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Premium Management Outsourcing
The premium management outsourcing concept is new in the P&C insurance industry. It has never been attempted before because premium trust funds are currently reported on the agency Balance Sheet.
Insurance Trust Accounting makes it possible to place premium funds in a separate ledger and report them on a separate Balance Sheet. Agency premium and commission management can be now outsourced to Paulmar, your outsourcing partner. The outsourcing of the premium and commission management is also known as “trust account management” or “trust accounting and financial management”. The outsourcing benefits to P&C insurance agencies can be significant:
- Agencies will be able to focus exclusively on sales and service (core business) while premiums and return premiums are professionally manage by a qualified third party;
- Agency workload is reduced:
- CSRs … 25 % or more
- Bookkeepers … 70% or more
- Producers … 10% or more
- Managers … 10% or more
- Workload reduction can be used to either (a) reduce operating cost or (b) grow business (increase sales) without additional payroll;
- Complete and accurate data and accounting records;
- Full compliance with Insurance Code fiduciary mandates;
Premium management service (Service) is similar to the payroll service: agencies will provide source documents; the outsourcing partner will manage premiums from the time they are transacted until they are disbursed to legal owners.
- The Service is deployed starting with new business and renewals;
- No disruption to an agency’s ongoing operation will occur;
- Software application and data are maintained on the agency premises;
- Agency personnel have unimpeded access to the application to generate production and financial reports;
- The outsourcing partner accesses the application and data over the Internet using a fully secured connection.
The service generates sufficient additional net income to cover both the service fee and a 20% or more current profit increase.
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