Direct Bill vs. Agency Bill: What You Should Know
By Sara Mohrbacher, Vice President – WRC Agency
The terms “direct bill” and “agency bill” come up frequently when discussing policy payments. It is important to know which method a particular policy has because the two billing methods are very different.
For these policies, a bill is sent directly to the client from the carrier. However, the down payment may be collected on new business to start the policy.
If a client tries to pay you for a direct bill policy, we recommend having them forward the payment to the carrier instead. If they have waited until the due date, ask them to call the carrier to pay over the phone. When we receive payments for direct bill policies, we will forward the payment when possible, but it does slow down the payment process.
When a policy cancels or if a credit is due to the client, the carrier will send those funds directly to the client.
For agency bill policies, a bill is sent to the agency for the premium. It is not sent to the client. It is your responsibility as an agent to collect the funds.
When working with WRC Agency, we will collect the premium from you. Typically, agency bill policies require a down payment of 100% of the premium. You will then receive the commission on your commission statement once processed through our system.
As your agency ultimately is responsible for premium due on agency bill accounts, we suggest that you receive the premium from your client before forwarding payment to WRC Agency. If that payment is returned by the bank, your agency will need to work with the client to recollect.
Financing often is available on larger agency bill policies. This allows the client to enter a contract with a financing company and then it is the financing company’s job to collect the premium. If the insured does not pay, the financing company will notify the carrier and eventually the carrier will cancel for nonpayment. Any unearned premium is sent back to the financing company.
It is very important to remember that when a policy is financed, any additional premium or audit premium is not financed, and your agency must collect it. If you are unable to collect, please contact our agency as soon as possible with a record of collection attempts made and we will contact the carrier to see if we can switch collection from agency bill to direct bill. It is not always an option, but this situation is uncommon.
If an agency bill policy cancels, or if a credit is applied when premium is due back to the insured, the carrier will send the premium to WRC Agency and we will refund the client directly.
If you have any questions, please contact us.