As announced at our 2012 Agency Roundtable Meetings, we are expanding our effort to manage the ever increasing cost of 3rd Party reports used to underwrite personal lines business. Effective with June 2012 agency MVR orders, we will be introducing an Agency MVR Chargeback program. Details of the program follow:
* How does the program work?
The expected agency MVR threshold will be 70% of issued drivers to MVRs ordered each month. If an agency issues at least 70% of the operators for which MVRs were ordered, there will not be any cost to the agency. If the agency issues less than 70% of the operators for which MVRs were ordered, the agency will be charged the cost of the unissued operators’ MVRs. Following is a calculation to provide you the specifics:
· Number of MVRs ordered x Threshold percentage (70%) = Expected Issued Driver Count
· If the Actual Issued Driver Count is less than the Expected Issued Driver Count, all unissued driver’s MVRs will be charged
Example #1: MVRs ordered: 100
Threshold %: 70%
Expected Issued Drivers: 70
Issued Drivers: 80
Since the Actual Issued Driver Count is 80 and is above the 70% threshold, the agency will not incur any cost.
Example #2: MVRs ordered: 100
Threshold %: 70%
Expected Issued Drivers: 70
Issued Drivers: 40
Since the Actual Issued Driver Count is 40 and is less than the 70% threshold, we will charge for the 60 unissued driver’s MVRs (100- 40 = 60).
* MVR Cost:
The rates we will be using per MVR are show as follows:
Michigan: $7.00 per MVR
Ohio: $4.00 per MVR
Out of State: Actual MVR charge by state
* The first billing date is August 1, 2012. At that time, we will be deducting the applicable June 2012 MVR cost from the Agency Commission Statement. We have built in a 30 day lag in order to allow time for policies to be issued. Therefore, the August 2012 Agency Commission Statement will reflect any charges for June unissued MVR orders.
* The amount we will be deducting will be reflected on two new tabs on the Commission Statement Supplement report. The first tab titled, MVR Chargeback, will display only MVRs the agency is being charged. A screen print of this tab is attached and shown in Exhibit “A”. The second tab titled, MVR Details, will display a detailed listing of all MVRs ordered by the agency and include a footer displaying the calculation used to determine the monthly MVR charge. A screen print of this tab is attached and is shown in Exhibit “B”. These reports are only viewable by those with management authority in your office. If the Agency owner would like to delegate this authority to others in the office, this can be accomplished through the system.
* If the agency is in a negative commission situation, we will follow the same notification process we currently use for normal Past Due commission credits.
* To assist your efforts in reducing MVR costs, we have built-in a new prompt in iBIS. This new prompt is displayed at the “Prepare for Submission” step and is labeled: “Charges may apply”. This will assist you and your staff in knowing exactly when the MVR will be ordered in the process. If they continue in iBIS past this point, they will know MVR charges may apply.
* We continue to encourage your staff to use the Quick Quote feature within iBIS. This will assist your staff in knowing if we are a competitive market for your customer. The Quick Quote stage will provide your staff the quoted premium on the account. The quoted premium could potentially increase as your staff continues with an underwritten quote.
We appreciate your assistance in managing MVR orders and costs. As we continue to move forward through 2012, your continued loyalty to Frankenmuth Insurance is greatly appreciated. As always, should you have any questions, comments, or concerns, please feel free to contact your Personal Lines Field Manager, Underwriter, or me.
Exhibits A & B follow:
3rdPartyMVRChargebackCommission Statement Supplements0423.pdf (564.27 kb)
