Premium report overview

Premium report policy transactions allow the insurer to bill the premium at regular intervals throughout the policy term based on reported values. These billings attempt to ensure that the premium billed is close to the final audit amount. In most cases, the billings are more accurate than an estimate. For direct bill policies, the insured sends payment along with the report. If the insured does not submit reports in a timely fashion, the insurer can cancel the policy.

The insured may choose premium reporting because they are not able to accurately predict their payroll in advance or they have variable bases, such as seasonal variations in their payroll. Others may choose premium reporting because they end up paying only for the premiums that they actually owe. They may prefer this to paying for everything up front or agreeing to an estimated amount.

On binding a new policy period, the insured is billed a collateral amount called a deposit. The application schedules premium reports based on the audit schedule selected. As each report comes in, the user enters the reported amounts and the rating engine calculates the premium. When the user submits the report, PolicyCenter sends the transactions to the billing system. If a payment is received with the report, then the billing system reconciles the premium amount with the amount that the policyholder sent. Since the insured is doing their own calculation of premium outside the system and sending in a payment, there may be discrepancies that the billing department must resolve.

Within a submission, the premium report policy transaction is a payment plan choice on the Payment page. If you select premium reporting, then you can select one of the audit schedules configured for premium reporting. The audit schedule determines the frequency and number of premium reports. The Payment page includes another field for scheduling a final audit. The choices are Yes (schedule a final audit), No (no final audit is required), or Determined By Business Rule. When a final audit is selected or required, the application determines which final audit schedule to use.

When the policy is issued, PolicyCenter adds audit scheduled items to the policy. You can see these audits by clicking the Audit Schedule link of the policy file. Initially these are not audit policy transactions, rather they are a list of all the audit policy transactions anticipated but not yet initialized for the policy period. They are listed according to their start and end dates and their status is Scheduled. When a policy is canceled or reinstated, PolicyCenter revises the number of audits scheduled according to the coverage dates.

Each of the scheduled items includes a process start date, an audit method and a due date. Users with the proper permissions can edit these fields before the premium audit policy transaction is initialized. For example, you can change a final audit with an audit method of voluntary to physical. You can also waive a premium audit. However, the final audit may not be waived on a premium reporting policy because it is the mechanism to return the initial deposit.

A regularly scheduled batch process called Audit Task starts the audit policy transactions on their process start date. The audit status changes from scheduled to in progress. The audit becomes a draft policy transaction and the scheduled item becomes a link to the audit wizard. You can begin entering the audit information.

After receiving the audit details, you can enter them into the Audit Summary and Audit Details screens. Determine the premiums by selecting the Calculate Premiums button. Finalize the calculations by selecting the Submit button. At that time, the audit becomes uneditable, the status becomes Completed, and the audit schedule displays the resulting premiums.

You can change completed audits. Premium reports can be manually reversed and rebilled. Final audits are automatically reversed and rescheduled by policy changes completed after the final audit. Final audits can also be manually revised. A revised audit displays current and previous premium values.