What Is an Account Current?
The account current is a summary statement enumerating the financial performance of an individual insurance agent's business over a predetermined period. These statements form the basis for the reconciliation of accounts between the insurer and the agent. The account current is the basis for the paper trail as premiums paid by policyholders travel between insurance provider, agencies, and agents.
Figuring out the Account Current
An account current spreads out the financial parts of an insurance agent's business exhaustively. The statement is generally extensive in that it determines premium and claim performance at the individual policy level. The accounting likewise ordinarily shows summary transaction information as a record of balances owed. These balances are due either to the insurance agent or the insurer relying upon the balance of claims paid, the premiums that are written, the premiums returned, and commissions.
Summary things on the account current might incorporate gross premiums, agency commissions, the net payable amount on the current statement, and payments made or received between each submittal of the accounting.
Individual detail segments per policy might incorporate the name of the agent underwriting the policy, the policy number, the name of the insured party, the date of policy underwriting, and the premium amount for the insurance policy. Different things incorporate the percentage of an agent's commission, the real dollar amount of the commission, and the net amount due to the insurer for that specific policy.
Account Current Statements in Insurance Operations
In light of their financial arrangement with the insurance company for which they work, insurance agencies require a level of accounting past that of a standard profit and loss statement (P&L). An insurance agent's income comes from a portion of the premium paid on an insurance policy. Albeit insured parties as a rule pay premiums straightforwardly to their agents, different substances might have a claim to some portion of the premium funds.
For instance, the insurance agency gets commissions and fees earned on the sale of an insurance policy. From that point forward, the net premiums have a place with general agents or insurance companies, contingent upon the agency's structure. Insured parties reserve the option to return premiums in the event that their insurance policy is canceled before its expiration date. Likewise, finance companies might have a claim on return premiums on the off chance that the insured property is subject to a lease or mortgage.
As the beneficiary of full premiums, an agent has a fiduciary duty to hold those funds in a trust until their disbursement. The account current records the money that should be moved between insurance companies and agents to cover premiums and claims on the policies managed by the agent.
Industry regulations require nitty gritty records to guarantee premiums paid by policyholders get shipped off the insurance company underwriting their policy. The paper trail given by the account current guarantees the ideal payment of premiums to general agents or insurance companies as required by the agent's fiduciary duty.
- The account current is a summary statement of an individual insurance agent's business over a period.
- The account current is required to accommodate the accounts between an insurer and an agent.
- Things on the account current incorporate gross premiums, agency commissions, the net payable amount on the current statement, and payments made or received between each submittal of the accounting.
- The account current guarantees opportune payment of premiums to general agents or insurance companies as required by the agent's fiduciary duty.