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... x No Thanks Loading.. What the Best Insurance Policy Administration Software Gets Right About Claims 7/24/2026 by Theo Walker This content has not been rated yet. For years, insurers have treated claims like the payoff moment of the policy lifecycle — the point where everything either works or falls apart. But that framing misses something important. By the time a claim lands on an adjuster's desk, most of the outcome has already been decided. The data is either clean or it isn't. The policy details are either accessible or buried in a legacy system. The workflow either connects to what came before or starts from a blank slate. This is why claims performance can't be fixed by claims technology alone. It's shaped much earlier, by how policies are administered, how data moves through the organization, and how well the underlying platform was built to support what happens next. The insurers getting this right aren't necessarily the ones with the flashiest claims portal. They're the ones whose policy administration software was designed with claims in mind from day one. Why Claims and Policy Administration Cannot Operate in Silos It's common for insurers to think about policy administration and claims as two separate disciplines, run by different teams, measured against different KPIs, sometimes even built on entirely different technology stacks. That separation made a certain kind of sense when systems were simpler and claims volumes were lower. It makes far less sense now. A claim is, at its core, a request to validate information the insurer already has: Was the policy active? What coverage applies? Were premiums current? ...

... . Most are somewhere in between. A few agencies make the fatal mistake of thinking they have $1 of commission to split with producers. They don't. They have $1 of commission minus the cost of operating the agency. A big percentage of that commission income usually goes to expenses other than production. Knowing where the money goes is essential for agencies trying to figure out how much they can afford to pay producers. The worksheet at the end of this article is an easy way to get a snapshot of where your agency stands. It's a good exercise for any agency at any time. It's especially helpful for an agency looking to bring in a new producer, turn around a dwindling profit picture, or boost its value as a going concern. Let's walk through the worksheet. ADMINISTRATIVE EXPENSE Add up the cost of office payroll, rent, light, heat, bad debts, dues, and subscriptions-every agencywide operating expense. Include advertising because the entire agency benefits from advertising. Exclude pay that goes to the principal, as well as federal and state income taxes or any other non-agency expenses. Also exclude business-development expenses for leads used by individual producers. For an average agency, the sum you come up with will take about 50% of every dollar that comes through the door. High-performing agencies get it down to 45% . Inefficient agencies run 60% and higher. MANAGEMENT FEE Next, add in the cost of managing the agency, including the production staff. A sales manager or producer needs to be compensated because time allocated to management is time taken away from production ...

... from fire or other peril, including financial dislocations caused by the need to carry on activities in substitute quarters Claims from persons injured (either bodily or through property damage) by an act or omission of the entity Payments mandated by law, such as medical and indemnity payments to injured workers (Workers Compensation) All these expenses are subject to management control. In fact, they're probably more susceptible to reduction from skillful handling than most areas of finance. Too many risk-management programs have been permeated by insurance thinking-which is natural, since insurance agents and brokers have more complete knowledge. However, risk-management concepts and procedures help achieve control of the bottom line: total risk-management costs. Total risk-management costs' refers to the sum of costs for: Losses incurred, direct and indirect Loss prevention Claims adjusting Insurance premiums Administration Losses incurred may be controlled through various loss-control measures. Also, the amount of liability claims may be affected-strongly-by prompt and fair payment of legitimate claims combined with vigorous resistance to questionable claims. If claims are not handled in-house (and few public entities handle them), you can monitor the claims adjuster's work. Loss-prevention costs may be minimized by questioning expenditures for safety, fire protection, and security. Relate them to actual anticipated reduction in loss costs. If the cost of a protection device can't reduce losses enough to amortize the cost, it's not justified. Even safety devices, where injuries rather than property damage are concerned, should be subject to hard-nosed financial analysis. Claims-adjusting costs are subject to little control in a fully-insured program, but when they're handled by contract adjusters, much can be ...

... more. Insurers of these lines generate substantial investment income on their reserves until losses are fully paid. Mid-size companies using alternative risk financing can earn the investment income on reserves that was formerly earned by an insurance company. ALTERNATIVE RISK FINANCING OPTIONS Insurers have developed many colorful titles for what amounts to a handful of alternative risk financing techniques. Methods range from guaranteed cost (for risk-averse firms) to self-insurance and captive insurance (for firms seeking the ultimate in control over the risk management and financing process) . These techniques include: &# 160 Guaranteed cost Retrospective rating Large deductible Self-insurance Captive insurance This chart summarizes the main features of these alternatives: Analysis of Key Risk Financing Alternatives Rating Scale 1-5: 1 = least favorable; 5 = most favorable Guaranteed Cost Retro/Rating Large-Deductible Self-Insurance Fronted Cost Non-Loss Administration 1 2 4 5 3 Maintenance 5 4 3 2 1 Organizational Control 1 2 3 5 5 Guaranteed cost insurance. Guaranteed cost remains an attractive option, particularly in a highly competitive insurance market. "Guaranteed cost" means that the insured pays a one-time premium based either on a rate (for example, per payroll or property values) or a flat amount. The insurer assumes the loss obligations covered under the policy. In some circumstances, guaranteed cost can be the best of all worlds. A specially tailored program can use an insured's expected losses to calculate premium. The premium is then discounted to recognize the time value of money. Insurer calculations include a risk charge for large losses and the possibility that losses might exceed projections. Many buyers like the fact that guaranteed cost ...

... I've consulted on this very subject. In more than 95% of the agencies I've contacted, the position of CSR (or whatever term they have bestowed) is a salaried' position. One would take this to mean that it would be exempt. In delving into the idea most agencies have behind using the salary' term, they're hinting at the idea that this is an exempt position. The bottom line isn't exempt versus non exempt — it has to do with overtime pay, an expense that few agencies want to incur. I've reviewed this every way to Sunday. In my opinion, under no circumstances will a true customer service rep position ever pass the FSLA exemption test. Among the exceptions to the Act, the most frequently applied are the executive, the professional, and the administrative exceptions. An employee who has supervisory authority over other employees and is paid a salary (that is, not paid on an hourly basis) is considered an executive. A professional employee is generally an individual whose work is based on an advanced degree, such as a lawyer or doctor. The administrative exception is relatively narrow, limited to the confidential secretaries of certain executive-level employees. Individual employees who fall into one of these three exceptions are exempt' from overtime calculations. A quick overview of each of these might lead one to believe that a CSR could fall into the administrative category. I've put together a test for the administrative employee. Answer each point as if you're on the witness stand. Here it is: ADMINISTRATIVE EXEMPTION TEST If employees are paid at least $250 per week ...

... x No Thanks Loading.. Administrative Expense Changes For The Life Operation 4/30/2013 by CompleteMarkets Editor , david goodwin This content has not been rated yet. Here's a letter I received recently: Dear Dave: I am the manager of a four-person Life/Benefits department of a P/C agency. The agency is set up with profit centers such as Personal Lines, Commercial Lines, Surety, and Life/Benefits. Each profit center shares in the common overhead of the agency office supplies, salaries, etc. I have no problem having my department pay for what it uses. My problem comes from being charged roughly one-fourth of the common overhead for the total agency, for such items as agency administration, accounting, legal services, taxes, repair and maintenance, etc. Those agency costs are high and take a big chunk out of our department's income. Agency owners are firm in saying that each profit center must bear its part of the total operation, and I can't find the flaw in their argument (if there is one) . Please tell me they're right and I'm wrong, if that's the way it really is, or else tell me how to show them they're wrong. We really need to know. Ohio Reader Dear Ohio Reader: In my view they're wrong, but it's easy to see their attitude as an honest mistake. If the Life operation's commissions are shared with the P/C agency's principals as owners or co-owners of the Life operation, then in effect you are paying for Life leads. You're also covering your department's overhead by ...

...al agents (MGAs), and program administrators, this signals a shift from broad ..., Wholesalers, MGAs, and Program Administrators Should Watch Next So far, you'...

... x No Thanks Loading.. Loss Portfolio Transfer 4/30/2013 by CompleteMarkets Editor , Al Rhodes This content has not been rated yet. LOSS PORTFOLIO TRANSFER by Al Rhodes A loss portfolio transfer (LPT) is one of the few transfers that can be a winning deal for buyer and seller. An LPT allows you to transfer claims to another party for a fixed sum. An LPT program involves past claims, but not future claims, as with a traditional insurance program. The main steps in an LPT are the claims review; actuarial analysis; and accounting for the transferred portfolio. The transaction involves the portfolio value of the liabilities, which is discounted to net present value; the investment value of risk capital; and issues such as administration, accounting, and taxes. SELLER'S ADVANTAGES: Eliminating uncertainty over the cost of losses, pay-out patterns, and interest-rate risks, including unreported losses. Reducing administrative duties. Eliminating accumulated collateral. Freeing up escrow funds used for claims handling from the TPA or the carrier. Seeing a positive effect on the balance sheet. Getting an accelerated tax benefit. SELLER'S DISADVANTAGES: Immediately paying the claim reserves' net-present value may reduce cash flow and investment opportunities if the value of cash increases. Losses may be lower than anticipated. The loss pay-out may be longer than anticipated. The seller may lose control of claims handling. The seller has to pay a fee for transferring the risk and administration. Losses might not be properly accrued or accounted for on current books. BUYER'S ADVANTAGES: The buyer gets a fee and may be able to manage ...

... Will the vendor provide training on how to use the ASP? If so, how? How will the ASP affect such capabilities as desktop faxing, e-mailing, and Internet access? If you have implemented imaging or use scanning, how will the new environment affect this capability? What kind of guarantee will you receive for security and integrity and regular backup of data? Will the ASP allow your employees to work at a speed comparable with what they have now? How are service issues handled? A CASE STUDY Behnke & Co. Inc. (Decatur, IL) is at the tail end of selecting an ASP. We interviewed Chief Operating Officer Jim Grady about their concerns, costs, and expectations. BMG: Why did you decide to take the ASP route instead of maintaining this type of administration in-house? Grady: Frankly, we wanted to get out of the system management business. Not only were we spending too much valuable time on it, we'd reached the point where we would've had to hire a system administrator. BMG: Does this mean that all of your system administration and server headaches are now outsourced? Grady: No. We still need an in-house server for applications that the ASP currently can't handle. For example, we use third-party software for e-mailing, word-processing, spreadsheets, rating, etc. Although we still need an in-house server, the ASP vastly diminishes the level of administration and hardware support. BMG: What other factors entered into your decision to go with an ASP? Grady: We anticipate needing a lot of flexibility. Our headquarters is in Decatur, ...

... principal remains active. At the time he or she seeks to retire, agency value will be a commission-retention payment for three to five years from another local agency. For most agencies today, however, value is something more than a high standard of living through self-employment. Value in the modern agency era depends on three primary factors: 1. Creation of a business entity. The agency must take on a life of its own, which will survive the principal's demise. This means: establishing a business process by which sales are made (by owners and non-owners); carrier relations, placement, and product development are nurtured; customer service is provided by highly trained staff members (not by producers) following systems, procedures, and workflows which have been carefully defined and constantly upgraded; and administrative management covering automation, accounting, human resources, and office facilities truly supports sales and service, instead of being the focus of operations. By creating a thriving business entity, owners have something of value to sell other than a collection of expiration dates and files. 2. Growing profits, not revenues. Value is almost entirely based on the profit an agency can generate for its owners or a buyer. Therefore, growing profits, not just revenue, should be management's goal. This is critical for marketing personnel, because some products, lines, and classes are more profitable to an agency than others. Helping agencies find the products and classes most profitable to them will help enhance value. 3. Agency risk. While agency value is based primarily on profit, the value will vary ...