Filed Under:Agent Broker, Agency Management

Smart Agency Processes

Wrapping up a series, an examination of agency financial matters

Continuing our discussion of how to apply a disciplined process to handling financial matters, (see sidebar, "Disciplined processes: Which area needs the most work in your agency") we now turn from credit policy to the other four areas that need to be addressed:

  1. Underwriters’ payable reconciliation
  2. Payroll
  3. Expense reimbursement
  4. Legal collection

Related: Read Phillip Lieberman's previous column on disciplined processes "A disciplined approach".

One of the issues with account current carriers is the extent to which individual items can be "crossed off" the rendered account when the check is issued. Quite frequently, this happens when a policy has been cancelled between the time the document is generated and the date the check needs to be issued, or when a large return premium endorsement is known to be coming through. But because the whole idea of an account current is to write one check for a month’s worth of business, carriers look negatively upon too many (or any) such deletions. The agency should be willing to minimize such amendments as the price to be paid for simplification.

One last word: There should be a strict policy that accounting should not advance unpaid net premiums to item-based carriers without approval from the CFO or agency principals. The clock is always ticking, so it is important that reconciliations be dealt with sooner rather than later.

Legal collection

The trick to effective control is the choice of threshold. You obviously would not turn over to a collection attorney an unpaid item of $100; but where your agency would draw the line is up to you. Some would select $250; some $500; others wouldn’t bother unless it was more than $1,000. If the account is located outside your state of domicile, your threshold might be higher than it otherwise might be.

Featured Video

Most Recent Videos

Video Library ››

Top Story

What grade does your state get for its insurance regulations?

Eight states received an “A” grade, and one state received an “F.” Insurance is regulated almost entirely by the state level, and here's a report card on how the states are doing.

Top Story

3 tips for becoming a lead-generation master

A lead-generation master takes full advantage of all the possibilities for attracting prospects through their website, not just through their contact forms.

More Resources


eNewsletter Sign Up

Agent & Broker Insider eNewsletter

Proven success tips and essential information to help agents and brokers grow their practice – FREE. Sign Up Now!

Mobile Phone

Advertisement. Closing in 15 seconds.