COMMERCIAL INSURANCE
BINDER BILLING PROCEDURE
Cash flow in insurance agencies has become an ever increasing area of concern. Most agencies have thousands of dollars of accounts receivable as a result of improper premium payment procedures.
One of the areas of concern is the late issue of renewals. It is not uncommon for an agency to receive renewals 60 days after expiration and then be forced to pay the companies before the agency gets paid.
Also, since interest income is pure profit, it is a great benefit for the agency to collect as much of the renewal premium for the account and hold it for the company, while the policy is being issued. A successful agency will generate interest income at a rate of .05% of the agency's annual Agency billed premiums. (Example: $3,234,000 annual premium x .005 = $16,170 interest income)
The binder billing procedure will allow you:
- Provide a greater service to your customer by affording them written confirmation of coverage
- Provide a greater measure of protection for the agency from errors and omissions losses by having the policy coverages outlined in writing
- Allow the agency to earn interest income by creating greater cash flow
BINDER BILLING PROCEDURE
REGULAR COMMERCIAL ACCOUNTS
1. If possible, CSR/Marketer obtains a renewal policy number from the company. If none is available, assign a binder number.
2. CSR/Marketer produces an invoice billing for the exact or estimated premium; also, prepares finance agreement, if necessary. The due date should be no later than the effective date of the policy.
3. CSR/Marketer issues binder of insurance for each policy. The binder should be written to conform with the individual company's guidelines and also contain the proper language regarding coverages and exclusions.
4. CSR/Marketer issues all certificates of insurance required. The certificates should be written to conform with the individual company's guidelines and also contain the proper language regarding coverages and exclusions.
5. CSR/Marketer generates all necessary auto ID cards
6. CSR/Marketer mails binder billing, finance agreement, certificate copies, auto ID cards and binder along with cover letter to customer and records these transactions in customer note pad.
7. CSR/Marketer sends certificates of insurance and binders to appropriate parties using Cover Letter and records transaction in customer's note pad.
Dear :
Re:
Enclosed please find the binder/certificate of insurance for your above captioned customer. Should you have any questions regarding the attached, please call us at your convenience.
Sincerely,
8. CSR/Marketer sends copies of certificates and binders to company using Cover Letter and records transaction in customer's note pad.
Dear :
Enclosed are the binders/certificates issued to ____ for ____. The appropriate applications/renewal requests are enclosed. Please issue a policy and forward to us as soon as possible.
Thank you for your prompt attention.
Sincerely,
Enclosure
9. CSR/Marketer establishes a 14 day follow up date to check for receipt of binder billed premium.
10. CSR/Marketer establishes suspense for receipt of policy. The suspense should be 7 to 10 days prior to the expiration of the binder. If policy is not received by the expiration of the binder, new certificates, auto ID cards and binders must be issued in accordance with the aforementioned procedures.
11. CSR/Marketer receives policy & checks it for accuracy.
12. If policy is incorrect, CSR/Marketer requests necessary endorsements and records transaction in customer's note pad.
13. If policy is correct CSR/Marketer
- Reissues all necessary certificates, auto ID cards, etc.
- Issues corrected billing, if necessary
- Prepares Summary of Insurance
- Mails copies of policy to all additional interests
- Mails renewal policy, etc. to customer
- Updates customer's computer file
- Deletes all unnecessary follow up dates from computer
- Records transaction in customer's note pad
- Files paper in Transactional file
14. CSR/Marketer sets follow up to call customer to review the renewal policy.
15. CSR/Marketer calls customer, reviews renewal and asks for referrals.
16. CSR/Marketer deletes all unnecessary follow up dates.