Insurance reconciliation glossary

Plain-English definitions of the terms you'll meet when reconciling carrier statements, commissions, and trust accounts — written for agency owners and bookkeepers.

Premium Reconciliation

The process of matching the premiums collected by an insurance agency to the deposits and commission statements received from carriers, ensuring every policy was paid and every commission was earned.

Commission Statement

A document from a carrier showing the commissions earned by an agency on policies sold, including premium amounts, commission rates, and net amounts owed.

Trust Account

A segregated bank account where an insurance agency holds premiums collected from clients on behalf of carriers. Strictly regulated and not commingled with agency operating funds.

Chargeback

A reversal of a previously paid commission, typically because a policy was canceled, downgraded, or the premium was returned to the client.

Producer Split

The percentage of an agency's commission that is shared with the producer who wrote the policy. Splits often vary by line of business, carrier, and producer seniority.

Direct Bill vs Agency Bill

Two billing arrangements between carrier and agency: direct bill (carrier invoices the client) versus agency bill (the agency invoices, collects, and remits premium to the carrier).

Fiduciary Accounting

Accounting performed by an entity holding funds on behalf of another party. Insurance agencies act as fiduciaries when collecting premiums for carriers.

Binder

A temporary insurance contract that provides coverage until the formal policy is issued, typically used while the application is being underwritten.

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