Concept & Practice Technology Benefits Service Continuing Education About Us Sample Market Reports

Sample Market Reports About Us Continuing Education Service Benefits Technology Concept & Practice Sample Market Reports

Financial Management


Ø  Trust account financial solvency management is founded on two pillars:


ü  New Trust Ledger (TL) accounting

ü  New premium financial solvency reporting system


Ø  Although developed on general accounting principles, TL accounting is different from general ledger (GL) accounting.


In TL accounting:


w       Premium accounting starts with the policy transaction (not the first invoice);

w       Premium funds are located in a separate ledger of accounts (separate from agency’s general funds);

w       TL accounting is “policy” driven (not “invoice” driven); all accounting records are created at the policy level;

w       There is no “closing” in TL accounting;

w       Manual journal entries are not used; all journal entries are computer automated;

w       Premium payments are “cash on hand” before they are deposited in the trust bank account;

w       Since TL accounting records mirror trust account transactions, more than 65 premium and return premium ledger accounts are necessary to capture these transactions;

w       Disbursement of premium funds (commission, remittance and refunds) is a fully controlled process.



Ø  The premium financial solvency reporting system includes several key reports:


1.     Balance Sheet

2.     Solvency Analysis Report

3.     Statement of Premium Receipts and Disbursements

4.     Premium Float Analysis

5.     Trust Funds Beneficiary Statement

6.     Audit Trails Reports


Ø  Premium financial solvency is reported, as required by law, at three levels:


v  Policy

v  Carrier

v  Agency

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