Insurance Broking & MGA Knowledge Center
Explore our verified library of Insurance Broking & MGA transactions. Every entry is reviewed for IFRS compliance and real-world accuracy by our technical accounting team.
Insurance Commission — Recognized at Policy Inception/Renewal (Point-in-Time)
Recording commission income earned by an insurance broker at the point a policy is placed — the broker's primary performance obligation is fulfilled when coverage is bound and the policy is issued.
Contingent Commission / Profit Sharing — Variable Consideration Constrained Until Carrier Determination
Recording contingent commission income — performance bonuses paid by insurance carriers based on the profitability, volume, or retention of the broker's placed business — with significant variable consideration constraints.
Premium Trust Account — Client Premium Received (Not Broker Revenue — Fiduciary Obligation)
Recording the receipt of an insurance premium from a client into the broker's fiduciary trust account — with the premium held in trust pending remittance to the carrier, creating a liability to both the client and the carrier.
Commission Earned — Transfer from Trust to Operating Account
Recognizing commission income by transferring the earned commission from the premium trust account to the broker's operating account — the event that converts a trust holding into recognized revenue.
Risk Management Consulting Fee — Fee-Based Arrangement (Instead of Commission)
Recording fee income from a risk management consulting arrangement — where the client pays the broker a flat fee for services and the broker rebates any carrier commissions, eliminating the conflicts inherent in commission-based compensation.
Wholesale / E&S Broker Commission — Surplus Lines Market Placement
Recording commission income earned by a wholesale broker placing specialty risks in the surplus lines market — the broker-to-broker model where a retail agent uses a wholesale broker to access non-admitted carriers.
Policy Renewal Commission — Annual Recurring Revenue at Each Policy Anniversary
Recognizing commission income at each annual policy renewal — the repeating placement performance obligation that generates the 'annuity-like' revenue stream that makes insurance broking businesses highly valuable.
Employee Benefits Group Commission — Health, Dental, Vision Insurance Placement
Recording commission income on group employee benefit plan placements — with unique recognition considerations for recurring monthly commissions as premiums are paid.
Return Commission — Revenue Reversal on Mid-Term Policy Cancellation
Reversing previously recognized commission income when a client cancels a policy mid-term — the broker must return the unearned portion of the commission to the carrier, reducing revenue.
Claims Advocacy Fee — Service Revenue for Representing Clients in Insurance Claim Disputes
Recording fee income earned by a broker for providing claims advocacy services — assisting clients in negotiating with carriers on disputed or complex claims, recognized as the advocacy services are performed.
Managing General Agent (MGA) — Delegated Underwriting Authority Commission and Profit Commission
Recording MGA revenue — earned from a carrier that has granted the MGA authority to bind, issue, and manage insurance policies on its behalf — including management commission, profit commission, and ceding commission.
Life Insurance First-Year Commission — Complex Recognition with Chargeback Risk
Recognizing first-year commission on a life insurance policy placement — with the significant chargeback risk if the policy lapses within the first 1-2 years creating a variable consideration constraint.
Reinsurance Broking Commission — Treaty and Facultative Reinsurance Placement
Recording commission income earned by a reinsurance broker — placing reinsurance on behalf of insurance company clients (cedants) with reinsurers — at significantly larger premium amounts than retail insurance.
Surplus Lines Tax — Fiduciary Collection and State Remittance
Recording the collection of surplus lines taxes from insureds and the remittance to state insurance departments — a fiduciary obligation entirely separate from broker revenue.
Insurance Agency Acquisition — Book of Business Intangible (Expiration List Value)
Recording the acquisition of an insurance agency — allocating the purchase price primarily to the 'book of business' (expirations list) intangible, amortized over the expected client retention period.
Program Administrator / Specialty Program — Administration Fee on Managed Insurance Program
Recording program administration fee income — earned by a specialty program manager that administers a market niche insurance program on behalf of carriers, earning a percentage of premiums written in the program.
Cyber Insurance Commission — Placement of Rapidly Evolving Specialty Cyber Coverage
Recording commission income on cyber liability insurance placements — the fastest-growing specialty line with unique coverage complexity, significant premium volatility, and enhanced broker advisory responsibilities.
Errors & Omissions (E&O) Insurance — Broker's Own Professional Liability Coverage
Recording the insurance broker's own professional liability (E&O) insurance premium — a significant operating expense protecting the firm against client claims for negligent placement or coverage advice errors.
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