Insurance agencies provide 2 types of billing options to their insureds. One of them is agency billing, in agency billing the insurance agency issues the bill to the insured for the policy. In agency billing the insurance agency acts as the middleman and collects the full premium from the insured. The insurance agency then pays the insurance premium to the carrier after cutting their commission.

The second type of billing is known as direct billing. In direct billing, the insurance company sends the bills directly to the insured, and then the insured person pays the premium amount to the insurance company. The insurance company then sends the commission earned on a policy to the agency every month.

For the agency, the received commission income is different and depends on which option the insured chooses. If the insured selects a direct bill, the agency will get the commission after the carrier has received the premiums. The carriers mostly give commission payments on a monthly or quarterly basis. But in the case of agency bills, the agency gets paid commission first, upon receipt of payment from the client. The agency cut the commission owed before sending the premiums to the carrier.

In the AL3 file, we can find the Billing information under Group: 5BPI. The Element Title will be Billing Method Code. The values for this field are:

• A- Agency Billed
• C- Company Account Billed
• P- Company Policy Billed

If the Value is A then the policy is Agency Billed, for Direct billing the value will be P.