Glossary
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.
Premium reconciliation is the core monthly close process for insurance agencies. The agency owes a remittance to each carrier for the premiums it has collected on the carrier's behalf, minus the commission the carrier owes the agency. Reconciliation makes sure the math agrees with what actually hit the bank account.
In practice, reconciliation involves comparing three sources: the agency management system (policies and producers), the carrier statement (what the carrier thinks was paid and earned), and the bank statement (what actually moved). Disagreements show up as short payments, missing deposits, chargebacks, or commission disputes.
Done by hand, premium reconciliation is one of the most painful tasks in agency operations — it often consumes 3–10 business days per month. Automated reconciliation platforms like Policy Balance Hub cut this to hours by matching line items algorithmically and surfacing only the exceptions for human review.
See also
- Commission Statement — A document from a carrier showing the commissions earned by an agency on policies sold, including premium amounts, commi…
- Trust Account — A segregated bank account where an insurance agency holds premiums collected from clients on behalf of carriers. Strictl…
- Chargeback — A reversal of a previously paid commission, typically because a policy was canceled, downgraded, or the premium was retu…