Premium Trust Report

1. From Home Base, click the Accounting button.
2. Click Reconciliations.
3. Click Agency Bill.
4. Click Premium Trust Report to load the Reports/Marketing program.
5. The Premium Trust Account Rec. report choice defaults. Modify the criteria as desired, and then click Run to run the report. See Criteria Tab for more information.

Explanation of the Report

The Premium Trust Reconciliation provides details of the amount that should be in the Premium Trust bank account. The report totals all customer payments applied to Account Current items, minus the earned commission, minus the amount paid to the company, plus payments received, and minus advances and returns left on account. This report reflects the current status of the items in TAM. It cannot be run for a specific time frame.

How it is Used

Some states require that an agency use a Premium Trust account to deposit and hold premiums paid by customers until the net amount is sent to the billing company. Money required to be in the Premium Trust account cannot be used to pay operating expenses for the agency.  However, any amount in the account above what is required to be held may be transferred to another cash account.

This report lists all the client transactions that affect what must be retained in the Premium Trust account. For an item to appear on the report, it must meet one of the following criteria:

• It must be an account current item which has been partially or fully paid by the client or partially or fully paid to the company.
• It must be a PAY, FIN, ADV, or RET with a balance.

When to Run the Report

The accuracy of this report depends on timely and accurate reconciliations, timely and accurate application of customer payments, and timely Month-End posting. If your agency is behind with any of these processes or the company payables are out of balance and/or need cleaning up, this report will not yield meaningful results.

You can run the report at any time, but it will crbe least cluttered immediately following Month-End.

Run the Close Item—Calculate Open Item utility immediately before running the reports to have fully paid items to drop off the report. This utility automatically runs every third time you pack and reindex TRANSACT.DBF. You can also run it manually:

1. Have all users exit TAM.
2. Click Start > Applied Systems > Utility Manager.
3. Sign in using your TAM login information.
4. Click Accounting > Receivables > Close Item—Calculate Open Item, and run the utility.

Criteria

Premium Trust Account Reconciliation Report

Status of Accounts  

Run the Status of Accounts report for the Premium Trust account to get the current account balance.

Interpret the Report Summary

• Total Paid by Client: Payments taken in and applied to production items.
• Total Paid to Company: Premium sent to company to pay company statements. (This is based on what has been flagged and closed, not activity in the Company Payables General Ledger account.)
• Commissions Earned on Payments: The portion of customer payments that are agency commission, based on the policy commission rate.
• Payments on Account: Payments left on account. The report assumes these payments are entirely due to the billing company. Part of this amount is commission, which does not have to be held in trust.
• Total Paid by Finance Company: Payments taken from finance companies and applied to items.
• Commissions Earned on Payments: The portion of finance company payments that are agency commission, based on the commission rates on the customer policies.
• Minimum Premium Trust Balance: The minimum balance that must be held in the Premium Trust account to cover the outstanding payables. Compare this figure to the balance in the Premium Trust account according to a Status of Accounts.  If the account balance is less than the minimum required, the agency is out of trust. If the account balance is greater than the minimum required, any overage may legally be transferred to another account.

Questions

What determines when items will appear on the report?

The report provides a detailed list of each client that has money in the Premium Trust account. Items do not appear on this report when they are transacted; they appear only when money first changes hands, either by the customer remitting payment or by the agency paying a company statement (or making an item payment).

Production items appear on the report at these times:

• The item has been paid, in part or in full, by the customer.
• The item has been paid, in part or in full, to the company.

Any payment (PAY), return (RET), or advance (ADV) with a balance appears on the report.

What determines when items will drop off the report?

Items drop off the Premium Trust Account Reconciliation report when they close. This can be determined by checking the transaction detail screen and making sure the word “Closed” displays in red in the lower right corner of the screen. An item qualifies for closing when it meets all of the following criteria:

• Fully paid by the customer (item has a zero balance).
• Fully paid to the company (Y in the Company Paid field).
• The accounting months on the item and all its internals must be posted months.
• Binder bill item must be on a closed binder.

Once an item meets the above criteria, the item will be marked as closed the next time the Close Item - Calculate Open Item utility runs.

What if a fully paid item hasn’t dropped off the report?

If an item appears on the report and you think it should not, check the criteria above. Look at the item through Update Transactions (Utilities > Accounting > Receivables > Validate & Repair Client Balances, click the arrow, Update transaction without balance adjustment).

• The Closed field should display an uppercase Y.
• The item balance should be zero.
• The Company Paid field should display an uppercase Y. There should be a check number (not a statement number) or a user’s initials if the statement was closed in Statement Utilities.
• The item and all its internals should have an accounting month equal to the last month posted or prior. (Click Next through all the items that have the same item number as the original transaction and look at the accounting month on each).

If the item meets the above criteria and it still displays on the report, run the Close Item - Calculate Open Item utility.

Occasionally, a closed binder continues to print on the Premium Trust Account Reconciliation even though it has a C in the BIN field.  If this is the case, contact Applied Systems Accounting Support for assistance.

Notes

• No other TAM report provides the same information as the Premium Trust Account Reconciliation report. Some agencies try to arrive at the same figures using Company Payables and Aged Receivables reports, but this is not a valid workflow.  Run the Premium Trust Account Reconciliation report to get the correct numbers.
• The report only looks at the Closed field on the item, not at the field values that qualify the item to be closed. Run the Close Item - Calculate Open Item utility before running the Premium Trust Reconciliation report to get accurate data.
• Voiding a customer’s payment causes a previously closed item to reappear on the report, but it does not until after running the Close Item - Calculate Open Item utility.
• Voiding a statement check or item payment check causes a previously closed item appear on the report, but does not so until after running the Close Item - Calculate Open Item utility.
• The Close Item - Calculate Open Item utility does not automatically run at Month-End. An item that meets all the criteria to drop off the report will not drop off until the Close Item - Calculate Open Item utility is run, but the report totals will be correct even if the item prints on the report.
• Client payments left on account overstate the minimum amount to be held in trust. It is in the agency’s best interest to keep this figure as low as possible.  Running an Unapplied Cash report will show on which customers to J/E Between Items to reduce this amount.