PROCESSING CENTER

Document Management
The Brooke Management System has been documents based for many years because converting documents into electronic images provides a universal platform for storing and sharing information. Document management activities are centralized and performed by processing center personnel. These activities include customer setup, and document sorting, imaging and distribution. The documents department manager has 10 years of experience at Brooke working on document management-type activities. More than 60 dedicated individuals are employed in the documents department.

- Customer Setup
Documents are located by searching for customers, so accurate and timely setup of customer records is the first step in reliable document management. Because assignment of a customer record to a franchisee establishes account ownership, the customer setup process is the most important step in document management.

Because of its importance, customer setup personnel include some of the most seasoned and capable processing center employees. The customer setup team leader has five years of experience in customer setup activities at the processing center.

Customers are typically set up when an application is received from franchisees on the processing center's agent fax line. Customer setup personnel locate the prospect record entered by franchisees when initial customer contact is made and research the Brooke Management System for possible ownership challenges. Ownership is then assigned to the franchisee and customer setup is completed.

- Document Sorting
All documents are gathered and sorted at the processing center. Documents from insurance companies and vendors are received in paper form via USPS, UPS or Fed Ex, and may also be received in electronic form on the regular fax line. Documents from franchisees are typically received in electronic form on the agent fax line.

The document sorting personnel use a unique, innovative and proprietary process to electronically sort faxes received on the regular fax line and agent fax line. Documents received from franchisees on the agent fax line contain a bar code on the fax cover sheet that automatically links the document to the correct customer during the document imaging process, without any further action required by processing center personnel. Documents received from insurance companies and vendors on the regular fax line do not have a bar code on their fax cover sheets, so the document sorting personnel use a separate proprietary image program to view, sort and link documents to customers in a paperless environment.

Documents received in paper format are reviewed and sorted, then linked to customers by a scan cover sheet with a bar code that also automatically links the document to the correct customer during the imaging process.

If processing center personnel identify documents that require immediate action by franchisees, those documents are categorized as action documents when sorted and an e-aware, an e-mail message with a link to the action document, is automatically and immediately sent to the franchisee when the document is scanned.

- Document Imaging
During the sorting process, a fax cover sheet or scan cover sheet is attached to the document with bar code instructions printed on it. Document imaging is the conversion of paper documents into electronic documents, then reading the bar code instructions on the cover sheet image to link the document to the correct customer.

Paper documents received at the processing center from insurance companies and vendors are converted into images using high speed scanners. Up to 80,000 pages of paper documents are scanned each day at the processing center!

Fax machines are long distance scanners. When faxes are received at the processing center, the documents have already been converted into images. The processing center requires franchisees to fax all customer correspondence to the processing center on a toll-free agent fax line. Insurance companies, vendors and others that do not use the Brooke Management System to create fax cover sheets may fax documents to the toll-free regular fax line. The agent fax line includes a bank of 24 fax lines that are available 24 hours a day, seven days a week. Up to 30,000 pages of faxed documents are received daily at the processing center.

Although much of the document imaging software was developed internally over many years, the processing center purchased the iRondo Imaging Station solution to repair images and read bar code instructions.

- Document Distribution
Documents are distributed by using the Brooke Management System to retrieve and view documents. Documents are also distributed by e-mail using Microsoft Exchange to send special e-mail messages with links to documents.

The Brooke Management System was designed to fully complement the document management activities of the processing center. Documents may be retrieved and viewed using the Brooke Management System by searching for the desired customer, then selecting from a list of documents linked to the customer.

The special e-mail messages used by the processing center for document distribution are called e-awares, e-images and e-faxes. E-awares are e-mails to franchisees with links to documents that the processing center believes are particularly important to franchisees. For instance, e-awares are sent for documents identified during the sorting process as requiring immediate action by the franchisee. E-imaging is a feature of the Brooke Management System that permits a user to send an e-mail containing a link to the document being viewed by the user. E-faxes are e-mails to recipients of faxes received on the regular fax line. E-faxes include links to the faxed documents that have been sorted by the processing center. Franchisees can receive e-awares, e-images and e-faxes anywhere, anytime via their cell phones, laptops or home computers.

Commissions Cash Management
Cash management for commissions includes the allocation to franchisees of cash collected from insurance companies for commissions on policies billed directly by insurance companies, and of cash paid to insurance companies for policies billed by franchisees. Commissions cash management also includes activities performed by the processing center to help franchisees in analyzing the accuracy and timeliness of these allocations by assisting with orphan account research, providing deficiency analysis information and implementing franchise safeguards.

- Commission Allocation
The allocation of commissions to franchisees is an increasingly automated process. However, a significant amount of expertise and experience is required to understand, process and troubleshoot insurance company statements. The experience of the processing center personnel in dealing with these activities is a tremendous asset for franchisees.

Most of franchisees' revenues result from commissions paid on policies billed directly to policyholders by insurance companies. This represents the largest level of activity. Each month the direct bill team processes nearly 160,000 commission transactions with an extraordinary accuracy rate.

- Orphan Research
When customer account ownership is not readily identifiable because the processing center did not receive an application or for other reasons, the commissions are allocated to an “orphan” account. Franchisees are encouraged to research this account on a regular basis to see if any of their customers have been orphaned and claim ownership by faxing an application to the agent fax line.

Although orphan account research is primarily the responsibility of franchisees, the commissions cash management department takes the initiative to research orphan commissions and encourages franchisees to claim ownership if their research indicates who the likely owner is.

- Franchise Safeguards
The proper allocation of commissions is of utmost importance to franchisees because revenues determine the amount of a franchisee's compensation and the value of the franchisee's business. The processing center has implemented several safeguards to reassure franchisees that the commissions allocations are timely and accurate.

- Safeguard #1
Perhaps the best safeguard for franchisees is an experienced processing center staff. The manager of the commissions cash management department has nine years of experience at Brooke working with commission allocation-type activities. More than 20 dedicated individuals are employed in the commissions cash management department, including three senior individuals who have been employed longer than 10 years.

- Safeguard #2
Written certifications help safeguard franchisees. Each month, processing center managers and team leaders provide written certification that their assigned tasks have been completed and any exceptions are specifically listed. These certifications are posted on the Brooke Management System for access by all franchisees.

- Safeguard #3
Independent consultants help safeguard franchisees. An independent consulting firm periodically observes and monitors the commissions allocation process to help ensure the written certifications provided by managers and team leaders are accurate. The consultants also randomly test commission allocation for accuracy. A report is issued by the consulting firm and posted on the Brooke Management System for access by all franchisees.

- Safeguard #4
Trust accounts help safeguard franchisees. All commissions received from insurance companies are held in the organization's trust account until allocated to the franchisee. Additionally, all premiums received from customers for premiums billed by franchisees are held in the organization's trust account until paid to insurance companies, and all premium refunds received from insurance companies for franchise billed policies are held in the organization's trust account until paid to customers.

- Safeguard #5
Agent billed policies create exposures for franchisees. Insurance premiums billed by franchisees (agent billed policies) represent significant credit exposure to franchisees and are time consuming for franchisees to handle. To help safeguard franchisees against credit losses, the commissions cash management department allocates insurance company charges for net premiums to specific customers, which permits franchisees to compare these charges with customer receipts to identify uncollected accounts. To help safeguard franchisees from the additional administrative expenses required to handle agent billed policies, the commissions cash management department constantly works to reduce the number of agent billed policies.

Franchise Cash Management

Franchise cash management includes the allocation to franchisees of all receipts and charges that are not commission related to franchisees. Franchise cash management also includes the reconciliation of the organization's trust accounts and processing of payments to and from franchisees.

- Receipt Allocation
Franchisees deposit all premiums they receive into a local trust checking account. The processing center then transfers all premiums from the local trust checking accounts to the organization's consolidated trust account and allocates the receipts to franchisees. Although receipts are immediately allocated to franchisees, the receipts are typically escrowed and not available for the franchisee's use until the net premiums are paid to insurance companies or premium refunds are paid to customers. This instills financial discipline in franchisees by prohibiting the use of receipts that are designated for others.

Each day the franchise cash management team contacts the banks to verify the total of receipts deposited. This process helps identify errors made by a franchisee's employees and also helps identify any misappropriation of funds by a franchisee's employees.

- Check Allocation
As a benefit of belonging to Brooke, checks initiated by franchisees are often paid by the processing center, reconciled by the franchise cash management department and allocated to the franchisee. These checks include: 1) electronic withdrawals from insurance companies for premium payment of direct billed policies, 2) checks requested by franchisees for payment to vendors or lenders, 3) customer purchases of personal money orders, 4) charges by the advertising center for advertising expenses, 5) charges by the facility center for rent, utilities and other facility expenses and 6) charges by the processing center for franchise fees.

The franchise cash management team also reconciles all checks initiated by franchisees each day by allocating these checks to specific customers. This permits franchisees to compare these charges with customer receipts to help identify errors made by a franchisee's employees and also helps identify any misappropriation of funds by a franchisee's employees.

- Trust Account Reconciliation
To meet regulator, lender and insurance company requirements, the processing center has established a trust account with a large national bank. All customer and commission receipts are deposited to the trust account and the processing center requests reimbursement from the trust account when payments are made to insurance companies, customers or franchisees. Customer receipts are held, or escrowed, in the trust account until the net premiums are paid to insurance companies or premium refunds are paid to customers. Commission receipts are held in the trust account until the commissions are allocated to franchisees.

- Franchise Payments
Franchisees receive payments from Brooke when the credit balance of the franchisee's account is settled each month and when franchisees receive authorized commission advances. Franchisees make payments to Brooke when the debit balance of the franchisee's account is settled each month. The national office authorizes payments to and from franchisees, but the processing center processes these payments. To improve funds availability to franchisees, the processing center uses electronic transfers to make all payments to franchisees.

When franchisees do not pay Brooke the amount of their account balance at settlement time, the processing center automatically sends cancellation notices to any of the franchisee's customers who have not paid their franchise billed policy premiums. By doing so, the processing center assists franchisees in collection of their accounts.

Management Reporting

The processing center provides reports to franchisees for monthly statements, escrowed receipts and uncollected accounts. The most recent version of each of these primary management reports is provided to franchisees each day in Microsoft Excel format through the Brooke Management System.

- Monthly Statements
The management report for monthly statements is the most comprehensive and important of management reports. It includes a detailed listing of all commissions, premiums, receipts, checks and franchise payments allocated to franchisees by the processing center during any selected monthly statement period. Those with a fundamental knowledge of Microsoft Excel can organize and reorganize their data to make this important management information more useful.

- Uncollected Accounts
The uncollected accounts report lists the franchisee's customers who have not paid their franchise, or agent, billed policy premiums. Collection of unpaid premiums is obviously very important to franchisees. Uncollected accounts are the customer balances that result when premium receipts recorded by franchisees to a customer account are less than the amount of premium payments paid by the processing center to insurance companies for the same customer account.

- Escrowed Receipts
Customer receipts are escrowed, or deferred, in the organization's trust account until net premiums are paid to insurance companies or premium refunds are paid to customers. A report listing all escrowed receipts is useful to franchisees in identifying premiums for refund to customers. This report is also used to identify inconsistencies that result when premium receipts from customers are recorded by franchisees to a customer account that is different than the customer account used by the processing center to allocate premium payments to insurance companies.

- Custom Reports
In addition to the above primary management reports, franchisees have access to other reports such as large commission customer reports, commission trending reports, insurance company commission reports, agent billed policy analysis reports and more.