Glossary
Commingling
Mixing fiduciary premium funds with an agency's own operating money — a serious regulatory violation in every state.
Premium collected from a client belongs to the carrier, less commission, and must be kept apart from agency funds. Depositing it into an operating account, or paying agency expenses out of the trust account, is commingling regardless of intent or of whether anything was ultimately lost.
Regulators treat commingling severely because it is the mechanism by which agency failures turn into client harm. Penalties run from fines through licence suspension to criminal referral, and the offence is provable from bank records alone.
Work this out on your own numbers
Tie the trust account out three ways and see the shortfall or cushion — the number a commingling question turns on. Runs in your browser.
Trust account reconciliation worksheetSee also
- Trust Account — A segregated bank account where an insurance agency holds premiums collected from clients on behalf of carriers. Strictl…
- Fiduciary Accounting — Accounting performed by an entity holding funds on behalf of another party. Insurance agencies act as fiduciaries when c…
- Operating Account — The bank account holding an agency's own funds — commission income, expenses, and payroll — kept strictly separate from …