Glossary
Escrow
Funds held by a neutral party on behalf of others until a condition is met, a structure closely related to insurance premium trust accounting.
Escrow arrangements hold money that belongs to someone else until the moment it is due to be released. The holder has custody but no beneficial interest.
Premium trust accounts follow the same logic: the agency holds the carrier's money and may not treat it as its own. The obligations that follow — segregation, reconciliation, and no borrowing against the balance — are the same in substance.
See 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…
- Commingling — Mixing fiduciary premium funds with an agency's own operating money — a serious regulatory violation in every state.