Client Money Risk Transfer Agreement

Under ASA rules, intermediaries can use a single money management method or a combination of risk transfer and fiduciary accounts, provided the detailed rules of CASS 5 are followed. For brokers, this means that the sum of the insurance assets (money held in the company`s fiduciary accounts, plus the amounts owed by insurance debtors and authorized short-term assets) should be equal to or greater than the debt resulting from the insurance transactions (the amount owed to the creditors for reflection and possible advances on the fiduciary accounts). Please refer to CASS 5.5.62G at 5.5.68R, which contains instructions and rules for calculating the customer`s money and calculating the customer`s resource and money requirement. In ever-changing market conditions, it is essential to decide whether or not to open clients` money accounts, as it undermines the flexibility of brokers in their dealings with customers and product suppliers. A: Of all general insurance intermediaries, an audit of customer money is required: when an insurer grants a risk transfer to an intermediary, it means that the client`s money is in fact the insurer`s money as soon as the intermediary receives settled funds: and money that is reimbursed by insurers (for example. B, refunds or refunds), it is the money of the insurer until payment to the customer. The legal trust fund does not allow the intermediary to make credit advances to clients. Therefore, premium payments to the insurer can only be made from balance funds received by the customer. Accounts receivable. Insurers and other product suppliers therefore set their own requirements (in terms of terms and conditions with the broker) to ensure that the money is protected.

Q: I don`t have any customer money, how can I make a zero return? Because customers themselves do not participate in risk transfer agreements, repairing an insurer may not always be easy to follow in the event of a default. Q:What are the differences between a legal bank account and a non-legal trust bank account? However, companies that operate only under Risk Transfer and do not hold client money under CASS 5 must continue to complete Column C « Insurer Agent » in the RMA-C. There is a basic assumption that the rules of the client`s money are too prescriptive. In creating customer protection by controlling the way brokers treat premiums, the regulator may have lost sight of the basic requirement that companies « balance their books. » Q: How do I remove my requirement to keep customers` money? A: The client`s money is defined in the glossary of the manual, but it usually includes money that a company receives and holds for its customers as part of the exercise of certain investment or distribution operations of insurance. Here too, the company must make a decision, based on whether it will manage the « real » customer currency in the future, for example when placing transactions with an insurer or product supplier, in the absence of a formal risk transfer agreement.