Discover the complex financial engine behind US Property & Casualty (P&C) insurance.
While billing systems vary significantly across the industry based on lines of business and legacy technology, they all follow a core logical lifecycle to move from a calculated premium to settled cash . In this video, we break down the foundational concepts and the six critical phases of the premium billing process:
Key Foundations: Understand the difference between Direct Bill and Agency Bill, and why Equity Dating is essential to ensure collected premiums always cover the “earned exposure” or risk to date .
- Phase 1: Policy Issuance & Setup: See how the billing system triggers once underwriting is finalized, establishing accounts and applying Payment Plans .
- Phase 2: Invoicing: Learn about the timing of invoice generation and the necessity of separating Premium, Taxes, and Fees .
- Phase 3: Cash Application: Explore modern collection channels (ACH, Credit Card, Lockbox) and the strict payment priority rules used to allocate incoming cash .
- Phase 4: Delinquency & Non-Payment: Navigate the legally mandated timelines and state-specific regulations for Late Notices and Notices of Cancellation (NOC) .
- Phase 5: Mid-Term Adjustments: How the system dynamically adjusts remaining instalments when a policyholder makes an endorsement .
- Phase 6: The Commercial Twist: A look at the Premium Audit process for lines like Workers’ Compensation, which can trigger final bills or refunds at the end of a policy term