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Accounts, Cashbook, Bank Account to Select (General Insurance)

General Insurance brokers should always…

  • Put all sums received from clients into the Client Bank account
  • Take all sums refunded to clients from the Client Bank account
  • …and…

  • Put all sums received from insurers into the Client Bank account
  • Take all sums paid to insurers from the Client Bank account
  • …but…

  • Put all sums received from advisers & introducers into the Office Expenditure Bank account
  • Take all sums paid to advisers & introducers from the Office Expenditure Bank account
  • To set-up your bank accounts see “Accounts, Setup, Bank Accounts”. Then having set-up both a “Client Bank” account and “Office Expenditure Bank” account, you should use them as shown above because, first of all, the entire amount of a client’s settlement for a policy always goes into the Client Bank account, where the commission element is automatically marked as “Transferable”. So when you pay the insurer you must take the amount of the net premium out of the Client Bank account, just leaving the total transferable commission. (n.b. if a policy is settled via direct debit, then again the commission received from the insurer goes into the Client Bank account, where it too is automatically marked as “Transferable”). After you have run the “Transferable” routine (see “Accounts, Period End, Transferable”) the total amount of “Transferable” commission gets moved to the Office Expenditure Bank account, and its marker is automatically changed to “Commission Received” (so you can’t mistakenly transfer it a second time). Finally you get to settle the pay-aways to the associated introducers and advisers, which must come out of the Office Expenditure Bank account, because these sums are part of the total amount of commission, already transferred.

    For Your Information – The Nominal & Control Accounts Involved in this Process

    To differentiate them from commission and charges that have been received, commission and management charges in all new invoices start off in a “Suspense” control. Once received (i.e. via the Reconciliation process) they are automatically reallocated to a “Transferable” control, which indicates the amount of commission currently in the Client Bank account, that is ready to be transferred out. Once transferred (i.e. via the Transferable process) they are automatically reallocated to standard Sales Nominal accounts…

  • Commission in suspense (control) >>> Commission transferable (control) >>> Commission received (sales nominal)
  • Charges in suspense (control) >>> Charges transferable (control) >>> Charges received (sales nominal)
  • In contrast, all of the adviser and introducer commission goes through a single nominal each…

  • Advisers commission (purchase nominal)
  • Introducers commission (purchase nominal)
  • The insurer premium also goes through standard nominal accounts, but note that it will appear in a sales nominal when included in the client’s invoice (i.e. the client pays the insurer’s premium to you first) AND in a purchase nominal when included in the invoice from the insurer to the brokerage (i.e. for when you settle with the insurer). If you process your accounts accurately then the sales and purchase nominals for your General Insurance Premiums should exactly match…

  • General premiums (matching sales & purchase nominal accounts)