Insurance Tips📈 

Direct Bill vs Agency Bill

Direct Bill VS Agency Bill 

• Update your policy layout to reflect the billing to quickly see agency or direct bill

  • Click the gear icon

  • Then select the following layout

  • It is up to the agents to select the correct one in the system

  • When entering the premium follow this: 💰💸 🧮

• • • 1. Agency Billed Policies: Premium + Taxes + Fees (separate) Agency Bill Entry Video 

      2. Direct Billed Policies: Premium only (taxes and fees should be included in this amount) 

Direct Bill - Characteristics 

• May see Castle looking thing

• Policy typically downloads.

What is Direct Bill?

• In direct bill, the insurance carrier bills the insured directly.

• The insured pays the insurance carrier directly.

• The agency receives its commission on a monthly or quarterly basis, after the insurance carrier has received payment from the insured.

• Direct bills can be less time-consuming for the agency, as they do not need to collect payments from the insured.

• However, direct bill can also give the insured less control over the billing process and can make it more difficult for the agency to improve cash flow

Agency Bill - Characteristics

• Should see a finance company linked

• Policies are typically manual. Insurance company or Wholesaler/MGA 

• On a quote you will notice line items like these:

  • Pure Premium (before taxes and fees)

  • Broker fees (sometimes they split it up with inspection, wholesaler fees, filing fees)

  • Taxes

What is Agency Bill?

• The insurance agency bills the insured directly.

• The agency is responsible for collecting the premium and sending it to the insurance carrier.

• The agency receives its commission upfront, upon receipt of payment from the insured.

• They also can use a finance company to pay the premium to the carrier (after a down payment to the agency). This is subject to finance fees.

• Agency bills can be more time-consuming for the agency, as they need to collect payments from the insured and then send them to the insurance carrier.

• However, agency bills can also give the agency more control over the billing process and can help to improve cash flow.

• It is important that we take in certified funds as there is a usually minimum earned premium that we are on the hook for.

• Do not bind a policy that is agency bill without confirming are we financing the premium or is the insured paying in full

Installment Bill

With installment bill, the policy is still agency bill but the carrier will bill us with the monthly installment due from the insured. This includes the endorsements made on the policy. We need to collect from the insured the monthly installment and retain the commission before paying the carrier.

Billing Equity

In this example, the policyholder has paid 50% of the premium for the policy, so they have 50% of the equity in the policy. Insurance companies always want to maintain positive equity in the policy so they are not behind..

• A policy has a premium of $365 for a year of coverage.

• The policyholder pays $100 on the first day of the policy term.

• The policyholder's equity on the policy is now $100, which represents 27.27 days of coverage (100 / 365).

• The policyholder's equity date is now the first day of the policy term.

• On the 31st day of the policy term, the policyholder pays another $100.

• The policyholder's equity on the policy is now $200, which represents 55.56 days of coverage (200 / 365).

• The policyholder's equity date is now the 31st day of the policy term.

Trust and Operating accounts

• Trust accounts are used to hold funds that are being held for a third party, such as an insured or carrier.

• Operating accounts are used to hold funds that are being used for the day-to-day operations of the business.

• Commissions go into operating accounts.

• Funds held to pay the insured or carrier go into trust accounts.

Pro-Rata vs Short Rate

Pro rata and short rate are two different ways of determining the refund amount that an insured party will receive if their insurance policy is cancelled before the expiry date. The difference between the two is that pro rata is a simple calculation based on the amount of time remaining on the policy, while short rate includes a penalty as a disincentive for early cancellation. 

Escrow

An escrow account is a separate bank account that holds money for specific expenses related to your home, such as homeowners insurance and property taxes. Your mortgage lender will use the funds in your escrow account to pay these bills on your behalf, ensuring that they are paid on time and that your coverage remains in force.

When it comes to homeowners insurance if let’s say the client pays their policy when they have an escrow account then they need to get the escrow account adjusted.

Example: Client pays homeowners policy and they have an escrow account. The bank will most likely pay the insurance company and the insurance company will refund the insured. The insured is responsible for putting the money back in their escrow account to make sure their escrow account does not go out of balance.

Minimum Earned Premium

Minimum earned premium is the lowest dollar amount an insurer will retain to write a business insurance policy. It is the specific proportion of your premium an insurer will collect if you cancel your coverage before the end of your term. Depending on your policy details, it may be up to 100% of your term payment or lower. This means that if you cancel your policy before the end of the term, you will still have to pay a certain amount to the insurer. This amount is the minimum earned premium. It is important to understand the minimum earned premium when you are buying a business insurance policy, so you can make an informed decision. NEED MONEY BEFORE BINDING POLICIES AGENCY STANDARD.

Cancellation Refunds

Pro rata cancellation is calculated by multiplying the premium by the percentage of the policy term that has not yet elapsed. For example, if a policy costs $1000 and is cancelled after 6 months, the pro rata refund would be $500 (6/12 * $1000).

Short rate cancellation is calculated in a similar way, but a penalty is deducted from the refund amount. The penalty is typically based on the insurance company's administrative costs and the risk that they will not be able to collect any premiums if the insured makes a claim before the policy expires.

The amount of the penalty will vary depending on the insurance company and the type of policy. However, it is typically around 20% of the unearned premium.

Here is a table summarizing the key differences between pro rata and short rate cancellations

• https://g.co/bard/share/ea655e51ec82

• NJ Guaranty Fund

What is the difference between the 2?

Admitted

• • Admitted policies are typically on direct bill and written directly with the carrier. Source will be downloaded. 

  • The benefit of going admitted, usually its Direct Bill VS Agency Bill (direct bill) and it typically downloads. This is also good for the insured as the admitted carriers are bound by the state laws. For example, in NJ we have the Guarantee fund, if an admitted carrier goes bankrupt the state will provide $300,000 in coverage.

  • If Admitted but does not download, move to a downloaded company. 

Non-Admitted

• • Non-Admitted policies are typically on Agency Bill written through Wholesalers. The actual insurance companies that write the policy are in the Surplus Lines Market (E&S). Surplus Lines writes policies that admitted carriers will not write but they do not abide by the state's insurance laws for admitted carriers. This is not the best for the insured but given the marketplace this may be the best bet (a roofing contractor or homeowner with multiple claims)

How do I know if a policy is Admitted or Non Admitted?

• • Non-admitted policies usually have a surplus line tax on them. You may see the finance company info in the linked applicant Finance Company Update Source is Manual.

    • How do I know to go Admitted or Non-Admitted?

      • ALWAYS try and go admitted if we can, some admitted carriers may accept RED FLAGS that other admitted ones don't

      • Check the RED FLAGS list, does the account have any knockouts? 

      • If it has a knockout it will most likely go non admitted

      • If it does not have a knockout it may fit in the admitted market

Surplus Lines Forms/Certificate of Effort

• The certificate of effort document is important because it provides proof that the agent has made a diligent effort to find coverage in the admitted market, which is required by law in some states. 

  • • Think of a vacant or builders risk policy. It’s common to place that policy in a non-admitted market because admitted carriers would not look to write this type of policy. 

  • NJ VIDEO  also ON NJ AGENT SIGN THE LAST PAGE TOO!

  • NY Link  complete it online NY VIDEO Use the license number for NY agent. Check Sircon for NY agent. Download and attach the signature NY Total Cost Form and Excess Line Placement

NY ID Cards

You have to log into the carrier site through Internet explorer. 

Download the ID Cards 

Once it opens it will ask for a key. 

Enter  IIES private key for license BR-1337471 is: 02445F7CBC45CF92D3D15732B0A5CD7D0D8C   

The IVR access code for license number BR-1337471 is 32744134.

NY PIN- 53821 To get access and get the ID cards

PLEASE DO NOT PRESENT AN INSURANCE ID CARD TO DMV USING YOUR KEY FOR ONE HOUR.  THIS WILL ALLOW DMV TIME TO UPDATE THEIR RECORDS.

Insurance Change Authorization

Paid in Full Receipts (Use Adobe to edit doc)

Slang and abbreviations

Generic

COI - Certificate of Insurance

FU - Follow up

F&B - features & benefits

MVR - motor vehicle record

LOB - Lines of Business

LM - left message

LRs - loss runs

LPR - Loss Policy Release (Cancellation form)

LS - lost soul (not a Presently interested customer)

VM - Voice Mail

SONL - Statement of no loss

NOC - Notice of cancelation

(Commercial) Miscellaneous

• Liberty Mutual - Digital Accelerated: The Essential Guide for Independent Agents

Automobile Lease Agreement

• TRA

• Garage

• Submission Center -  Use this for running a rate for a commercial lines policy

Download vs Manual
Ezlynx Article: Policies - Locate Downloaded Policies

What is the difference between the 2?

• Manual

  • Manual policies are ones where the carriers do not download into the management system. We need to manually enter all transactions (renewals, changes, audits, new policies etc.) Most are non-admitted 

• Download

  • Download policies are ones where the carrier connects to our management system and downloads policy data into our management system. This typically happens overnight (mainly in the morning) They may send data faster. 

  • Most are admitted 

• How do I know if a policy is Manual or Download?

• • Click the policy and view the summary and look in the right hand side for the source.

• How do I know what carriers download?

• Good question! Most Admitted carriers download with nearly all lines of business. Most notably Guard will only download homeowners and workers compensation policies. Some MGAs like Tuscano and Johnson and Johnson are available now.

• Reviewing Policy History

• Change requests will show as manual until confirmed. Once confirmed the source will stay downloaded. Change Requests will also remain yellow.

Carrier vs Wholesaler

Video - Carrier VS Wholesaler

Watch this video here Have the chrome extension installed and check the directory

Carrier 

Usually Downloads  

Usually Direct Bill

MGA/Wholesaler

Mostly Manual but carriers like Tuscano (MGA Resource) and Johnson and Johnson download 

Fast Comp Digital MGA but service is handled by carrier like billing

They are not a carrier. They designate the carriers. For example, you apply for coverage and it gets designated to Travelers assigned risk

Why we try to avoid NJCRIB

• PPAP (Planned Premium Adjustment Program) charges an additional 20% on top of voluntary workers compensation policies.

• Poorer Service- Expect longer wait times and slower responses to emails

• Less payment plans/payment methods- They do not offer automatic or monthly payments 

• Policies will not download

• Inability to add other states to the policies

NJCRIB Helpful videos

• Find a Class Code

• Class Code Explainer

• Experience Rating Modification- To get an experience rating modification the premium needs to surpass $6000 in a 3 year period

• Policy Coverage Search Find owner info Policy Coverage Search on NJCribs' Website

• ERM-14 (Additional Youtube Video)

• Change or Challenge a Class Code

• Class Inquiry

The responsibilities of CRIB include the following:

This means they create the rates that the insurance companies. For example, a plumber with class code 5183 has a rate of $5.86 per $100 in payroll. NJCRIB will review the performance of all plumbers in NJ with workers compensation and adjust the rates (higher or lower) on the 1st of the year every year.  

Administration of the Classification System

They will make and manage the classifications for all businesses. Sometimes we can request NJCRIB put a business under a different class code or NJCRIB may do an inspection to adjust the class code that's better suited for the business.

The responsibilities of CRIB include the following:

This means they create the rates that the insurance companies. For example, a plumber with class code 5183 has a rate of $5.86 per $100 in payroll. NJCRIB will review the performance of all plumbers in NJ with workers compensation and adjust the rates (higher or lower) on the 1st of the year every year.

Administration of the Classification System

They will make and manage the classifications for all businesses. Sometimes we can request NJCRIB put a business under a different class code or NJCRIB may do an inspection to adjust the class code that's better suited for the business.

Review and maintenance of individual employer insurance coverage records

They will review businesses and assign them an experience rating modification. Every business starts at 1.0 and depending on the premium size and claims experience the modification gets adjusted by NJCRIB. Anything above a 1.0 is more hazardous and generates a debit against the policy. Anything below 1.0 is less hazardous and generates a credit to the policy.

Administration of the Residual Market 

This is perhaps where we will see the most activity with NJCRIB. For workers compensation there is the voluntary market and then the residual market. 

The voluntary market is made of up carriers who will write workers compensation policies "voluntarily". Typically they will write less hazardous class codes that they can make money on (less claims payout) but this appetite will change from carrier to carrier.

The residual market is basically the market of last resort. Let's say you are a roofer or you are a painter with a lot of claims and no carrier in the voluntary market will write your policy. NJCRIB has a pool of carriers that will write these policies. When you submit the application to be bound they will designate a carrier for you. Typically this would be Travelers, CNA, Hartford (serviced by Travelers) Guard, Liberty Mutual. This is not the same as our admitted carriers. The coverage and pricing is pretty much the same since they abide by the same class codes. Where you will notice a difference is the following

Additional Insured vs Mortgagee vs Loss Payee vs Lienholder vs Leasing Company

Term Definition Rights 

• https://g.co/bard/share/1373df127acb

Additional Insured

An entity that is added to an insurance policy to receive the same coverage as the named insured. Receives the same liability coverage as the named insured, but does not receive any property damage coverage.

Mortgagee

A lender who has made a loan secured by real property. Receives loss payment, even if the borrower invalidates the insurance contract. They are also provided with 30 days' notice of cancellation for any reason, except for 10 days' notice of cancellation for non-payment of premium.

Loss Payee

An entity that is entitled to receive the insurance proceeds from a covered loss. Receives property damage coverage, but does not receive any liability coverage.

Lienholder

A creditor who has a security interest in property. May be named as an additional insured or loss payee, depending on the terms of the loan agreement.

Leasing Company

A company that leases property to another party. May be named as an additional insured or loss payee, depending on the terms of the lease agreement.

Here is a more detailed explanation of each term:

• Additional Insured: 

An additional insured is an entity that is added to an insurance policy to receive the same coverage as the named insured. This means that the additional insured will be entitled to the same liability and property damage coverage as the named insured.

• Mortgagee:

 A mortgagee is a lender who has made a loan secured by real property. In the event of a loss, the mortgagee is entitled to receive the insurance proceeds, even if the borrower invalidates the insurance contract. This is because the mortgagee has a security interest in the property, and the insurance proceeds are used to pay off the loan.

• Loss Payee:

  A loss payee is an entity that is entitled to receive the insurance proceeds from a covered loss. This means that the loss payee will be paid directly by the insurance company if there is a loss covered by the policy.

• Lienholder: 

A lienholder is a creditor who has a security interest in property. This means that the lienholder has a right to sell the property to satisfy the debt if the borrower defaults on the loan. The lienholder may be named as an additional insured or loss payee on the insurance policy for the property, depending on the terms of the loan agreement.

• Leasing Company: 

A leasing company is a company that leases property to another party. The leasing company may be named as an additional insured or loss payee on the insurance policy for the property, depending on the terms of the lease agreement.

Google Earth

www.earth.google.com

Measure Distance between units or distance to coast, Calculate Square footage

Google Earth Use Cases

Keep in mind that this is a tool to estimate square footage if there are multiple stories confirm with insured

Additional Insured

An additional insured is a person or organization that is added to an insurance policy to provide coverage for a specific event or activity. This means that if the additional insured is sued for damages related to the event or activity, they will be covered by the insurance policy.

As a contractor, you may be required to add the property owner or general contractor as an additional insured to your insurance policy. This is to protect them in case of any accidents or damages that may occur during the construction project.

It is important to understand what additional insured means when you are working on a construction project, so you can make sure that you have the right insurance coverage.

Use Nationwide for RCE

OR Travelers personal lines 

🔖DBAS 

Below is an example of this, sometimes customers will try to set up multiple operations by adding DBAs to the existing entities. We don’t really want this. Always check the exposure with the carrier.

Custom Station Raleigh LLC DBA Smoke Station and Custom Station Raleigh LLC DBA Custom Station are the same LLCs we need to have separate LLCs for each business as there is a duplication in coverage because both policies will cover Custom Station Raleigh LLC

• A DBA is not set up as a separate legal entity from the business owner and remains the same legal entity as the business itself. Forming an LLC creates a separate legal entity, independent of the business owners, partners, or members. 

• Liability: As the name suggests, LLCs offer liability protection to business owners or partners. They cannot be held responsible for the business’s debts and cannot be sued individually for the errors of their business. With a DBA, the business owners or partners are liable for the business's debts and legal operations, and their personal assets may be seized if the business defaults.

COMMERCIAL TIPS

Subcontractor Procedure

Email Template

Hello, 

See the attached mandatory sub procedure. Below is the procedure listed out. I have also attached a sample certificate to reference. This way you can visually see what each item means on a certificate. 

These steps are mandatory by your carrier when hiring subcontractors. If you do not follow these guidelines the carrier can penalize you. 

Certificate Sub Requirements

General Liability

• Carrying equal to or greater limit to your own

• Additional insured verbiage/Description of operation box:

• Listing your business as additional insured with ongoing and completed operations endorsement in your favor or blanket endorsement

• Project name and address -specific operations

• Waiver of subrogation 

• Primary noncontributory

Workers Compensation Requirements

• $500,000/500,000/5

• 00,000 limits

• Owners Included

• How to complete pp1b form pp1b form

Commercial Auto Policy  (if they have it)

• listing your company as additional insured

• hired and non owned endorsement 

Items needed to be signed

• Contract or Work Orders

• Hold Harmless agreement in your favor (sample attached )- Make sure it doesn't show sample on the form they sign

• Sub agreement/contract (sample attached)- Make sure it doesn't show sample on the form they sign

Inspections they don't want to do interior inspections?

Difference between roofs 

• Replacement Cost Estimators  

Travelers RCE - Sign into Travelers agents portal & go to Home Replacement Cost Estimator under supporting tools.

Enter the property  address and requested details to get the valuation.

Trailer interchange?