Current
Premium Accounting
Insurance
Trust Accounting has been long overdue in the P&C brokerage industry. Its recent
development was prompted by the need to manage premium financial solvency and
enable agency to manage its commission income. For the longest time, premium
and return premium accounting has been an adaptation of general business
accounting to insurance premium transactions.
All agency
management systems on the market today have sold general ledger (GL) accounting
as sufficient for premium and return premium transactions. Accountants and CPAs
struggle finding ways to report trust funds solvency. Using formulas rather than
accounting, they confirm the GL accounting’s inadequacy for premium and return
premium transactions.
As adapted for premium
transactions,GL accounting proved unable to process the agency “earned”
commission. The current practice of transferring commission funds to the agency
business account based on “need”,is the second most important cause of
insurance trust financial insolvency.
Insurance
Trust Accounting
Following
the development of Insurance Trust Accounting, Paulmar Group has offered it to
P&C independent agents and brokers for more than two years. Uniquely
conceptualized, Insurance Trust Accounting is a mirror of premium and premium
business transactions. It uses a different ledger of accounts, separate from
the agency general ledger, and recognizes the policy transaction as the sole
insurance “sales” document. Premium invoice function is reduced to the status
of “reminder” of payments.Premium invoice is not an insurance “sales” document (as
it is in GL accounting) and therefore its journal entry no longer creates
“income” records in the agency general ledger.
Insurance
Trust Accounting is branded Trust Ledger (TL) AccountingTM and is commercially distributed as
NOBL TechnologyTM. The TL accounting software application fully
automates insurance trust daily operations and reliably reports both production
and trust financial solvency. It is offered to insurance agencies on
outsourcing basis. Agencies will provide source documents, Paulmar Group(outsourcing
partner), will create data records and perform trust
management functions, such as: billing and follow-up, bank deposits, commission
funds transfer, company remittance, return premium refunds, DB Commission Statement,
personal (non-fiduciary) funds maintained in the insurance trust bank account. NOBL
automatically converts premium and commission data records into accounting
records. No manual journal entries are used in TL accounting.
Benefits
The benefits
to insurance agency owners are significant:
- Guaranteed agency’s compliance with fiduciary duty;
- Peace of mind for agency owners and managers;
- Complete and accurate accounting records;
- Total control over premium and return premium funds;
- Reliable reporting of agency production and trust financial solvency;
- Significant reduction of agency workload;
- Opportunity to dedicate agency resources exclusively to sales and service;
- Choice for agency owners to grow organically with no additional payroll;
- Potential for the agency to increase profit margin by 20% or more.
- Reduction of agency E&O risk exposure;
For
additional information visit Paulmar website: www.paulmargroup.com or contact Paulmar Group at 800.830.9093
