Insurance Agency Bank Account Question

[Rburket]

I'm the P&C Manager for a new insurance Agency. All the banking is done at the other location, and I found out today that they only use one account. Every other agency I've worked at used 3 account. One for insureds policy payments (new business, reg payments) that we forward to the company.

The other account was for agency billed accounts and the 3rd account I'm thinking was for commisions to pay agents and bills. Is this correct.

Can anyone help clear this up for me. The owners are having a meeting tomorrow and I'm finding there are several things that should be set up differently.

Thank!

 

[Hawkfnm]

I have two main accounts, one for customer payments/company sweeps, one for everything else.

I just like to have a clean separation of sweep payments vs commissions/payroll/bills. However, I could see using one account for everything as long as it's tracked/reconciled meticulously.

 

[Josh]

Using one for everything can be considered commingling of funds and is illegal in some states.

 

[Insurance-Guy]

You should have a TRUST account for the customer's payments and a EXPENSE account for everything else. I never want to have customer's funds going into my EXPENSE account...

 

[djs]

Yep, customer payments belong in a separate account. Putting them into your operations account can get you in trouble in some states.

You can get by with 2, splitting the type of customer (agency vs direct) payment is up to how you want to run the operation.

Beyond the ethics and legal issues, I really don't want carriers sweeping my operations account. I also don't want some of my bills sweeping my trust account. It's far better to keep these separate!!!!

Dan

 

[Guest]

I have a expense account, a trust account, and a seperate account for my life/health commissions, I use that as a savings/tax withholding account, meaning, I dont touch it.

 

[Crys]

This was great info! Extremely helpful..

 

[aindemnityinc]

I have two main accounts, one for customer payments/company sweeps, one for everything else.

I just like to have a clean separation of sweep payments vs commissions/payroll/bills. However, I could see using one account for everything as long as it's tracked/reconciled meticulously.

How many companies sweep your account. I have about 10 and it is becoming a big headeche try to keep up with those sweeps to make sure everything they take out is correct.

 

[Biggdogg]

I've gone to the extreme. I have my expense account only. I do not accept payments in the agency. In this day and age, everything can be done electronically, and the clients know that I won't accept cash and checks are applied online.