Glossary
Sweep Account
An arrangement that automatically moves balances between bank accounts on a schedule, used by agencies to transfer earned commission out of trust.
Sweeps automate a routine transfer. In an agency the legitimate use is moving commission from the trust account to operating once it has actually been earned and identified.
Automation does not remove the fiduciary obligation. A sweep configured to move a fixed amount, or to zero out a balance without regard to what is earned, can systematically pull carrier money into the operating account — automated commingling, which is no more defensible for being automatic.
See also
- Operating Account — The bank account holding an agency's own funds — commission income, expenses, and payroll — kept strictly separate from …
- Trust Account — A segregated bank account where an insurance agency holds premiums collected from clients on behalf of carriers. Strictl…
- Commingling — Mixing fiduciary premium funds with an agency's own operating money — a serious regulatory violation in every state.