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Feature article |
Compensation Management – Aligning Carriers and Managing General Agents
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Though the existence of Managing General Agents (MGA) simplifies and increases market reach for
various insurance carriers, these large agencies find themselves handling a complex internal ecosystem. They are
plagued by unique administrative challenges that can eventually lead to poor agent retention rates, escalated administrative
costs, and a low success rate in ensuring the accuracy and recuperation of commissions paid from the carriers. |
MGAs sell products from multiple carriers, in many cases across state lines or nationwide, paying commissions to multiple
business channels according to a hierarchy. Each carrier has a unique compensation model for each product, causing the MGAs
to manage a high multitude of commission schedules. Additionally, payment reconciliation (calculating expected commissions from
the carriers, comparing the expected amounts to commissions received, and recovering the difference) further complicates the
administration process.
Another challenge is to stay abreast of the trends among carriers. Tech-savvy carriers submit data in electronic formats,
and if MGAs use outdated systems that cannot interface with the data format, the MGA’s staff is required to manually input
the data. This tedious work decreases employee motivation and wastes time that could be applied to more productive activities. |
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