Insurance Agency Trustee Bank Accounts

PotentialFarmer · 10-15-2009, 02:31 AM

Hi folks. I'm in California and just about ready to start. I have a question concearning the banking/accounting side of the biz and I hope someone could help me out. I know that I cannot comingle funds in my regular business account, however my bank isn't quite sure how to set up the trustee account. Do any of you have experience with this? What have you done? Is it just set up as Blank Insurance Agency Trustee? Any help would be great. Thanks.

somarco · 10-15-2009, 03:19 AM

Why do you need a trusteed account? Are you collecting premiums made payable to your agency?

PotentialFarmer · 10-16-2009, 01:18 AM

Originally Posted by somarco

Why do you need a trusteed account? Are you collecting premiums made payable to your agency?

Yes, then the carrier is drafting my account for the full amount. Its specific to one carrier, its the way they do business, why is beyond me but they are a solid carrier.

somarco · 10-16-2009, 01:36 AM

That account needs to be completely separate from all other monies coming in to your agency. I assume clients are remitting gross and the carrier is withdrawing net. You never ever want to comingle those funds with other agency accounts until after the carrier has withdrawn the amount due them.

TristanTLC · 10-16-2009, 03:42 AM

You will also need to keep a ledger to separate client's funds. Trust accounts are subject to audit, and it is an extremely easy way to loose your license! I would advise you to cooperate with an attorney and use their Trust account instead of setting one up yourself. I have a carrier that does exactly what you do, and I have an attorney hold all the funds for that account and give me a ledger every week.