What is 'Account Current'

The account current is a summary statement detailing the financial performance of an individual insurance agent’s business over a specified period of time. These statements form the basis for reconciliation of accounts between the insurer and the agent.

BREAKING DOWN 'Account Current'

An account current lays out the financial components of an insurance agent’s business in detail. The statement is usually comprehensive, specifying premium and claim performance at the individual policy level. The account current also typically shows summary transaction information as a record of balances owed either to the insurance agent or to the insurer, depending on the balance of claims paid, premiums written, premiums returned and commissions.

Summary items on the account current may include gross premiums, agency commissions, the net payable amount on the current statement and payments made or received between statements. Individual line item columns per policy may include the agent underwriting the policy, the policy number, the name of the insured party, the date the policy was written, the premium amount, the agent’s commission percentage, the actual amount of the commission and the net amount due to the insurer for that specific policy.

Role of account current statements in insurance operations

Because of their financial arrangement with the insurance company for which they work, insurance agencies require a level of accounting beyond that of a standard profit and loss statement. An insurance agent’s income comes from a portion of the premium paid on an insurance policy. Although insured parties usually pay premiums directly to their agents, other entities may have a claim to some portion of premium funds. For example, the insurance agency receives commissions and fees earned on the sale of the policy. After that, the net premiums belong to general agents or insurance companies, depending on the agency’s structure. Insured parties have the right to return premiums if their insurance policy gets cancelled prior to its expiration date. Likewise, finance companies may have a claim on return premiums if the insured property is subject to a lease or mortgage.

As the recipient of full premiums, an agent has a fiduciary duty to hold those funds in trust until their disbursement. The account current documents the money that needs to be transferred between insurance companies and agents to cover premiums and claims on the policies overseen by the agent. Industry regulations require detailed records to ensure premiums paid by policyholders get sent to the insurance company underwriting their policy. The paper trail provided by the account current ensures the timely payment of premiums to general agents or insurance companies as required by the agent’s fiduciary duty.

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