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Binder Transactions and Invoicing
Binder Transactions and Invoicing are used to invoice an insured for coverage before the actual receipt of the policy or confirming endorsement from the carrier. Usually the reason for doing a binder transaction is because the agency (when they are required to pay a carrier on an basis), does not want an invoice to appear on the account current before the policy is issued and received by the agency.
Depending on the Binder Post Method, binder invoices may not post to the insurance company payable account until they are replaced. See the Binder Invoicing and Agency Setupsection below.
Setting Up Binder Transactions
Successful binder billing in AMS360 depends on setting up the policy transaction correctly.
Binder New Business
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Open the customer and click Actions > Policy > New. The Create New Policy form displays.
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Select the appropriate Type of Business from the list.
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Change the default transaction of New Business to Binder New Business.
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Complete all other fields as for any new policy. Click OK.
Policy # is a required field. If the number is not yet available, use BINDER, TBD or some other temporary policy number designation.
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The Policy form displays. Complete the sections. Premiums should be estimated based on a company quote or agency standards for deposits to bind coverage.
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When you Create the Invoice, the printed invoice indicates this is a binder billing.
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Click Post, monitoring the to verify the posting action.
Sample Create New Policy Form
Binder Renewal
From the Policies Tab...
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Select the policy to be renewed by clicking on it in the list.
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From the Actions menu, select Policy > Renew.
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The Create Renewal/Rewrite Policy form displays.
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Complete the form, changing the Transaction to Binder Renewal. Click OK.
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The Policy form displays. Complete the sections. Premiums should be estimated based on a company quote or agency standards for deposits to bind coverage.
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When you Create the Invoice, the printed invoice indicates this is a binder billing.
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Click Post, monitoring the to verify the posting action.
Sample Binder Renewal Form
Alternate method...
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From the Policies list, click the policy number link to open the policy to be renewed.
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Click the Renew icon. The Create Renewal/Rewrite Policy form displays.
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Alt+A; R.
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Complete beginning with step #4 above.
Binder Endorsement
From the Policies Tab...
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Select the policy to be endorsed by clicking on it in the list.
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From the Actions menu, select Policy > Endorse...The Endorsement form displays.
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Complete the form, changing the Transaction to Binder Endorsement. Click OK. The Policy form displays.
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Update the sections affected by the endorsement. Enter estimated endorsement premium and bill, if desired.
Alternate method...
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From the Policies list, click the policy number link to open the policy to be endorsed.
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Click the Endorse icon.
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Alt+A; E.
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To finish this alternative method, start with step #3 above.
Binder Invoicing and Agency Setup
The Binder Post Method you choose in the Accounting Options section of Agency Setup determines when binders and binder replacements affect the general ledger.
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Binder Post Methods
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What is this?
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Post Expense on Effective Date
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Binder billings automatically post the payables, income and expenses on the invoice effective date, regardless of whether you replace the binder.
This is the method you might have chosen if your agency wants to recognize income and producer expense before the binder is replaced.
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Post Expense After Replaced on Later of Effective or Replace Date
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Upon posting of the replace transaction the payables, income and expenses post with the invoice effective date or the replace date, whichever is later.
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Binder Invoice Posting Example
Binder invoices post to an accounts receivable account to allow for timely collection or return of premiums:
If your Binder Post Method in Agency Setup is Post Expense on Effective Date, the offsetting entries post to the appropriate payables, income and expenses on the invoice effective date.
If your Binder Post Method in Agency Setup is Post Expense After Replaced on Later of Effective or Replace Date, the offsetting entries post to a "deferred binder" account until such time as the binder transaction is replaced:
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11213-Deferred Binder-A/R Agency Business
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11223-Deferred Binder-A/R Broker Business
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11233-Deferred Binder-Finance Co
Example:
Binder billing of $10,000 P & C premium to the customer, broker, or finance company.
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GL Account
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Amount
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GL Account
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Amount
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Agency Business
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11211-A/R Agency Business
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10,000.00
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11213-Deferred Binder A/R Agency Business
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(10,000.00)
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Broker Business
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11221-A/R Broker Business
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10,000.00
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11223-Deferred Binder A/R Broker Business
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(10,000.00)
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Finance Company
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11231-A/R Finance Co
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10,000.00
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11233-Deferred Binder Finance Co
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(10,000.00)
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See Binder Bill for an example of posting entries for replace invoices.
What's Next?
Visit Binder Bill to learn how to update transactions when you receive the policy from the company. Use the Unreplaced Binders Report to manage outstanding binder transactions.