NOBL Commission Management
Missing Link of Agency Automation
The main reason an insurance agency is in business is to generate income and eventually realize a profit. Unlike other sales and service enterprises, P&C insurance agencies are unable to see their income from sales easily available in their business bank accounts.
Insurance agencies do not “earn” their sales commission upon the closing of sale. The sales commission is embedded in the premium payments received either from insureds of premium finance companies. Payment checks must be first deposited and cleared by the banks and be determined for each individual payment. Given the hundreds of payments an agency receives daily, the calculation of “earned” commission is a very tedious and time consuming process.
None of the current agency management systems help agencies in managing sales commissions. None was designed to do it. Some agencies maintain separate spreadsheets with questionable results. Most transfer commission funds out of the trust account based on needs rather than what they earn.
Agency commission mismanagement is considered a primary source of trust financial insolvency. If an agency transfers more that it earns, it violates the Insurance Code; if it transfers less, chances are it may under-report its taxable income and expose itself to an IRS audit.
NOBL product was developed to help agencies fully automated their commission income.
Here is what NOBL can do for your agency, whether it is small or large, uses or not an agency
management system (such as AMS or Applied Systems):
- Full control over premium receivables: receivables aging concept is eliminated;
- Full control over the agency commission income; "earned commission" will be determined by payment and policy so it can be transferred to the business operating account without fear of violating the Insurance Code or understanding commission taxable income;
- Full control over return premium "unearned commission";
- Full control over cancellation endorsements and related premium reimbursements of return net premium from insurance companies as well as “unearned commission” from the agency’s operating account. A commission reserve fund may be maintained in the trust account to facilitate the “unearned commission” reimbursement;
- Full control over Direct-Bill commissions due from insurance companies or managing general agencies. Reliable reconciliation reporting of commission payments with agency data records;
- Reliable reporting of agency transacted commission as well as producer transacted commission;
- Reliable reporting of “earned commission” policy by policy;
- Reliable reporting of “earned commission” so it can be legally transferred to the agency business operating account;
- Reliable reporting of agency producer commission to help agencies pay its producers.
Paulmar Software is a pioneer in agency commission income automation. Paulmar principals have written and published numerous articles on this topic.
NOBL software includes 8 different products. (1) To manage only accounts receivable agency owners will
require have to outsource only the first product. The complete list includes:
- Receivables (transacted premiums and endorsements)
- Agency & Producer Commission Management
- Insurance Company/General Agency Remittance
- Return Premiums/Cancellations
- Personal (non-fiduciary) Funds
- Direct Bill Commission
- Agency Production Reporting
- Trust Financial Solvency Management
The service fee is a usage fee set-up per policy record/policy term. Paulmar is programmed to upload
production reports so that a different software application can generate invoices and email them to
Very important! Since trust account management, trust accounting and financial solvency reporting are
above and beyond the insurance service, agencies can legally charge a broker/technology expense.
Information on software usage fees will be provided at the end of NOBL demo.
The NOBL demo will focus on two topics: (1) NOBL scope and place in the P&C insurance marketplace and (2) NOBL added value to the P&C agency business operation. NOBL will enhance the agency operation by (a) automating the trust account daily operations and (b) monitoring, controlling and reporting the trust financial solvency as required by Insurance Code.
Briefly presented will be NOBL management functions: Receivables, Agency Commission, Co Remittance, Return Premiums, Cancellation Endorsements and Premium Refunds, DB Commission, Production Reporting, Financial Solvency reporting.
Trust account management will be functionally separated from the agency sales and service management. Due to the complexity of premium and return premium financial transactions, premium trust funds will be maintained in a different ledger of accounts separate from the agency’s business funds.
NOBL will streamline the agency business operation and increase its competitive edge in the marketplace.
After signing the SaaS Agreement, Paulmar will train the agency personnel to prepare data entry source documents and run NOBL. Agency will be able to start working with NOBL immediately after NOBL is set up. The NOBL setup consists of creating data records of the agency’s CRSs and producers, insurance companies, general managing agencies, premium finance companies, setting up printers, etc. The training will focus on preparing source documents, working with data entry windows and running trust management functions, such as: commission income, company remittance, cancellation endorsements and premium refunds, etc.
NOBL will be implemented with new policies and renewals. There will be no disruption to the agency’s ongoing operation. Two agency personnel will be certified to operate NOBL. Designated management personnel will be trained to run production and financial solvency reports.
A two months free-of-charge trial period will allow an agency to decide whether to continue working with NOBL or stop it. No questions will be asked.