Return premiums generally result from cancellation endorsements. In certain cases, insured’s premium payments exceed the policy “earned premium” and insured is due a “return premium”. Return premiums may also result from premium audits.
NOBL Return Premium & Cancellation Endorsements
Cancellation endorsements are endorsements RP (reduction of premium). Endorsements RP reduce the policy initial premium following an insured-requested coverage change.
In policies with installment payments, endorsements RP either change the amount of remaining installments or the number of them.
Return premium due to cancellation endorsements require (1) “return” (unearned) net premium reimbursements by the insurance company and (2) “return” (unearned) commission reimbursements by the agency from its business operating account.
The agency “custodian” in charge of the trust account management, will then determine the return premium (gross amount) and refund it to the insured or premium finance company (if the policy was premium financed).
This Add-On product helps agencies process endorsements RP/Cancellation endorsements, monitor reimbursements to the trust account and issue premium refund check vouchers for refunds to insureds or finance companies.
A. Why is NOBL Return Premium Product Needed?
Return premiums are owned by others, insureds or premium finance companies, and therefore they must be “returned” to owners ASAP. CA Insurance Code requires agencies to send return premiums to their owners within 25 days from the date of receipt of the “unearned” net premium from insurance companies.
Cancellation endorsement reconciliation is a difficult process few agencies know how to do it. The process is made even more difficult by the fact that in current practice, insurance return premiums are wrongly treated as “returned merchandise”.
B. What’s Included
Return premium automatic reconciliation
- Control over "return" net premium reimbursements by insurance companies
- Control over "unearned" commission reimbursements by the agency
- Issue of premium refund vouchers so the agency can write premium refund checks
C. Management Reports
- Return Premium Status Report
Return Net Premium Status Report
- Return Commission Status Report
- Premium refund Vouchers
- Other reports are available
D. How It Works
- Agencies us NOBL to create endorsement RP data records
- In the case of endorsements RP, NOBL automatically updates the policy initial installment schedule
- In the case of cancellation endorsements, NOBL uses reports to monitor the reimbursement of “unearned” net premiums by insurance companies and “unearned” commissions from the agency operating account
- NOBL automatically creates premium refunds vouchers indicating what amount the agency should refund and to whom
- Agencies may also use NOBL to refund return premiums by credit rather than in cash/by check
- Agencies may use NOBL to offset a policy return premium to another insured’s policy and then use it to pay the down payment on a new policy
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