Group Insurance presents special problems when calculating commissions.  The Advisors Assistant Insurance Commission takes a specific and simplified approach to group insurance commissions which we feel is appropriate for a system in our price range.

Because of the reasons expressed below, Advisors Assistant is not designed to calculate DUE TRANSACTIONS which will always be accurate in all group situations.  Advisors Assistant is designed to apply payments received by the agency and calculate accurately the payments to producers and managers once the group insurance commission is posted by the agency.

Group Insurance Communications

Changes in group census data with participants going on and off the policy are usually reported directly by the client company to the group company or third party administrator.  The insurance agency is usually not a party to these changes and does not receive timely information on group changes.

Without this real time data, accurate commissions DUE cannot be calculated.

If a group agency is receiving census data every month, real time, then it is most likely a third party administrator and their administration system will calculate producer and agency commissions and cost an order of magnitude more than Advisors Assistant.

Group Insurance Rate Tables

Many group insurers do not pay a level commission through out the year.  They will often pay a higher commission on the initial receipts of premium and then step the rate down.

While such a rate structure can be accommodated, the real time data to calculate the premiums due for the current month are needed to accurately calculate a commission DUE.

Advisors Assistant will use the current premium in the policy to calculate an estimated commission due. During the posting process you can adjust the commission based on the true premium and have the other levels re-calculated. While the commission amount may not be exact, you will know a commission is due and be able to correctly pay the agents and managers.

Paying Group Insurance Producers

We've learned that most group agencies pay their producers based on a percentage of the commissions received on a producer's case.  This takes away the need to track every last dollar of premium each month and saves tens of thousands of dollars of data entry by the agency.

Our Approach To Group Commissions

For group insurance, we recommend paying producers based on a percentage of commission or participant fees.  You can also pay part of any fixed administration fees.

When you post the commission received, Advisors Assistant calculates the amount to pay producers and managers based on the rate table.  Since you probably don't know the premium involved, paying them a percentage of agency commission makes the most sense.

Advisors Assistant does not validate that the commission you receive for group policies based on a stepped rate system is the correct amount.  These validation techniques can be written using Excel if you are able to collect the premium data.

See Also

Posting Amounts Different Than Calculated As Due