What is an 'Account Current'

The account current is a summary statement detailing the financial performance of an individual insurance agent’s business over a specified period. These statements form the basis for reconciliation of accounts between the insurer and the agent. The account current provides the basis of a paper trail as premiums paid by policyholders travel between insurance provider, agencies, and agents.

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 in that it specifies premium and claim performance at the individual policy level. The accounting also typically shows summary transaction information as a record of balances owed. These balances are due to either to the insurance agent or the insurer, depending on the balance of claims paid, the premiums which are written and those which are 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 each submittal of the accounting. 

Individual line item columns per policy may include the name of the agent underwriting the policy, the policy number, the name of the insured party, the date of policy underwriting, and the premium amount for the insurance policy. Other items include the percentage of an agent’s commission, the actual dollar amount of the commission, and the net amount due to the insurer for that specific policy.

Vital 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 (P&L). 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 part of the premium funds. 

For example, the insurance agency receives commissions and fees earned on the sale of an insurance 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 canceled before 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 a 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 guarantees the timely payment of premiums to general agents or insurance companies as required by the agent’s fiduciary duty.

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