Page Contents Administrative Fees Billing Calculations Active Policy Table Historical Storage Salesmen's Commission Calculations Billing Corrections

Administrative Fees  

First, let us consider the application of administrative fees to the billing problem. In all cases, if there is an administrative fee (AF) attached to the policy, it will be added to the first of an insured's policies' billable-premium amount to arrive at the amount to bill to the Company. Since the administrative fee can only be charged once/insured, subsequent policies held by the insured will not incur a further billing of the administrative fee amount.

Also, there are many cases where an administrative fee is charged for a "unit." This may be a work-related unit, such as a truck where two or more partners make up the unit; or it may be a family unit where the man, wife, and one or more children make up the unit. In any case, the administrative fee is billed only one time per "unit." To designate that a given insured is part of a unit, you must designate one unit member as primary and the other unit members become "subordinate" for billing purposes. This is done by entering the primary insured's key (a key identifies each insured party) in the SubordinateTo field of the secondary unit members' Insured Table entries. The primary's Insured Table entry carries no extra designation.

Billing Calculations  

Billing for each ActivePolicy (AP) record is calculated based on the value in the PolicyMaster Table's (PM) BillingType code field. While other billing types may be added later, as of now the valid billing type codes are as outlined below.

Special Billing type Zero

Billing type zero is a special case unlike any of the others you will see below. This billing type recognizes that there are certain insurance policies where we do no billing, have not real knowledge of who the individual insureds are, and, therefore, cannot know exactly how much we should receive each month from the insurance company. When this is the case, billing type zero can be used just to keep up with the fact that something is due and then to maintain a record of how much we have received by month so we can question any large changes.

Other Billing Types

1. With billing type one, all who take a given kind of policy pay the same amount for their policy. The amount in the billable/payable premium columns of ActivePolicy should equal zero. As you will see, billing type one requires that the billable premium amount is always greater than the payable premium amount. Our commission is calculated as the PolicyMaster billable premium amount minus the PolicyMaster payable premium amount. The billable premium plus any administrative fee (as appropriate--see above) is billed to the company and the PolicyMaster payable premium amount goes to the insurance carrier (IC).

   Historical Data stored as current-month's value:

   1. PM Payable + to the ICxr "Premiums Paid to the Carrier" (PC 1-36)
   2. PM Payable + to the PM "Amounts Paid to the carrier by ITSBITS" (PI 1-36)
   3. PM Payable + to the AP "Amounts payable to carrier by ITSBITS" (API 1-36)
   4. AP Billable + to the Company "Billed to Compnay" (Company BC1-36)
   5. AF Fee + to the AF "Billed to PolicyHolder/Unit" (AF TB 1-36)
   6. PM Billable + to the Insured "Billed by ITSBITS" (IR 1-36)
   7. AP Billable + to Receivables Total Due and Current Amount fields
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2. With billing type two, all who take a given kind of policy pay the same amount for their policy. The amount in the billable/payable premium columns of the ActivePolicy Table should equal zero. The PolicyMaster billable premium plus any administrative fee is billed to the company and the PolicyMaster payable premium amount goes to the insurance carrier (IC). The IC will return a percentage of the PolicyMaster payable premium amount as the commission amount. The commission amount is calculated as PolicyMaster payable premium amount multiplied by the value in the PolicyMaster Commission (commission-percentage) field.
   Historical Data stored as current-months value:
   1. PM Payable + to the ICxr "Premiums Paid to the Carrier" (PC 1-36)
   2. PM Payable + to the PM "Amounts Paid to the carrier by ITSBITS" (PI 1-36)
   3. PM Payable + to the AP "Amounts payable to carrier by ITSBITS" (API 1-36)
   4. PM Commission + to the PM "Amounts Receivable from Carrier" (IC 1-36)
   5. AP Billable + to the Company "Billed to Compnay" (Company BC1-36)
   6. AF Fee + to the AF "Billed to PolicyHolder/Unit" (AF TB 1-36)
   7. PM Billable + to the Insured "Billed by ITSBITS" (IR 1-36)
   8. AP Billable + to Receivables Total Due and Current Amount fields
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3. The difference between this and a billing-type-one policy is that the premiums are not the same for anyone who takes the policy, but vary by person/policy. Therefore, the billable/payable premium amounts on the PolicyMaster Table are zero or blank. The billable/payable premium amounts on the ActivePolicy Table are used. In this case, our Commission is calculated as the ActivePolicy billable premium amount less the ActivePolicy payable premium amount for the policy. The ActivePolicy billable plus any appropriate administrative fee is billed to the company and the ActivePolicy payable premium amount goes to the insurance carrier(IC).
   1. Historical Data stored as current-months value:
   2. AP Payable + to the ICxr "Premiums Paid to the Carrier" (PC 1-36)
   3. AP Payable + to the PM "Amounts Paid to the carrier by ITSBITS" (PI 1-36)
   4. AP Payable + to the AP "Amounts payable to carrier by ITSBITS" (API 1-36)
   5. AP Billable + to the Company "Billed to Compnay" (Company BC1-36)
   6. AF Fee + to the AF "Billed to PolicyHolder/Unit" (AF TB 1-36)
   7. AP Billable + to the Insured "Billed by ITSBITS" (IR 1-36)
   8. AP Billable + to Receivables Total Due and Current Amount fields
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4. The difference between this and a billing-type-two policy is that the premiums are not the same for anyone who takes the policy, but vary by person/policy. Therefore, The billable/payable premium amounts on the PolicyMaster Table are both zero or blank. The billable/payable premium amounts on the ActivePolicy Table are used. Our commission is calculated as the ActivePolicy payable premium multiplied by a percentage stored on the PolicyMaster Table in the Commission field. The billable premium plus any appropriate administrative fee is billed to the company and the ActivePolicy payable premium amount goes to the insurance carrier (IC). The inurance carrier will return the commission amount to us.

   Historical Data stored as current-months value: AP Payable + to the ICxr "Premiums Paid to the Carrier" (PC 1-36) AP Payable + to the PM "Amounts Paid to the carrier by ITSBITS" (PI 1-36) AP Payable + to the AP "Amounts payable to carrier by ITSBITS" (API 1-36) AP Billable + to the Company "Billed to Compnay" (Company BC1-36) AF Fee + to the AF "Billed to PolicyHolder/Unit" (AF TB 1-36) AP Billable + to the Insured "Billed by ITSBITS" (IR 1-36) AP Billable + to Receivables Total Due and Current Amount fields PM Commission + to the PM "Amounts Receivable from Carrier" (IC 1-36)

   
   

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5. Under billing type five, everyone who gets a policy pays the same. A given percentage of the billable premium amount for the policy is our commission--this is really just a variation on billing type one. The PolicyMaster payable premium is calculated as the PolicyMaster billable premium amount multiplied by a percentage stored on the PolicyMaster table in the Commission field. The PolicyMaster Billable premium plus any appropriate administrative fee amount is billed to the company. The PolicyMaster Payable premium is sent to the insurance carrier. Our commission is calculated as the PolicyMaster billable premium less the payable premium. We send the payable premium to the insurance carrier and retain the commission amount.
   1. Historical Data stored as current-months value:
   2. PM Payable + to the ICxr "Premiums Paid to the Carrier" (PC 1-36)
   3. PM Payable + to the PM "Amounts Paid to the carrier by ITSBITS" (PI 1-36)
   4. PM Payable + to the AP "Amounts payable to carrier by ITSBITS" (API 1-36)
   5. AP Billable + to the Company "Billed to Compnay" (Company BC1-36)
   6. AF Fee + to the AF "Billed to PolicyHolder/Unit" (AF TB 1-36)
   7. PM Billable + to the Insured "Billed by ITSBITS" (IR 1-36)
   8. AP Billable + to Receivables Total Due and Current Amount fields
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6. With billing type six, all who take a given kind of policy pay the same amount for their policy, e.g., this is a variation of billing type two. The PolicyMaster payable premium is calculated as the PolicyMaster billable premium amount multiplied by a percentage stored on the PolicyMaster table in the Commission field. The PolicyMaster Billable premium plus any appropriate administrative fee amount is billed to the company. The PolicyMaster Payable premium is sent to the insurance carrier. Our commission is calculated as the PolicyMaster billable premium less the payable premium. The Commission will be returned to us by the insurance carrier.
   1. Historical Data stored as current-months value:
   2. PM Payable + to the ICxr "Premiums Paid to the Carrier" (PC 1-36)
   3. PM Payable + to the PM "Amounts Paid to the carrier by ITSBITS" (PI 1-36)
   4. PM Payable + to the AP "Amounts payable to carrier by ITSBITS" (API 1-36)
   5. PM Commission + to the PM "Amounts Receivable from Carrier" (IC 1-36)
   6. AP Billable + to the Company "Billed to Compnay" (Company BC1-36)
   7. AF Fee + to the AF "Billed to PolicyHolder/Unit" (AF TB 1-36)
   8. PM Billable + to the Insured "Billed by ITSBITS" (IR 1-36)
   9. AP Billable + to Receivables Total Due and Current Amount fields
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7. This is a fee-only policy type. The PolicyMaster billable/payable premium amounts are both zero and the ActivePolicy billable/payable premium amounts are both zero. There is no premium as such but the company pays an administrative fee amount for each of the ActivePolicies it sponsors. We pay No money to the insurance carrier.

   Historical Data stored as current-months value: AP Billable + to the Company "Billed to Compnay" (Company BC1-36) AF Fee + to the AF "Billed to PolicyHolder/Unit" (AF TB 1-36) AP Billable + to the Insured "Billed by ITSBITS" (IR 1-36) AP Billable + to Receivables Total Due and Current Amount fields

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8. This billing type pays a different (renewal) commission after an initial period of time has passed than it does when a new policy is initiated.

   First, we must check the Active Policy Table's EffectiveDate field + the PolicyMaster Table's NewPolicyMonths value against the billing (run) date. We will call the (EffectiveDateField + the PMs New PolicyMonths value) date the "PolicyHasLasted" date, though it is strictly a computer program-internal.

   If this "PolicyHasLasted" date is the billing-run date or earlier, we must calculate our commission for this policy as the PolicyMaster RenewalPolicyPct times the PolicyMaster Table's billable premium amount. But if this "PolicyHasLasted" date is after the billing-run date, we calculate our commission for this policy as the PolicyMaster NewPolicyPct times the PolicyMaster billable premium amount.

   Thence, the PolicyMaster Table's payable premium amount is the PolicyMaster billable premium amount less the commission amount. The company is billed the billable premium amount from the PolicyMaster table (plus any appropriate administrative fee). The payable premium amount is sent to the insurance carrier and we retain the commission amount for the policy. The payable premium amount thus arrive at is sent to the insurance carrier.

   1. Historical Data stored as current-months value:
   2. PM Payable + to the ICxr "Premiums Paid to the Carrier" (PC 1-36)
   3. PM Payable + to the PM "Amounts Paid to the carrier by ITSBITS" (PI 1-36)
   4. PM Payable + to the AP "Amounts payable to carrier by ITSBITS" (API 1-36)
   5. AP Billable + to the Company "Billed to Compnay" (Company BC1-36)
   6. AF Fee + to the AF "Billed to PolicyHolder/Unit" (AF TB 1-36)
   7. PM Billable + to the Insured "Billed by ITSBITS" (IR 1-36)
   8. AP Billable + to Receivables Total Due and Current Amount fields
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9. This is just like type 8, however, the full, calculated, billable premium amount is sent to the insurance carrier and we expect the insurance carrier to return the commission amount to us.
   1. Historical Data stored as current-months value:
   2. PM Payable + to the ICxr "Premiums Paid to the Carrier" (PC 1-36)
   3. PM Payable + to the PM "Amounts Paid to the carrier by ITSBITS" (PI 1-36)
   4. PM Payable + to the AP "Amounts payable to carrier by ITSBITS" (API 1-36)
   5. AP Billable + to the Company "Billed to Compnay" (Company BC1-36)
   6. AF Fee + to the AF "Billed to PolicyHolder/Unit" (AF TB 1-36)
   7. PM Billable + to the Insured "Billed by ITSBITS" (IR 1-36)
   8. AP Billable + to Receivables Total Due and Current Amount fields
   9. PM Commission + to the PM "Amounts Receivable from Carrier" (IC 1-36)
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10. With type 10, each policy has a different billing rate, therefore, the ActivePolicy BillablePremium is used as the basis for billing and payment. This type pays a lower premium for renewal than for a new (initial) policy. First, we must check the ActivePolicy EffectiveDate field + the PolicyMaster's NewPolicyMonths value against the run date. We will call the (EffectiveDateField + the PM's NewPolicyMonths value) date result the "PolicyHasLasted" date, though it is strictly a program-internal. If this "PolicyHasLasted" date is today or past, we must calc the commission for this Active Policy record as the PolicyMaster RenewalPolicyPct × the ActivePolicy's billable amount. But if this "PolicyHasLasted" date is not today or past, we calc the commission for this AP record as the PolicyMaster NewPolicyPct × the ActivePolicy's billable amount. Thence, the payable premium amount is the ActivePolicy billable amount - the commission amount. The Payable premium amount is sent to the IC and we retain the commission amount.

    Historic data storage is exactly as for type 8 above.

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11. With type 11, each policy has a different billing rate, therefore, the ActivePolicy BillablePremium is used as the basis for billing and payment. This type pays a lower premium for renewal than for a new (initial) policy. First, we must check the ActivePolicy EffectiveDate field + the PolicyMaster's NewPolicyMonths value against the run date. We will call the (EffectiveDateField + the PM's NewPolicyMonths value) date result the "PolicyHasLasted" date, though it is strictly a program-internal. If this "PolicyHasLasted" date is today or past, we must calc the commission for this Active Policy record as the PolicyMaster RenewalPolicyPct × the ActivePolicy's billable amount. But if this "PolicyHasLasted" date is not today or past, we calc the commission for this AP record as the PolicyMaster NewPolicyPct × the ActivePolicy's billable amount. The full ActivePolicy BillablePremium amount is sent to the insurance carrier and they will return our commission to us.

    Historic data storage is exactly as for type 8 above.

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12. Billing Type 12 is used when all companies/insureds are billed the same, so we bill the Company the PolicyMaster BillablePremium amount (plus any appropriate administration fees). We send the PolicyMaster PayablePremium to the InsuranceCarrier and we expect a return from them of commission% × the PolicyMaster PayablePremium. For this type, the PolicyMaster PayablePremium is ALWAYS less than the PMBillablePremium amount.

    Historic data storage is exactly as for type 8 above.

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13. This is like billing type 12, but the billed amount differs for each policy, so the ActivePolicy BillablePremium and ActivePolicy PayablePremiums are used. We bill the company the amount in ActivePolicy BillablePremium (plus any appropriate administration fee), and we pay the insurance carrier the amount in ActivePolicy PayablePremium. Our kept commission is the difference between these 2 amounts, but we also expect to get back a percentage of the ActivePolicy PayablePemium from the Insurance Carrier. This % is stored in the PM Commission field.

    Historic data storage is exactly as for type 8 above.

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14. With Billing Type 14 all insured are billed a premium based upon age and other individual factors. In addition, each policy is billed an administrative fee by the insurance carrier. We must bill this fee, the billable premium (shown on the ActivePolicy table), and any administrative fee of our own. Our commission is the ActivePolicy billable premium amount less the ActivePolicy payable premium amount. We retain our commission and our administrative fee (if any.) We send the ActivePolicy Payable Premium amount plus the insurance carrier administrative fee (stored on the PolicyMaster table) to the insurance carrier.

    Historic data storage is exactly as for type 10 above.

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15. With Billing Type 15 all insured are billed the same premium amount. In addition, each policy is billed an administrative fee by the insurance carrier. We must bill this fee, the billable premium (shown on the PolicyMaster table), and any administrative fee of our own. Our commission is the PolicyMaster billable premium amount less the PolicyMaster payable premium amount. We retain our commission and our administrative fee (if any.) We send the PolicyMaster Payable Premium amount plus the insurance carrier administrative fee (stored on the PolicyMaster table) to the insurance carrier.

    Historic data storage is exactly as for type 10 above.

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16. With Billing Type 16 all insured are billed a premium based upon age and other individual factors. In addition, each policy is billed an administrative fee by the insurance carrier. We must bill this fee, the billable premium (shown on the ActivePolicy table), and any administrative fee of our own. Our commission is the ActivePolicy billable premium amount less the ActivePolicy payable premium amount. We retain our administrative fee (if any.) We send the full ActivePolicy Billable Premium amount plus the insurance carrier administrative fee (stored on the PolicyMaster table) to the insurance carrier who will return our commisson to us.

    Historic data storage is exactly as for type 10 above.

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17. With Billing Type 17 all insured are billed the same premium amount. In addition, each policy is billed an administrative fee by the insurance carrier. We must bill this fee, the billable premium (shown on the PolicyMaster table), and any administrative fee of our own. Our commission is the PolicyMaster billable premium amount less the PolicyMaster payable premium amount. We retain our administrative fee (if any.) We send the full PolicyMaster Billable Premium amount plus the insurance carrier administrative fee (stored on the PolicyMaster table) to the insurance carrier who will return our commission to us.

    Historic data storage is exactly as for type 10 above.

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Active Policy Table Historical Storage  

On the ActivePolicy Table 7 sets of historical data covering the last 36 months are maintained and used for actual billing and payments to the insurance carrier. These are summarized here:

Field names Stores Notes AF1-AF36 Billed Admin. Fees See section above for how this is calculated AP1-AP36 Billed Premium Amounts   PP1-PP36 Payable (to insurance carrier) Premium Amounts   AC1-AC36 Send this premium to insurance carrier   CK1-CK36 Keep (retain) this commission amount mutually exclusive to CR1-CR36 CR1-CR36 Commission to be returned by insurance carrier to us mutually exclusive to CK1-CK36 SC1-SC36 Salesmen's Commission amount. See section below on how this is calculated

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Salesmen's Commission Calculations  

The salesman's code, commission rate, and pay-method are by-Insured and hence are stored as part of the Insured Table.

There are currently 5 pay methods which determine how the sales-person's commission is calculated as follows:

1. The salesperson's commission is the salesman's commission rate, a percentage, times the TOTAL billed to the company, i.e., the sum of the billable premium and any administrative fee amount.

2. The commission is the salesman's commission rate times the amount-earned. The amount-earned is calculated as the TOTAL billed to the company, i.e., the billable premium plus any administrative fee, less the amount sent to the insurance carrier plus the amount to be returned by the insurance carrier.

3. The commission is the amount sent to the insurance carrier times the commission rate.

4. The commission is the billed-to-company premium amount times the salesman's commission rate. (Any administrative fee is ignored in this calculation.

5. The commission is the Administrative fee billed to the company times the salesman's commission rate. (The billable premium, if any, is ignored in this calculation.
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   Billing Corrections 

   Any entries on the BillingCorrections Table are handled during billing calculations. If there is a billing correction, the correction amount is added to the amount billed to the customer during the billing processing. If there is a payables correction, the correction amount is added to the payable premium amount before our commission is calculated. In addition, the salesman's commission amount is altered to account for the billing correction.

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