An agency would retain the TA Service primarily because TA operation is a non-core business. It just drains financial resources without giving the agency any competitive advantage in the marketplace. Its outsourcing will render independent agencies more productive and more profitable. An average agency may expect a 40% higher profit margin through TA operation outsourcing.
As you know the daily management of premiums and return premiums account for more than 75% of an agency’s accounting and financial management effort. The results of this labor intensive and costly process are unreliable and continue to expose agency owners and managers to potential violations of Insurance Code as well as Tax Code. We know from published statistics that one in three agencies in California operates out of trust jeopardizing its business license or risking dangerous legal problems.
After a number of years of research our company has been able to develop an innovative, cost-effective solution for the management of insurance agency commission income as well as agency trust account operation as a whole. www.paulmargroup.com
Last edited by mclureins on Thu Jul 30, 2009 12:17 pm, edited 1 time in total.
Outsourcing services like trust accounts and customer service needs is fine for the dot-coms and 1-800's out there, but in my little town ALL of my customers / clients expect and get the personal service I have always promised. Yes, it's a part of doing business, but I'll bet my bottom dollar that the intangible benefits derived from the personal service does more for my agency in the area of retention and cross-selling opportunities than I might possibly save by outsourcing! I would imagine all the other "Mom & Pop" agencies out there will agree... Plus, we like it when our friends and neighbors come calling! Just my two cents. What does everybody else think?
I now have a better understanding of the question. TA in this case is Technical Assistant ... or in plainer (and uglier) terms...data entry.
There is some merit for outsourcing of this task in certain circumstances. Examples being when an agency can not find qualified or adequate staffing or there is a resource issue (no space to place a person inside). These have to be balanced by the need for this position to communicate with more skilled positions - ask questions or advise when certain things are happening (cancellation etc).
In my past environment we outsourced our accounting. This was done for the lack of desk space in the office as well as lack of enough work to keep a qualified person busy...which meant that we were not able to find a person to work part time that had the skills we required. We found a company that provided this service and it worked out wonderfully, and still does to this day. Our assigned person works from her home in the Seattle area and we would scan/email items to her for processing and she would let us know when they were completed. This included carrier DB/AG statements, Finance co statements and eft postings, vendor invoices, bank statements and the like. ( AngelaAdamsConsulting.com )
Another option is having your own person work from their home. This means that they must be self starters and have the correct home environment to get the job done - secure work station, lack of interruptions etc.
Currently I am providing some services to that agency to help them dig out from a backlog caused by a staffing change and vacations. I get items "assigned" to me in their system. In the evenings I log on via remote access and process the items and print any required items to their internal printer (remote access allows for this). In the morning, they pick up the prints and stuff them into envelopes and send them on their way. This is working out well so far and is keeping them above water until they get their new person trained and up to speed.
TA means Trust Account. You know - like the state laws that require that premiums be held in trust and not intermingled with agency operating funds? Your company payables cannot exceed the money held in trust or you are "out of trust." Apparently this is a firm that assists in that process.
Actually the reason is that there is no method or software currently being used in the market to account for each policy as they are earned. This is about trust account not Tech Assistant. The systems in todays market lack a profound amount of ability to handle direct bill commission or unearned commission. Cancellations and so on.
teh message we are trying to get accross is that we as agents are processing money that doesn't belong to us. It belongs to the insurance carriers. It is tedious, expensive and bears much room for errors. Everything in todays market is entered on a general ledger. The General Ledger is not the correct accounting method because each policy must be maintained on its own earned and unearned level. There is also whats called a premium float that the general ledger does not supply. The agency never has an idea of their networth because of how much traffic comes in and out of their trust account. There is always money being returned, money being earned, cancellations and so on. Agencies have to wait for cancellation endorsements to be processed in order to finalize accounts and they shouldn't/ We have developed the most advanced automated system to give agency principles the ability to show the actual solvency of each and every single policy in real time. No matter how long it takes to cash a check, process an invoice whatever.
I recommend to our agency partners (>1000) that they maintain a separate trust bank account. All premium payments, cancellations, etc should be processed through this account. All bills, paychecks, commissions etc should be processed through your general account. This way, you know that if you have money, in the general, you can use it. Money in the trust, is not yours. Even if you don't keep updated on your books and don't have a management system, you can keep some semblance of order and not get into trouble. This is good practice regardless whether the state requires it or not, and some states do.
Every agency should have a seperate trust account. If you are using your head and set your clients up as direct bill and you wont need to hire an outside source! You will only use it to sweep client payments to carriers.
The problem with Outsourcing revolves mainly on a trust issue. I mean once you outsource your tasks you also outsource your secrets and the spreadsheets on your company that you don't want to get out. In some way it's a catholic wedding. All on all, Motorola is doing it all the time, and it works great. So i guess it depends.
I don't know of such a resource. Most small agents simply have two bank accounts, one for operations, and one for premium trust. No matter the legislation in the state, this is good procedure. You know to NEVER touch the premium trust account, and the operations account can give you a rough balance of your financial state.
My agency maintains separate fiduciary accounts for each carrier (9) we have 'sweeps' for. This way one carrier cannot 'accidentally' oversweep and suck out premium $ owed to another carrier for whatever reason (NSF check from an insured maybe...) "But what about the costs of maintaining 9 separate accpounts?" you ask. Simple - look into doing your agency 'banking' at a credit union. Commercial banks have outrageous 'fees' they charge for all kinds of things. regards,
