1. Presented by: Margaret Stahl Consultant
Insurance 101
Presented by:
Margaret Stahl
Consultant

2. Independent Agency System
Represent multiple companies
Direct Writer
May only represent one company
What we do
Represent multiple companies
Allows the agency to move clients to another company for better coverage or pricing, if needed
Versus Direct Writers
May only represent one company
How We Get paid
Agency Commission
Agency Bill vs Direct Bill
Direct Bill download
Direct Bill statements
Account Current
Producer Commission
Cash Accounting vs Accrual
Gets paid when the agency receives their commission
Gets paid upfront for even unearned premium commission and may be required to repay the agency if the policy cancels or an endorsement produces return premium

3. How We Get paid Carriers Customers Insurance Agency Agency Commission
Direct Bill
versus
Agency Bill
Carriers
Customers
Insurance Agency
How We Get paid
Agency Commission
Agency Bill vs Direct Bill
Direct Bill download
Direct Bill statements
Account Current
Producer Commission
Cash Accounting vs Accrual
Gets paid when the agency receives their commission
Gets paid upfront for even unearned premium commission and may be required to repay the agency if the policy cancels or an endorsement produces return premium
Producer Commission
Cash vs. Accrual

4. Agency Commission Agency Bill vs Direct Bill Direct Bill statements
Direct Bill download
Account Current

5. Producer Commissions Accrual Accounting Cash Accounting
Cash Accounting vs Accrual
Cash Accounting
Gets paid when the agency receives its premium commission.
Accrual Accounting
Gets paid up front – including unearned premium commission and may be required to repay the agency if the policy cancels or an endorsement produces return premium.

6. Who is Whom? Principal Sales Producers/Brokers Customer Service
Account Managers /CSRs
Support
Assistants/Processors
Insurance Companies
Underwriters

7. Principal
Principal
Sales
Producers/Brokers
Customer Service
Account Managers /CSRs
Support
Assistants/Processors
Usually the agency owner, but in the event of a corporate or financial institution ownership there could be multiple and are the decision maker(s) in the agency.

8. Producers / Brokers
Producers are commissioned-based sales people in the agency.
Can be paid with a base salary plus commissions.
Can be paid solely based on earned commissions/draw.
Brokers are other agency owners or business owners in which the agency will place coverage for on their behalf.
Paid in the same manner as producers or similar to producers.
Must maintain a license to receive commission.

9. Account Managers/CSRs
Customer Service Team.
Have many different titles depending on the agency.
Account Managers are responsible for managing the account. Making certain the client has the correct coverage.
Will have the relationship with the client in connection with the Producer/Broker.

10. Underwriters Agency contact at the Insurance Company.
Assist in helping the agency place the business with their company.
Provide policy rating.
Usually work for the insurance companies the agencies represent.
If a Risk agency – they may be employees of the agency.

11. Assistants/Processors
Work in connection with the Account Managers / CSR’s.
Usually responsible for the day to day processing:
Data Entry
Providing forms requested by the client

12. Insurance Companies Carriers Customers Customers Insurance Agency
Agency Commission
Direct Bill
versus
Agency Bill
Agency Bill
Carriers
Customers
Customers
Insurance Agency
How We Get paid
Agency Commission
Agency Bill vs Direct Bill
Direct Bill download
Direct Bill statements
Account Current
Producer Commission
Cash Accounting vs Accrual
Gets paid when the agency receives their commission
Gets paid upfront for even unearned premium commission and may be required to repay the agency if the policy cancels or an endorsement produces return premium
Producer Commission
Cash vs. Accrual

13. Direct Bill Carriers Customers
The company is responsible for collecting premiums from the client and will forward commission amounts to the agency (usually monthly.)
Some agencies do not reconcile commission amounts.
Some agencies receive this information via paper statement and will manually enter in a commission statement to offset the commission payment they received.
Some agencies will receive commission statements directly into their management system via commission download. Once the commission payment is received from the company the statement will be posted.
Direct Bill
Carriers
Customers

14. Agency Bill
The agency is responsible for collecting all premiums. Then provides the premium less commission payment to the company via Account Current. Usually monthly, but some E&S Carriers will require it within 10 days when not required to bind coverage.
Agency Bill
Customers
Insurance Agency

15. Insurance Company versus Brokerage Company
Provide direct appointments to the agency.
Some provide ‘niche’ programs that may also only be accessed through a Brokerage Company.
Brokerage Company
Provide access to companies that you may not have access to.
Provide access to Non-Admitted Companies – also known as Excess and Surplus Markets

16. Parent Company and Writing Company
Parent Company is the nationally known name. The name they trade under.
Writing Company is the pricing structure they use under the Parent Company name. A particular writing company may only have filings in certain states.
i.e. Travelers Insurance Company – Parent Company as 26 Writing Companies they provide coverage through
Travelers Lloyd Insurance Company – Writing
Travelers Casualty & Surety - Writing

17. Policy Transactions: New Business
Renewal
Endorsement
Audit
Cancellation
Reinstatement
Premium Transaction
New Risk to the Agency or Company
Usually garners more commission for the Producer writing the coverage

18. Policy Transactions: Renewal
New Business
Endorsement
Audit
Cancellation
Reinstatement
Premium Transaction
The policy has renewed
Sometimes pays the Producer at a reduced commission rate.
Policies that involve a lot of legwork at renewal may pay the same as New Business accounts.
Sometimes instead of usually?

19. Policy Transactions: Endorsement
New Business
Renewal
Audit
Cancellation
Reinstatement
Premium Transaction
A change made to the policy
Add a vehicle
Change a mortgagee

20. Policy Transactions: Audit
New Business
Renewal
Endorsement
Cancellation
Reinstatement
Premium Transaction
Some policies are written on an ‘estimated’ premium basis. The premiums on these policies will be adjusted with an audit of the Premium Rating Base. If the values have been understated or overstated they will be an adjustment to the premium.
Premium basis can be made on multiple records.
Sales
Payroll
Admission
Area

21. Policy Transactions: Cancellation
New Business
Renewal
Endorsement
Audit
Reinstatement
Premium Transaction
The termination of a policy.
Can be by request of the client at any time.
Can be made by the request of the company under only certain circumstances.
Non-Payment of Premium
Increase in Risk or Hazard
Fraudulent Policy

22. Policy Transactions: Reinstatement
New Business
Renewal
Endorsement
Audit
Cancellation
Premium Transaction
The reversal of a Cancellation.
Can be with a lapse in coverage or with no lapse in coverage.

23. Policy Transactions: Premium Transactions
New Business
Renewal
Endorsement
Audit
Cancellation
Reinstatement
Transactions are any of these policy transactions that increase or reduce the premium.
Deletion of a vehicle would produce a return premium.
Addition of a vehicle would produce an additional premium.

24. What is Insurance? Types of Policies
Personal insurance
Private Passenger Auto
Homeowners
Motorcycle
Umbrella
Business Insurance
Business Auto
General Liability
Commercial Fire
Package
Workers Compensation
Life & Health
Personal Life
Buy Back (Corporate) Life
Individual / Family Health Insurance
Group Health Insurance
Dental
Vision

25. Co-Insurance
A percentage amount of insurance that the individual / business agrees to carry in order to purchase insurance.
Sometimes will provide a premium reduction by agreeing to purchase enough insurance to repair / replace the damaged or destroyed items.
If there is a loss and the individual / business has not maintained the agreed coinsurance amount – they may receive payment at a reduced amount.

26. Replacement Cost vs Actual Cash Value
Some policies will reduce the amount of the Replacement Cost payment by the percentage of the amount of insurance they were underinsured by.
Did / Should
The amount of insurance that is needed to repair replace the damaged item. Even if the individual has purchased Replacement Cost coverage, they may be paid the Actual Cash Value of the item if they have not maintained adequate amounts of coverage.
Actual Cost
The amount of insurance that is needed to repair / replace the damaged item minus the wear and tear or depreciation of the item.
All claims will be paid less the previously agreed upon policy deductible – after agreed upon payment amount.

27. Insurance vs Bond
Insurance
The insurance company assumes the risk in exchange for a premium.
Premium is charged based on the value of the risk and the insurability of the risk.
Bond
The insurance company will pay a claim made against you on your behalf and arrange for reimbursement of payment from you.
Premium is based on financial records as well as risk factors.

28. Subrogation All policies include a subrogation clause.
In the event an insurance company pays a claim caused by a third party, they reserve the right to seek reimbursement from the third party of any payments made.
Some companies will allow for this clause to be deleted for an additional premium (commercial policies only.)

29. Who needs Insurance? To provide protection for your personal items
Personal / Individual
To provide protection for your personal items
Any personal item used in the course of business will be excluded by the personal policy
Corporate
Items owned by or used by a business
Partners
Individuals who have formed a partnership in the formation of a business not Incorporated and own joint property and share risk

30. Why do I need Insurance?
So as not assume all of the risk in the event of a loss.
To protect a loan taken out in purchased items.
Required by an entity for which you may be doing work.
Peace of mind.

31. Coverage extensions
Additional coverages built into the standard policy to provide for normal expenses incurred after a loss.
Additional Living Expense on a homeowners.
Newly acquired property on an auto or property policy.

32. Endorsements
Enhancements to the policy outside of the coverage on a standard policy of its type
Towing on an auto policy
Loss of Income on a commercial property policy

33. Exclusions
Specific limitations or omission of coverage that may or may not already be specified in a policy.
Undisclosed driver
Wear and tear and deterioration
Nuclear loss or acts of war

34. Who is an Insured? Named on the policy Individual Corporation
First Party
Named on the policy
Individual
Coverage provided due to the type of entity named on the policy
Corporation
Officers, Directors, Stockholders
Partnership
Members, Partners, Spouses
LLC
Members, Managers
Third Party
Claimant
Lienholder / Loss Payee
Mortgagee

35. Underwriting
All insurance risks must meet certain criteria and are subject to guidelines in determining eligibility and premium.
In Agency
Some agencies are afforded limited underwriting authority and will be specified in writing, usually in the contract.
If a Risk Management Agency, the authority will be broader and premiums subject to agency determination.
By Company
All risk must be reviewed by a company underwriter to determine eligibility and pricing prior to being offered to a client.

36. Claims - How they are handled
By Agency
Some agencies have draft authority for small, non-liability, claims.
Agencies will take the claim information from the client and report to the company on the insured’s behalf.
By Company
The company will take claim information from the agency or insured / third party.
Will be referred to company claims adjuster for investigation and determination of payment.
Will be referred to an outside adjusting company for investigation and determination of payment on the company’s behalf.
By Insured
Some companies encourage the insured report the claim direct to them to expedite the process.

37. What are loss runs?
Commercial Lines report generated by the insurance provider with a listing of all claims filed and their status including payment amounts.
Free report provided by the carriers.

38. Why we run MVRs
Reports generated by companies via the state motor vehicle departments of each state with information of all citations and accidents.
Cost of report depends on the each state and will be charged per driver.

39. CLUE Reports
Personal Lines reporting entity providing a listing of all claims filed and their status including payments.
Minimal fee charged by the entity providing the report.

40. Credit Report
Used to determine the potential profitability of a risk.

41. Proof of Insurance ID Cards Certificates
Individuals
Business
Certificates
Entity you may be doing work for
Binders / Evidence of Property Insurance
Mortgagee
Lienholder / Loss Payee

42. Who else is in our World? Vertafore AMS360 NetVU
Users Group(s) where Users help Users
Membership encouraged
Big I
State Independent Insurance Agency Association
Membership Required
State Board of Insurance

43. For more information about other upcoming classes,
Thank you!
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