Billing implications of deposits

A deposit is not the same as a down payment. A deposit is collateral collected up front on a policy that bills based on reporting. A down payment is an initial payment of a portion of the premium. In the insurance industry, people use these terms loosely. Guidewire documentation uses these terms with their precise meanings.

PolicyCenter can receive a deposit as an up-front payment. Similarly, PolicyCenter can take an additional up-front payment as changes, renewals, and rewrites modify the amount of the deposit that the policy requires. PolicyCenter sends the information about up-front payments to BillingCenter.

The reporting plan typically specifies a deposit requirement as a percentage of the premium subject to reporting. On submission, PolicyCenter calculates the required deposit and it is billable immediately. PolicyCenter can receive this deposit as an up-front payment.

On a policy change, the required deposit may change based on the total premium changing and the deposit being a percentage of total premium. PolicyCenter shows the amount of required deposit as part of quoting the policy.

PolicyCenter determines the deposit based on total premium and the deposit percentage for the reporting plan that the PolicyCenter user chose. It sends the deposit to the billing system as an absolute number, for example a $500 deposit for each PolicyCenter job that PolicyCenter sends to BillingCenter.

BillingCenter tracks this amount for each policy period and uses it to establish a required deposit, a bill to collect that deposit, and so forth. BillingCenter implements a default function for determining the deposit for a policy based on the deposit requirement for each policy period. Alternatively, you can configure BillingCenter to support a rolling deposit, the maximum deposit of all open periods, or a straight deposit, the sum of deposits of all open periods.

PolicyCenter segregates the collateral requirement for each policy period but stores collateral information on the account. If you change the collateral requirement, PolicyCenter establishes a new collateral requirement. If you set it to zero, PolicyCenter closes the existing collateral requirement.

Implications for deposits vary by job type.