SmartCommissions - Rates

In this topic:

• Overview
• Types of Commission Rates

Working with Rate Records Searching for Rate Records

• Initial Rate Setup Creating a Rate Record
• Entering Basic Schedule Information
• Deleting a Rate Record
• Viewing and/or Editing a Rate Record
• Viewing the Policies/Cases Linked to a Rate
• Copying a Rate Record
• Mass Editing Rate Records
• Mass Modifying Rate Records
• Merging Rate Records
• Commission Rate Notes

Overview

In SmartOffice, commission payout percentages are defined using commission rate records, which are stored in the system's "rate file." SmartCommissions uses the data in the rate file to perform automatic commission calculations. This section describes the types of rates available and how to create and manage them.

Note: Rates are used only for the contract/rate-based configuration in SmartCommissions. For more information about the different configurations, see Module Setup.

Before creating rates, make sure that the appropriate contract records have been set up.

Once necessary rates are created in the system, the commission hierarchy can be set up.

Watch the Training Class: Contracts and Rates

Types of Commission Rates

Two types of rates can be established in SmartOffice: cumulative rates and standard rates. The difference is important only when supervisors are involved in the payout structure.

Standard rates simply display the rates that will be paid.

Cumulative rates structure payouts based on increasing the rates paid on specific contracts in graded increments.

The example below illustrates how two different payments are established based on the different rate types. The payout is exactly the same when these payouts are applied to the same policy.

The purpose of the cumulative rate option is to allow the commission paid to a supervisor to increase or decrease based on the advisor's compensation level. In the above example, if the advisor's compensation was 75%, Supervisor 1 would still receive 5% in the standard rate scenario. However, under the cumulative rate scenario, Supervisor 1 would receive 10%.

Initial Rate Setup

This section describes the steps that administrators must complete when first establishing commission rates in SmartCommissions. Before creating rates, the administrator must have already created the appropriate contracts for each level of the commission hierarchy.

After this initial setup, refer to Working with Rate Records for information about how to view, edit and delete existing rate records.

Creating a Rate Record

Note: Use great care when creating commission rates. Establishing all rate parameters properly is critical to the proper functioning of the commission tracking system.

• Do one of the following: From the Contracts tab of a carrier record, select the contract that the rate will apply to, and then select Menu > Advanced Options > Show Commission Rate. When the Commission Rates List opens, select Menu > New 'Commission Rate Information' record.
• From the SmartOffice side menu, select Insurance > Commission Rates to open the Search Commission Rates dialog box. Then click the New button.

• In the General Information section, complete the following fields: Contract Name: If the contract name is not already filled in, type the name of the contract that will be associated with the rate, or click the Contract Name hyperlink to search for and select a contract.
• Carrier Name: If the carrier name is not already filled in, type the name of the carrier associated with the rate, or click the Carrier Name hyperlink to search for and select a carrier.

• Product Name: Type the name of the product associated with the rate, or click the Product Name hyperlink to search for and select a product.
• Contract Type: This field is filled in automatically when the Contract Name field is completed. It can be changed only by editing the contract itself.

• Cumulative: Select this option if the rate is cumulative (see Types of Commission Rates).

• In the Paid Mode section, complete the following fields: Paid Mode: This field specifies when the party receives payment. The options are:

• Annual: One payment based on the policy's Annual Premium field (i.e., the premium to be paid if the insured pays the premium on an annual mode) is generated.
• Annual First Year Only: The same as the Annual option but for the first year only.

• Annualized: One payment based on an annualized premium paid when the first payment is received. It is assumed that the insured will pay all premiums in the first year; if not, a chargeback will be required to obtain the commission amount paid in advance but not earned.
• Annualized First Year Only: The same as the Annualized option but for first year payments only.

• As Paid: The commission is paid when the insured has actually paid the premium. This is the most common option.
• As Paid with Months Advance: Same as As Paid, but this option allows a specific number of months of advance payment.

• Months Advance: If the As Paid with Months Advance option is selected in the Paid Mode field, select the number of months of advance from this drop-down list.

• In the Additional Information Section, complete these fields: Banding Type: A rate can be "banded," i.e., it can vary depending on date, age, face amount or state. SmartCommissions enables the creation of multiple rate bands to accommodate those situations. In addition to standard banding, SmartCommissions offers three special banding types. Use this drop-down list to specify whether one of these special banding types applies to the rate (leave the field blank if the rate is subject to standard banding or no banding):

• Excess Banding: This banding type establishes lower commission rates for excess premiums paid above target premium.
• Number of Members Banding: This banding type is used for group policies, for which commissions must be paid based on the number of members in a group plan; as the number of members increases or decreases, commission per member can be paid or taken away.

• Premium Banding: This banding type is used for group policies. Premium banding means the commission rate changes as the premium on the policy is paid. It is a rolling accumulation of premium based on the number of years used for payment of commissions.
• Flat Amount: A flat dollar amount to be paid to the party associated with the contract. This is a one-time payment that is not based on the mode of the policy. This option is not commonly used.

• Retroactive: When Premium Banding is selected as the banding type, this option becomes available. Select this option if, as the rate changes for the policy, either additional commission is paid going back to the first dollar ever paid or the rate is valid only for the premium moving forward.
• Rate Description: This is a simple descriptive field that can be used to help SmartCommissions users more easily identify the rate defined.

• In the Commission Bands section, add a commission band by clicking the Options button and selecting New 'Commission Rate Bands' record to open the Commission Banding Information dialog box.
• Compete the Effective Date and Age From fields, which are mandatory. If the rate varies based on other factors (face amount, state, etc.), complete those fields as well. Note that, in lists, the expiration date appears in red if it falls within the next 30 days.

• If product options have been specified in the relevant product record, the Option Banding section enables the user to select one of those options if appropriate. Option banding enables the same product to have multiple unique commission payout structures depending on how advisors sell it.
• In the Commission Rate Details section, click the Options button and select New 'Commission Rate Definition' record to open the Basic Schedule Information dialog box. Then complete the appropriate fields. The fields in this dialog box differ depending on selections made earlier. For details, see Entering Basic Schedule Information.

• Select Menu > Save.

Entering Basic Schedule Information

Note: In the screens described in this section, SmartOffice supports both positive and negative commission rates.

Standard Banding

The standard banding schedule dialog box is where rates are defined in a rate record for which no special banding type is specified (see Creating a Rate Record).

The fields are:

• From Year, Through Year: The years in which this rate will be paid. For first-year rates, enter a value of 1 in both fields.

• Base Points: Base points pay the rate entered based on the base commissionable premium amount on the policy.
• Flat Extra Points: Flat extra points pay the rate entered based on the flat extra premium on the case only.

• Fee Points: Fee points pay on the commissionable policy fee identified on the case.
• Lump Sum Points: Lump sum points pay based on the lump sum premium value on the policy.

• Override Points, ERA Points, Bonus Points, Level 1 – Level 5 Points: These points all pay an additional amount based on the base premium paid.
• Excess Points: Excess points pay based on any premium paid over the target amount.

• Trail Points: Trail points pay based on trail commissions entered by the user during speed receipt entry. This type of commission payment is not projected but is made available at the time that trail commission is received to pass the payment to other levels of the hierarchy.
• Commission Amount($): A flat dollar value that is paid for each mode of payment allowed by the policy.

Excess Banding

When the Excess banding type is specified for a commission rate record (see Creating a Rate Record), the basic schedule dialog box displays the same fields as the standard banding schedule dialog box, except that there is no Excess Points field and there is a Complex Excess section.

The Complex Excess section enables excess commission rates to be determined based on the target amount. Click the Options button and select New 'Excess Commission Rate Banding' record to open the Complex Excess Information dialog box and enter the appropriate values.

Number of Members Banding

When the Number of Members banding type is specified for a commission rate record (see Creating a Rate Record), the basic schedule dialog box displays the same fields as the standard banding schedule dialog box, except that the Commission Rate Details section is replaced by a Member Banded Schedule section.

Click the Options button and select New 'Member Banded Commission Rate' record to open the Basic Schedule Information dialog box and enter the appropriate values.

Premium Banding

When the Premium banding type is specified for a commission rate record (see Creating a Rate Record), the basic schedule dialog box displays the same fields as the standard banding schedule dialog box, except that the Commission Rate Details section is replaced by a Premium Band Rates section.

Click the Options button and select New 'Premium Banded Commission Rate' record to open the General Information dialog box and enter the appropriate values.

Working with Rate Records

This section explains how to search for, create, delete, view and edit commission rates.

Searching for Rate Records

• From the SmartOffice side menu, select Insurance > Commission Rates to open the Search Commission Rates dialog box.
• To narrow down the search, complete one or more of the fields (for descriptions of these fields, see Creating a Rate Record). Otherwise, leave the fields at their default values to display all rates.

• Click the Search button.

The results of the search display in the Commission Rates List.

Deleting a Rate Record

• Perform a rate search.
• In the list of search results, tag the rate to be deleted.

• Select Menu > Delete 'Commission Rate Information' record.

Viewing and/or Editing a Rate Record

• Perform a rate search.
• When the list of results displays, click the first-column hyperlink of the appropriate rate (by default, the carrier name) to view the details of the rate.

• If necessary, make any changes to the rate. For information about these fields, see Creating a Rate.
• Click the OK button.

Viewing the Policies/Cases Linked to a Rate

• Perform a rate search.
• When the list of results displays, tag a rate.

• Select Menu > Related Policies to open the Linked Policy List.

Copying a Rate Record

To save time when creating rate records that are similar to one another, the user can copy an existing rate and then edit the copy as necessary.

• From the SmartOffice side menu, select Insurance > Commission Rates to open the Search Commission Rates dialog box.
• Click the Search button to display the Commission Rate List.

• Select Menu > Copy Commission Rates to open the Copy Commission Rates dialog box. Tip: It is not necessary to select a rate from the Commission Rate List before using the rate copying feature. The rate copy feature is a standalone utility that enables the user to copy any rate for any carrier without having to exit the utility and search for a new rate.
• Select one of the options displayed: Copy rates by Product: This option copies rates from one product to another within the same contract.

• Copy rates by Contract: This option copies all rates defined for a contract into another contract for a specific carrier-product combination.

• Click the OK button.

The steps to complete the copy process depend on the copying option the user selected.

If the Copy rates by Product option was selected:

• When the Select Product to Copy Rates From dialog box opens, enter the name of the product from which the rates will be copied in the Source Product field, or click the Source Product hyperlink to search for the product.
• Click the Options button and select New to search for and select the products that the rate will be copied to.

• In the Target Product List, tag one or more products. Note the following: If the contract from which rates will be copied is carrier-specific, tag products from the same carrier only.

• If the contract from which rates will be copied is a blanket contract, tag any product from any carrier.
• Click the Next button to display a list of the contracts for which the source product has rates identified.

• Tag the contracts whose rates are to be copied to the other products.
• Click the Finish button.

Note: If the rate being copied is option-banded, excess-banded, number of members-banded or premium-banded, the user will need to review the details of the new rate record and correct any inconsistency between products.

If the Copy rates by Contract option was selected:

• When the Select Source and Target Contracts dialog box opens, type the name of the contract that the rates will be copied from in the Source Contract field, or click the Source Contract hyperlink to search for a contract.
• In the Target Contract field, type the name of the contract that the rates will be copied to, or click the Source Contract hyperlink to search for a contract. Note that the target contract type must be the same as that of the source contract (i.e., carrier-specific or blanket).

• Click the Next button to display a list of products defined on the source contract.
• Tag the appropriate products, and then click the Finish button.

Mass Editing Rate Records

This feature enables the user to modify a group of rates at the same time.

• Perform a rate search, making sure to specify the appropriate contract and bandi ng type in the search dialog box (only like bandings can be edited at the same time).

• When the list of results displays, tag all records to be modified.

• Select Menu > Edit Commission Rates to open the Edit Commission Rates dialog box.
• Make the necessary changes, noting the following:

• To copy rates, select one or more rates, and then select Menu > Copy Commission Rates.
• To copy a commission rate band, select a rate, and then select Menu > Copy Band.

• To save changes and make additional changes, click the Save button.
• Certain fields, such as Cumulative, Flat Amount, Paid Mode and Paid By, appear as read-only and cannot be edited here. Some of these fields can be edited using the Mass Modify feature.

• When finished will all changes, click the OK button.

If any of the modified rates are linked to policies, a message offers the user the option of applying the changes to those policies so that commissions can be recalculated.

This recalculation does not happen immediately; the user must take the additional step of accessing Commissions Setup and validating any policies listed in the Invalid Policy List section.

Mass Modifying Rate Records

This feature is slightly different from mass editing of rates. SmartOffice's Mass Modify feature can be used to edit the following fields and options in multiple rate records simultaneously:

• Paid Mode
• Flat Amount

• Cumulative

For more information, see Lists - Mass Modify.

Merging Rate Records

Two commission rate records can be merged into a single rate record. This feature is useful for cleaning up duplicate rates that exist for the same carrier, product and contract.

• From the SmartOffice side menu, select Insurance > Commission Rates to open the Search Commission Rates dialog box.
• Click the Search button to display the Commission Rate List.

• Select the rate record from which you want to copy data (this will be the "source" rate record).

• Select Menu > Merge Commission Rates to open a list of rate records you can merge the source rate data into (only those rates with the same contract, carrier, and product are listed).

• Select the appropriate rate record (this will be the "target" record) to complete the merge.

Any age/face/option/state combinations in the source rate that do not exist in the target rate are moved over. In addition, any pending cases linked to the source rate are also moved over to the target rate.

Commission Rate Notes

While viewing a rate record (or after selecting a rate record from a list), the user can view notes about that record by selecting Menu > View Commission Rate Definition Notes.

In addition, SmartOffice maintains a separate set of notes for each entry in a rate's Commission Rate Details list (see Creating a Rate Record). Tag an entry in that list, click the Options button and select View Commission Rate Definition Notes.

For more information about viewing, creating and managing notes in SmartOffice, see Contacts and Businesses - SmartPad.