Premium Trust Accounts

[iiinycboi]

I've done a search and there was only one thread regarding this and there wasn't a solution.

As a independent agency are you required to set up a trust checking account for premium receives and transfer commissions out if net premium paid to insurance carriers?

Right now i work with a few GAs and 1 appointment with progressive but my premium account is a regular checking separated from my operations account.

Whats the requirement on trust accounts?

 

[djs]

In short, you cannot comingle customer money and your money. So yes, you need a separate account for deposits and transfer of customer payments.

In those cases where you pay net rather than gross, yes, you would do a transfer to your operations account from your trust account, indicating its a commission withdrawal.

Pretty straightforward.

Dan

 

[iiinycboi]

In short, you cannot comingle customer money and your money. So yes, you need a separate account for deposits and transfer of customer payments.

In those cases where you pay net rather than gross, yes, you would do a transfer to your operations account from your trust account, indicating its a commission withdrawal.

Pretty straightforward.

Dan

Does it have to specifically be a "trust" account though?

I'm current using regular business checking for premiums and one for operations/commissions.

My current bank doesnt have "trust" accounts only regular small business checking. unless trust and business checking is the same just play on words.

 

[iiinycboi]

Ok, so i spoke with the insurance department and yes i do need to have a trust account.

So i know you're not suppose to mix funds and to transfer out commission.

But how do you set up a trust account? Do you need to set it up like another entity and then go to the bank and set up a new trust account or can you use your existing company and just ask for a trust account. I spoke to my banker and they never did this before.

They gave me a realty trust account description and asked if this is what i wanted. so how did you set up your trust account?

 

[bobson]

Ok, so i spoke with the insurance department and yes i do need to have a trust account.

So i know you're not suppose to mix funds and to transfer out commission.

But how do you set up a trust account? Do you need to set it up like another entity and then go to the bank and set up a new trust account or can you use your existing company and just ask for a trust account. I spoke to my banker and they never did this before.

They gave me a realty trust account description and asked if this is what i wanted. so how did you set up your trust account?

We set up a regular business checking account and called it XYZ Agency Trust Account. The checks, statements, and deposit slips all say XYZ Agency Trust Account.

The first bank we spoke with wanted to know who the trustee was, who the accounts benificiary was. They didn't have any idea what we needed. We went to another bank.

 

[djs]

I don't think the bank treats them any different from any other bank business checking account. Just find one that doesn't have a ton of fees associated to it and that will let you print 'trust account' on the check.

Its far more of an accounting thing on your end.

Credit unions usually work well for these, they seem to understand it better, at least in my experience. Only problem with using a credit union is you have to make sure you can make deposits in a timely manner, or you need to float enough in the account to account for the daily withdrawal that might happen.

Dan

 

[ShannonO]

I agree with Dan - I just did a separate account and my checks say XYZ Premium Fund Account. I didn't say "Trust" account because that can have some different connotation to the bank and to lawyers, etc. because of the way "trusts" are used in the law.

Having the separate Premium Fund Account and being able to show transactions to & from the account so that each client ends up with a $0 balance (and at any time I can show an auditor what client deposits make up that account balance) is completely acceptable to the insurance commissioner here in Washington. I didn't need anything special - just a separate checking account from my operations account.