In this latest Expert column, we are proud to showcase the contributions of our Management Information Systems Expert, Beth Fell.

Be sure to check our Events Calendar for upcoming continuing education courses in August featuring Beth's expertise regarding Microsoft Excel.

One of the biggest challenges faced by insurance agencies in today’s marketplace is the reconciliation of commission payments received from the various insurance companies with which we all do business.  Each month, the checks from the carriers roll in, and the same set of critical questions needs to be answered:

• Did we get paid commission for each and every policy that we are supposed to get paid for?
• Did we receive the correct amount of money for each policy that is included in the total payment?
• If the commission is to be shared among several payees, was the total payment distributed correctly?

If the answer to any of these questions is “No”, then an investigation must be initiated to determine the cause of the discrepancy.  Very often, discrepancies are easily explained by routine occurrences – missing or incorrect paperwork caused a delay in obtaining approval, a policy was terminated or enrollment changed via transactions directly with the carrier, etc.  In these instances, it is simply a matter of updating records to reflect the new information.  Other times, however, discrepancies in commission payments are due to system or human error.  In these cases, it is imperative to not only fix the source of the error, but also to ensure that sufficient payment adjustments are received so that no commission deficit exists for the policy in question.

As an agency’s book of business grows, this reconciliation process becomes increasingly more difficult and time consuming.  Not only does the sheer volume of transactions become overwhelming, but the growing number of “special circumstances” and exceptions to the rule -- lump-sum commissions vs. percentage of premium, sliding-scale commission schedules, vesting scenarios, special commission-sharing arrangements, etc. -- also make it nearly impossible to keep track of how much revenue each policy is expected to generate in any given month.  As daunting a task as it is, however, it is critical that this reconciliation be done thoroughly and without error because discrepancies can translate into serious money!

To help manage this rapidly-growing challenge, Savoy Associates turned to Beth Fell, a senior member of our Management Information Systems department and resident expert in data analysis and reporting.  Working closely with our commission team, Beth developed an automated Payment Tracking System that reads the electronic commission statements provided by our carrier partners and evaluates each payment to ensure that it is correct.  Beth’s system implements complex programming logic to account for all the business rules and exceptions that come into play when determining a policy’s “expected” monthly commission, and it compares these values to what has actually been received.  In an average month, the Payment Tracking System evaluates over 40,000 transactions in a matter of seconds.  Discrepancies are reported immediately to our commission analysts, who then have all of the information they need to investigate and resolve any outstanding issues.

By automating the payment reconciliation processes, Beth has enabled our commission analysts to focus their time on investigating and resolving potential problems rather than crunching numbers.  This has allowed Savoy Associates to support a dramatically increased transaction volume over the past year with no additional staff required.  More importantly, however, by enabling us to identify and resolve commission issues quickly, Beth has helped us to improve the level of service that we provide to our brokers, and that is a goal we continually strive for at Savoy Associates.

Thank you, Beth!