These are exciting times. Social change is taking place at all levels, and norms and rules are changing. What was socially and politically unthinkable a decade ago has now been simply swept away with "modern times." There is an increasing tendency to impose new regulations. Many industries are feeling the effects of this and are having to adapt. They have no other choice, not even the insurance companies in this country.
The commission cap is only one of the issues. I don’t want to talk about the pros and cons of "commission caps." This has already been discussed at great length by politicians and experts, and by those who think they are experts. Are commission caps coming? Commission caps have already existed in the health insurance industry for many years. Whether, and in what form, they will exist in other industries in the future remains to be seen. But waiting doesn't mean being inactive. The possible scenarios must be played out.
For this purpose, technical and case concepts must be developed and rules and regulations must be established. These include industry-specific:
- Remuneration rules
- Remuneration rates
- Target agreements
The sequence in which the individual remuneration types must be viewed and posted must be precisely defined, because:
- the valuation basis varies,
- it is usually calculated for different time periods,
- it is invoiced at different times.
In many cases, guarantee payments, minimum disbursements, start-up financing and other support services are added to this, which must also be considered. Contract changes and cancelations can cause the commission cap to be exceeded or undercut several times within an invoicing or accounting period. A simple contract overview from a commission perspective must be available across accounting periods.
The following points should be easily identifiable in the commission system:
- Current contract status
- Current total premiums
- Current total premiums subject to commission (if not all rate components, such as surcharges and premium adjustments, that are relevant for commissions)
- Remuneration types and rates planned for future accounting periods
- The total of all of the remunerations of the contract in relation to the commission cap
As a user, I would like to see a clear arrangement of the information and a graph view. But even more important is a dialog-guided posting that would enable me to recognize when the commission cap has been reached. Test postings and simulation options save time when making corrections and creating and changing agent-related postings. Of course, in order to meet all regulatory requirements, each posting and posting decision must be archived, and auditors must check this. This is the only way to ensure that agent inquiries can be answered quickly and comprehensively.
With or without a commission cap, the flexibility of the commission system is extremely important. There will be changes and any transition periods will always be (too) short. It is therefore important to run through such scenarios at least once and to determine what resources are needed. It is also interesting to see whether all processes are sufficient and if they are documented according to their current status. If not, then perhaps now is the right time to get started!
If you need support, please feel free to contact me and to benefit from our many years of expertise.