Financial

Expertise

Insurance Agency

The insurance industry has specialized accounting for both underwriters and agencies. For agencies, the accounting depends on several factors, depending on the two major factors:

Agency Type

Method of Billing/ Payment

Agency Type

01

Wholesale

Clients are
retail agencies.

02

Retail

Clients are
insured parties.

03

MGA

The agency has the
authority to bind
policies on behalf
of an underwriter

Methods of Payment/Billing

AGENCY BILL

Upon Receipt of Insurance Binder

The agency bills the insured for the premium, taxes, and fees, and remits the premium taxes and fees less the commission to the carrier.

AGENCY BILL

Upon Insured’s
Premium
Payment

Payment of Premium Bill

DIRECT BILL

Upon Receipt
of Insurance
Binder

The underwriter bills the insured directly, and the agency has a receivable for the commission from the carrier.

Collection of Premium Bill

DIRECT BILL

Upon Agency
Receipt of
Commission

Typically, carriers will provide formatted statements of payments made to the agency on direct bills. This can be uploaded for the automatic creation of cash receipts from the Carrier, along with the automatic application of that cash receipts to the agency billing of the carrier. This provides an inherent reconciliation of direct pay policy commission receipts with what is due under the policy

Ayodia Insurance Work

Implementation and customization of Accounting Seed to provide a comprehensive financial automation solution for numerous agencies, including.

Automatic accounting entries for policies that are either agency bill or direct bill, with all billings, payables, revenue, and commission expense billed in the correct amounts to the correct parties

Reversal of Accounting button on Policy so that if there is an error on the policy input, the accounting can be reversed and then recreated after a policy correction.
Automatic calculation of refunds due to insured parties, or retail brokers (in the case of a wholesale brokerage), for policy terminations.
Automatic creation of billing and payable records for policy cancellations and for endorsements.
Accruals for producer commissions, which become payable to the producer upon collection of the agency commission.
Comprehensive reporting on policies, including renewal rates.
Automatic creation of cash receipts/disbursements from direct bill carrier uploads, which match the cash receipt to the carrier billing, and apply it.
Creation of financial automation for wholesale and MGA agencies.
Separate, appropriate accounting for agency and carrier fees.
Provision for either agency pays taxes or carriers pays taxes.

TO DISCUSS

YOUR SPECIFIC NEEDS

 

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