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Accounting Vs. The Front Office
Is there friction in your office between your accounting department and your service staff? Gail Franzen advises you to tackle the personality differences between accounting and customer service personnel through communication and standardized workflow processes. In talking with various agencies around the country, one thing they have in common is the conflict between the service staff and the accounting department. Misunderstandings arise between the two departments when they need to interact with one another and when their job functions affect one another. Much of what transpires in the accounting department depends on the invoicing being performed by the service staff. The service staff’s primary responsibility is servicing the client — not invoicing. From the accounting department’s perspective, time is wasted when the company statement and the invoice don’t agree. This frustration grows when the service staff is interrupted in the middle of an important task by the accounting department to verify and correct the discrepancy. More and more carriers are moving agencies from payment by account current statement to company statement, placing the burden of reconciling on the agency. The accounting department needs to match each item on the carrier statement to the invoice. Frequently, items aren’t invoiced or the premiums and commissions are wrong. INVOICING PROBLEMS Whether the invoice is direct bill or agency bill, the same issues and concerns arise. It’s not the invoicing process that’s the problem. All agency management systems have the ability to process invoices. The real issue is training and understanding the specific agency codes. Here are the most common problems: Incorrect commission percentages Incorrect premiums Incorrect tax and fee codes, such as agency fee vs. broker fee Incorrect payee (entering paper carrier instead of payee company) When there are a number of invoicing corrections on an account, the client’s ledger becomes difficult to read. The producer will either pass the task of collection to the CSR or will need to sit with the CSR to decipher the account before contacting the client. If monthly statements are mailed to the client, they’ll phone the agency confused about how much they should pay. WORKFLOW SOLUTIONS Let’s look at what’s causing the billing discrepancies. In today’s office, the invoicing previously handled by a senior CSR is now an assistant’s responsibility. The senior CSR might understand the repercussions from invoicing, but what about the assistants who are doing the invoicing? The assistant isn’t involved in receivables. Problems with billing errors are compounded when the service staff is backlogged. Developing and implementing effective workflows will eliminate most billing discrepancies. The process of creating your invoicing workflow should start with a task force, including service staff and accounting. Bringing the two departments together in the task force will encourage an environment of understanding. Task force members should determine agency guidelines for various areas, including binder billing, direct bill, agency bill, and invoice corrections. Once you’ve created your guidelines, continue the process by creating the most efficient workflow for your agency management system. Use this outline as a starting point to determine the areas on which your agency needs to concentrate: CREATING INVOICING GUIDELINES Responsibility and Timing Set responsibility for invoicing — Account Manager vs. Assistant When is a policy to be invoiced and if it’s to be binder billed Determine a timeline in which endorsements will be processed and invoiced from the date received from the carrier Determine a timeline in which a discrepancy notice from accounting will be resolved Determine when to bill a cancellation premium Policy Set Up Line of business code Writing Company vs. Parent Company vs. Broker Profit Center Producer, Account Manager Direct Bill Does your agency bill direct bill from the policy or from the statement? Do you bill annually or on an installment basis? Invoice Dates The invoice date is always ‘Today’s Date’ The transaction effective date is the effective date of the insurance transaction Future Bills Who prints and mails future invoices and when? Installment Invoices Make every effort to obtain the installment schedule from the carrier before invoicing Who prints and mails future installments and when? Invoice Printing and Distribution Determine if invoices are printed immediately or batch printed Set timeline in which invoices are to be mailed after printing Determine timeline to print and mail future installments Commission Verify commission percentage from carrier before invoicing If multiple commission percentages apply to one policy, determine if the premium is to be divided by line of coverage or to be rounded Verify producer commission before invoicing Invoice Memos Create standards for messages on invoices Invoice Corrections Based on your agency management system, determine if invoices are to be revised or voided and then re-invoiced Set guidelines for correcting installment plans and future bills TRAINING SOLUTIONS Once you’ve developed workflows, establish a training and implementation plan. When people fully understand the outcome of an action, they take more time and consideration in performing it. Consider an Insurance Accounting 101 training class for all service staff involved in the invoicing process. This isn’t an accounting class, but a class detailing what happens when an invoice is done. Explain the different areas affected by a single invoice. Use this outline for your class: Explain how company payables are created Explain how producer commissions are created Explain how different taxes and fee codes affect the different payable or income accounts Demonstrate the company payable reconciliation process Demonstrate the correct invoice premiums and installments Demonstrate how to make invoice corrections CONCLUSION Keep the lines of communication open between the accounting department and the service staff to reduce friction between the departments. Remind your staff that they need to take extra time at the beginning of the process to save time for everyone at the end of the process.

Mercator Risk Services provides Directors and Officers (D&O) liability insurance to a wide range of organizations. This coverage helps protect the personal assets of decision makers from costly lawsuits. The primary D&O segments include: Public Companies Private Companies Non-Profits, including Associations and Unions Financial Institutions/Financial Related Initial Public Offerings (IPOs) Trustee Liability & Trusts Distressed/Hard-to-Place Accounts Certain segments have undergone significant change. For public companies, recent judicial decisions, regulatory scrutiny, corporate scandals and industry consolidation have increased the exposures and liabilities affecting the directors & officers. Mercator Risk Services’ markets are able to provide the protection directors and officers are seeking. Private company D&O has evolved into a comprehensive product with a variety of coverages, and Mercator Risk Services provides highly competitive proposals from a range of markets for this segment. Proposals can be provided with separate limits for each coverage as well as on an aggregated (single) limit basis. Non-profit D&O is another large segment, and Mercator provides a number of competitive markets for this segment. Non-profit D&O policy forms can vary greatly. Some policy forms provide D&O only, but many have been extended to provide employment practices liability coverage (EPL) and professional liability coverage (errors & omissions or E&O). Because they see a mix of D&O accounts, they utilize a large number of D&O markets for all types of D&O in all states. Not all of these markets are willing to quote each account, but they are typically able to obtain competitive terms on most accounts. Mercator can offer primary limits of up to $10 million, and also significant excess limits. Minimum premiums vary depending upon the class, but start as low as $950. Minimum deductibles start as low as $0! Mercator Risk Services can usually utilize an application you have to get started (other than a renewal application), or they can provide a specialized application for your client. Hard to Place: They also handle hard to place, distressed and unusual accounts, such as accounts with claims or financially impaired accounts. Let them know about your clients’ needs and they’ll provide you with information and assistance with your particular situation or account and Directors & Officers Liability coverage. For more information, please call (860) 527-9717 or send an e-mail to info@mercatorpro.com. You can get additional information on their products, insurance applications, and Specialty Lines insurance information on their Web site www.mercatorpro.com.

Directors and Officers Liability insurance coverage is designed to give financial relief when the management of a company is pursued legally. The D&O insurance policy will cover defense costs for investigations or trails against a company's directors and officers. Each insurance company’s policy will employ its own language, but in general terms: Insuring Agreement A, often referred to as “A-Side Coverage,” typically provides coverage directly to the directors and officers for loss – including defense costs – resulting from claims made against them for their wrongful acts. A-Side Coverage applies where the corporation does not indemnify its directors and officers. Insuring Agreement B, or “B-side coverage,” reimburses a corporation for its loss where the corporation indemnifies its directors and officers for claims against them. B-side coverage does not provide coverage for the corporation for its own liability. The language and conditions of Insuring Clause B typically mirror Insuring Clause A. Many D&O policies offer an optional coverage to protect the corporation against securities claims.

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Program Highlights: Separate Directors & Officers Liability and Employment Practices Liability Limits EPL Defense Costs outside the Limit of Liability for firms with up to 200 employees. Unlimited Extended Reporting Period for former Directors & Officers Provides the protection of an occurrence policy EPL Wrongful Act extends to 12 named perils including acts arising out of use of the internet and Third Party Sexual Harassment. Optional Third Party Discrimination if EPL is purchased. Stand alone Directors & Officers Liability option Optional Fiduciary Liability Extension Entity Coverage included automatically in D&O and EPL Coverage Parts Full Prior Acts Coverage Punitive Damages where insurable by law. Automatic Coverage for service on Non Profit 501(c)(3) Boards Spousal Extension

King Support Systems Insurance Services provides Directors and Officers Insurance in AZ, CA, NV, OR and WA. Available Coverages Up to $10 Million Aggregate Streamline Applications Quick Turnaround Claims Made Form Subsidiary Coverage Non-Profit Organizations EPLI with Third Party Fiduciary Exclusion Available Employment Practice Liability Volunteers Included as Individual Insured Private For Profit Organizations Optional Duty to Defend World Wide Coverage Spousal Estate & Domestic Partner Extension Up to six lines of Coverage under one form Target Classes Co-Ops/Condos Hotels Mobile Home Parks Non-Profit Organizations Professional Services Restaurants Minimum Premium $600.00 Minimum Deductible $2,500.00 Directors and Officers Insurance

Directors, Officers and Company Liability insurance is a policy designed to provide financial protection for the directors, officers, and the corporate entity which they serve.

Bankers Condo Associations Profit & Non Profit Organizations Youth Amateur Sports Errors and Omissions Most all professionals New Programs: Directors & Officers for Youth Amateur Sports (Pony, Little League, Soccer, Pop Warner, etc.) Example: League Association — No Charge, $1 million coverage Teams-$275.00 — $1 million coverage!! Fidelity Youth Amateur Sports Example: $125.00 per team — $10,000.00 coverage

We take a slightly different approach to underwriting than most general agencies by starting with one fundamental principle in mind; SERVICE. Our commercial property/casualty underwriters are some of the best in the industry, with years of experience and training. You’ll see that our proven, service oriented team will provide you with the ultimate advantage to writing your surplus business. Whether it is one of our programs or some other classification you need placed, we can help.

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