pose a very real danger to your bottom line: slowing down to board producers risk the profits for the business they could write in the meantime.
Risk # 2: Regulatory risk
If you do not own the compliance and producer management functions of your business, you take on the risk of each business unit that handles this in different, often fractional ways in which compliance and licensing validation are only part of someone’s responsibility. This can lead to sales according to lapsed licenses, inappropriate and unlicensed commissions and wasted fees for late licensing. Further, if compliance is a distributed, fractional responsibility, you are probably facing the risk of the person who administering this function lacks the kind of institutional knowledge that is critical to protecting producers under their scope. Each of these scenarios has its own legislative risk, and regulatory risk can easily spiral to reputation risk.
Risk # 3: Very little transparency
How many agents write business to your insurance company or agency? How much does each insurance manufacturer cost you? What is the true ROI on each manufacturer or even every business unit? When the cost of license or appointment is opaque when you cannot connect costs with earnings or when you cannot tell how much of a business unit’s commissions are paid based on a single individual national manufacturer number, you do not have sufficient transparency to evaluate your costs, your risks or your business.
Risk # 4: Reduced perceived value for new acquisition
Part of the business risk is the perceived value you bring to your acquired distributors and their individual manufacturers. When you provide centralized services that take on difficult or boring tasks from your partner’s plates, you can drive home the value your relationship presents. This is something that needs to be done well or you risk the perception that you are “too big” for your new acquisition and that you cannot actually provide the services you say you can.
RISK # 5: LIMITED TRANSFICATION DIFFERENCE
If you are unable to handle change management, centralize the core functions of your acquisitions and screw together your efficiency, you will lock your growth to only be able to acquire agencies or airlines of a certain size. Otherwise, the large size of your acquisition’s producer strength would overwhelm your infrastructure. For companies that allow their agencies to handle manufacturer management and compliance tasks such as distributed services, the producer-to-administrator relationship tends to be very high, which means that more of your main number is dedicated to these tasks than you are likely to realize.
Why Agent Sync is the chosen partner for insurance agencies and carriers with high acquisition
AgentSync is custom built for insurance that leads prominent carriers and agencies across the spectrum to use our contextualized data and core software as part of their modernized infrastructure.
For insurance companies and agencies that primarily grow through aggressive acquisition strategies, Agent Sync presents a specific value where customers utilize the following functions:
- Automatic workflows: Automatic workflows Take boring, predictable and very manual tasks from your team so your human team can use their big beautiful brains to work with high leverage and more white glove services.
- API-driven, supplier-embroidery integrations: By breaking down silos, our standardized data makes it easy to integrate data up and down into your tech stack so that the people who need to make database decisions have the information they need when and where they need them. Integrate with a background control provider and streamline onboarding. Integrate with a commissions and make sure any commission is paid out on time and in accordance. The possibilities are endless.
- Hierarchy Administration: When your partnerships change, the manufacturers move or leadership structures split, you can reflect that change immediately across all your systems. Stop repeated data entry by ensuring that your data is right the first time and every time in your source-of-sand software.
- Scorecard: Is your sales area stacked with agents that are actually ready to sell? Know with a moment when you are ready and where to focus your operational effort.
- Reporting: It’s not just about who is licensed and where. With the most robust out-of-the-box reporting, you can report on who has been appointed in which territories should see gaps and opportunities in your distribution strategy.
- Bulk actions: Need to expand to Montana? You can go agent for agent for appointments or licensing applications. Or you can submit items in bulk. Montana, check. Who is next?