How to record treaty reinsurance deposit
Accounting for funds held by an MGA as a deposit from a treaty reinsurer to secure future obligations.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Fiduciary Cash - Restricted | Debit | 50,000.00 | - |
| Reinsurance Funds Held Liability | Credit | - | 50,000.00 |
💡 Accountant's Note
When an MGA receives a cash deposit from a reinsurer under a treaty agreement, it must recognize the restricted asset and a corresponding liability for the funds held.
Practitioner & Systems Framework
💻 ERP Architecture
Set up a separate bank account code for restricted treaty funds in the GL.
⚠️ Audit Flags
Large fluctuations in funds held without corresponding treaty contract updates.
📄 Required Documentation
Reinsurance treaty agreement and bank confirmation of deposit receipt.
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