Commercial Billing & Audit Questions

[GeorgiaAgent]

I have worked with a captive agency for several years and will soon be venturing into the market as an independent agent. In addition to personal lines, I have a few contactors who would like for me to put together proposals for their commerical insurance and I have the following questions.

1. If I use a company such as Burns & Wilcox or Tapco, what are my options for billing the client? (direct company bill, premium finance, in office??) Any recommendations?

2. If a client is later audited, what will my role (if any) in the audit process?

If anyone has any additional advice or anything else I should be aware of please let me know, I am eager to learn. Thanks in advance for the responses!!

 

[u2cruising]

Both of those company's are agency bill.
The insured can finance the premium or pay the full premium or you can find another finance company to finance the policy.
The down payment is 25% of the base premium plus taxes and fees.
The insured gets to choose 2 to 9 monthly installments.
The insured usually gets audited,it depends on the policy,you can always ask the underwriter.
For contractors they get rated on their class code and on their gross sales or their payroll.
If the insured does get an audit it should be on their class code and on gross sales or pay roll.
You do have to find out if the insured subcontracts any of their work.
That will effect the premium of the policy and the audit.

 

[GeorgiaAgent]

I really appreciate the response!

Are there any MGA / Wholesalers who can provide company billing?

Any recommendation of premium finance companies?

 

[C Bayer]

I am an underwriter at a MGA and the majority of our accounts are agency bill, however, we do have some carriers who will offer direct bill. Most of the coverage we write is E&S markets which is why it is normally agency billed. MGA's typically have financing options they can provide with quotes but I know plenty of agents who have their own financing company.

In regards to audits you may be asked to assist if the carrier needs contact information for the audit, is having difficulty getting an audit set up ,and if there is an audit balance you will have to collect. One thing I would recommend is discussing with the MGA how to handle audit balances that you are unable to collect. For example, if an agent is unable to collect the audit balance we request notification within 60 days so we can return the audit to the carrier for direct collection. If we do not hear back within that time frame it is billed to the agent.

 

[cador]

Our MGA's want their audit $ quick (it's already late as they see it as it's for the previous term) and normally give us like 15 days to collect it or turn it back to them as uncollectable. We either send the GA the $ with-in that time frame or we become responsible if we do not turn it back to them as uncollectable. I know we've lost some significant commissions having to do that over the years as some insured's aren't prepared/able to pay that quick and we've turned a few back in.

 

[EugeneM]

on workers comp for contractors its monthly payroll reporting majority of the time for cash flow reason. Also it makes the final audit at the end of the year easier (most of the time)

GL Auto is s different. u2cruising has hit the nail on the head. Most wholesalers will have a premium finance relationship or suggestion. We referr our wholesale clients to our sister company for premium financing and visa versa.

If the carrier cant get a hold of the insured they will come to you for assistance. Encourage the insured to be transparent and do your due diligence to cover your a$$ (shameless bump)

 

[indienoise]

Large E&s brokers are fine for some things, but talk to some more local/regional wholesalers who can help you with admitted, direct billed products and more responsive underwriters.
I see you're in Georgia. Contact southern specialty underwriters.

 

[Sam Adams]

indienoise,

Thanks for the info on Southern Speciality, am getting appointed with them. They said the producer can call in and get commerical quotes directly with underwriters. I hope they can help us as our cluster does not do a very good job on getting commerical quotes back to us in a timely manner. We dont have any direct appoinments as we are starting from scratch but want to build up commercial.