15th November 2021
The answer is yes. Understanding how a policy has performed, whether it be settled on-time or late gives underwriters invaluable information regarding their client and helps to understand the operational performance of the broker.
At our meetings with brokers over the last 12 months we have been advised that the volume of statements is overwhelming some brokers and they don’t have the resource in place to reconcile statements. The follow up comment from some brokers is that they are actively chasing the debt and as soon as we receive funds, they’ll be settled to clients, or we want to add value to the statement and only focus on certain aged bandings as opposed to a full review of the statements.
Yet the Terms of Business Agreement signed between insurer and broker, states differently. The emphasis here is the brokers’ responsibility to return a fully reconciled statement to Insurers.
Understanding why a premium has not been paid provides insurers with valuable information on the reliability of the client but more importantly on the operational processes of the broker. A number of factors could be at play here e.g., has the client been invoiced; is the billing correct; is there a shortfall in funds; why are queries not being resolved by DXC are just some of the questions we and our clients need to know and resolve.
How can insurers help to reduce the burden of the volume of statements sent to the broker?
Receiving multiple statements with the same contract numbers and repeating the same information time and time again does seem burdensome and a waste of a resource. The answer is a consolidated statement approach as it streamlines the broking function and it provides insurers with the reasons why the debt remains unpaid.
A consolidated approach is already in place for the insurers who are part of the Lloyd’s Shared Credit Control Service, and our clients are benefiting from receiving those responses. Brokers tell us they would prefer to review our consolidated statement over individual statements, as they recognise, they are responding to insurers as a collective. This is why our statements are one of the first to be reviewed on a monthly basis and the numbers speak for themselves, with a circa 80% response rate.
The market has to decide how they want to treat the collection of overdue premiums and the ever reducing resource available amongst brokers to reconcile statements.
In our experience the answer could be by having a pro-active Notice of Cancellation policy and by enforcing or extending settlement terms, or by making settlement due dates more realistic. Why not when we see year on year renewed premiums that are of a complex nature where both brokers and underwriters acknowledge that terms will not be met yet settlement due dates remain unchanged.
Until then the consolidated statement approach embraced by the Davies Lloyd’s Shared Service and endorsed by our client’s needs serious consideration.
For more information, please contact Sarah Savory, Director of Insurance Services via email@example.com.
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