Saas solutions for insurance companies continue to gain acceptance. The digital transformation is omnipresent and is forcing insurers to act faster and in a more customer-specific way. The pressure to modernize and innovate is especially high in the area of "customer-facing" systems.
But what about peripheral systems such as commission software? Few employees within a company actually use it, and it is often not particularly state-of-the-art, but it still works out well. Knowledge related to commission processes and regulations is often only available to a few key people. Can SaaS be the solution for commission software modernization? And most importantly, why is that the case? In order to be able to give an answer to this question, various aspects have to be considered.
Each insurance company pursues its own sales strategies, which results in individual agreements with intermediaries. Some of the business relationships have lasted for decades and are characterized by trust. Many changes within companies and new legal regulations resulted in new, additional compensation models. As a result, there are a variety of regulations in existing commission systems, some of which apply to individual intermediaries or groups of intermediaries.
In quite a few companies, the existing commission system is seen as a "data hub," as "somehow it all has to do with the agent and then it falls under commissions". Occasionally, the commission system is also intended to correct omissions and errors from other systems through its "healing effect" and the helping hands of the commission team.
What is the core of an insurance company commission system?
The commission system must also be viewed in terms of a clear domain cut, ownership of the specialist systems, and a tidy process chain.
Broken down to its essentials, the core of a commission calculation system consists of:
- the receipt of business transactions from portfolio systems
- the subsequent calculation of commissions
- the delivery of calculation resultsto peripheral systems such as print, disbursement, DWH, and the intermediary portal
In this context, the insurance-specific commission, liability and distribution rules shall be applied on the basis of the individually agreed upon intermediary conditions. Depending on the insurance company, sales channel, and insurance line, these calculations can be based on less complex calculation logics, or they can be highly complex.
Saas and commission software for insurance companies - a balancing act between two worlds?
The commission software as Saas solution offers standard processes, standardized interfaces, and a defined, leading-edge scope of services. The data stored centrally in the cloud does not have to be accessed from a central location, which enables decentralized work at different locations.
A key goal in implementing SaaS commission software may be to simplify and standardize commission processes and achieve automated processing rates. To achieve this goal, a SaaS solution must integrate a variety of insurance- and line-of-business-specific commission logics and commission processes. This is the only way to quickly create all commission rules in an audit-proof manner and to change them during operation without spending significant time and energy on programming. If these prerequisites are met, then the commission software can be implemented as SaaS with little effort. This is where SaaS can demonstrate its core strength: configurating instead of spending time and money on development. It saves time and therefore costs.
Likewise, state-of-the-art commission software must also be available in the SaaS model:
- different mathematical calculation methods,
- and customizable valuation, distribution, liability and payout rules
- demonstrate a large number of the software's well-documented extension points
They are a fundamental component of a customizable SaaS solution in an insurance environment. This enables the insurance company to develop features on its own that have full release capability.
But what if the commission logics are more complex and diverse? On the one hand, the SaaS solution must have a high degree of configurability. On the other hand, processes are expected to be standardized.
This is precisely where the balancing act between in-house development and an SaaS solution must be mastered:
• How much time and effort is required to integrate more complex rules and processes?
• What business values can be achieved in each case?
• What are the costs and risks associated with a custom solution implementation project?
• How long does a project like this take?
• What are the advantages of leaving previous rules and processes unchanged and integrating them into a SaaS solution?
• What advantages do I find when I contrast the speed and cost of implementing a SaaS solution with individuality and the cost of individuality?
The questions are not only to be considered from a commercial point of view, they are above all to be considered from a technical and sales point of view and must align with the company's IT strategy.
In many companies, the demographic change is clearly noticeable in the number and age of employees in the commission department. In all likelhood, the number of suitable applicants for open positions in the commission department will not necessarily increase over the next few years. Another result from this that insurance companies should not underestimate is the need to take action - specifically, in order to ensure that commission settlements can continue to be prepared punctually and correctly in the future.
What are the specific benefits of commission accounting software in the SaaS model?
Using commission software as a SaaS solution offers numerous advantages such as:
- faster time to market through standard software with a defined scope of services and standard processes
- quick connectionfrom and to an insurance company's peripheral systems through standard interfaces
- always up to date: regular updates and technical and specialist support by SaaS providers reduce IT time and effort on the customer side.
- transparent costs for scope of services, operation, and required performance, especially during load peaks
Data protection & SaaS: this is important
Data protection is already a key criterion in the pre-selection of a suitable commission SaaS provider. The most important regulations apply to it:
- Data protection according to the GDPR
- BaFin's Insurance Supervisory Requirements for IT (VAIT)
- C5 Cloud Computing Criteria Catalog of the German Federal Office for Information Security (BSI)
- EIOPA Guideline for Cloud Outsourcing.
Especially after the Schrems II ruling in 2020, there is also a special focus on data transfers to third countries.
Commission software as a SaaS solution - is this conceivable?
In terms of a clear domain cut, ownership of the specialist systems and a tidy process chain, the commission system must also be viewed. It is an indispensable part of an insurance IT modernization or market entry strategy and ensures an important bond and reputation with intermediaries and in the market through correct calculations and results displays.
Of course, commission software for commission calculation can also be operated as a SaaS solution! With plannable investments and without a large IT project, the possible applications are diverse. In a commissions world with countless special rules, it is often difficult to implement new, dynamic sales ideas within a short period. With a Saas solution, these ideas can be quickly tested in the market and intermediarys can be billed. People everywhere are talking about "Tesla speed" - with a commission SaaS solution, you can too! Perhaps not immediately in all sales channels and divisions. There are always reasons not to. But there are very many reasons that you should, and therefore new possibilities that argue in favor of it!
Let's talk about how commission software as a SaaS model can be part of your modernization strategy or a component in a complete Saas platform.
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