Two billing methods: with direct bill the carrier bills the client directly; with agency bill the agency collects premium and remits it to the carrier.
Direct Bill vs. Agency Bill
Two billing methods: with direct bill the carrier bills the client directly; with agency bill the agency collects premium and remits it to the carrier.
Direct bill and agency bill describe who collects the premium.
- Direct bill: the carrier invoices and collects premium straight from the policyholder, then pays the agency its commission (often via commission download). This is common in personal lines and reduces the agency\'s accounting and collection burden.
- Agency bill: the agency invoices the client, collects the full premium into a trust account, keeps its commission, and remits the net to the carrier. This is common on larger commercial accounts.
Agency bill gives the agency more control (and cash-flow float) but adds accounting complexity, trust-account rules and collection risk. The management system tracks both methods and reconciles what is owed to and from carriers.