Financial Management

Trust Account financial solvency is critical to the P&C agency financial management

Premium financial solvency management is characterized by several attributes:

• Use of new Trust Ledger (TL) accounting (different from GL accounting)
• Separate ledger of accounts (separate from agency general ledger)
• More than 65 premium and return premium accounts in the trust ledger
• Accounting records are created at the policy level
• There is no period closing in TL accounting
• Accounting and data records are one and the same data system; accounting records are used to report data in accounting format, premium data records are used to report data in non-accounting standard format
• Manual journal entries in the ledger are no longer permitted
• Commission funds transfer of other than earned commissions is not permitted
• Premium remittance of other than net premiums due and payable to insurance carriers is not permitted
• Automated journal entries mirror the trust account premium and return premium transactions
• Trust account financial reports are independent of the agency GL financial statements. They include:

  1. Balance Sheet
  2. Premium Float Statement
  3. Solvency Analysis Reports
  4. Trust Funds Beneficiary Statements
  5. Audit Trails Reports

For more information of premium financial solvency issues, please refer to
Financial Solvency Issues in PC Insurance Industry