How to record seed deposit for loss fund
Records the initial funding provided by an insurance carrier to an MGA to facilitate immediate claim payments from a trust account.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Restricted Cash - Loss Fund | Debit | 25,000.00 | - |
| Liability for Loss Fund Float | Credit | - | 25,000.00 |
💡 Accountant's Note
MGAs with claims authority receive a 'float' or 'seed' from the carrier. This is a liability as the funds belong to the carrier, not the MGA.
Practitioner & Systems Framework
💻 ERP Architecture
Establish a separate restricted bank account and sub-ledger for each carrier's loss fund.
⚠️ Audit Flags
Co-mingling of loss fund seed money with the MGA's operational or premium trust accounts.
📄 Required Documentation
Trust account agreement and wire confirmation from the carrier.
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Discussion & Community Questions
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