Glossary
Remittance
The payment an agency sends a carrier for premiums it has collected on the carrier's behalf, net of the commission it retains.
Under agency bill, the agency collects the full premium from the insured and forwards it to the carrier, keeping its commission. That net payment is the remittance, and it is due on the carrier's schedule regardless of whether the client has paid.
Remittance timing is where trust accounting bites. The money owed to carriers must be sitting in the trust account when the remittance is due, which means an agency carrying slow-paying clients can be technically out of trust even while profitable.
See also
- Trust Account — A segregated bank account where an insurance agency holds premiums collected from clients on behalf of carriers. Strictl…
- Agency Bill — A billing arrangement in which the agency invoices the insured, collects the premium, and remits it to the carrier net o…
- Commingling — Mixing fiduciary premium funds with an agency's own operating money — a serious regulatory violation in every state.