Risk Transfer Agreement Client Money

In response to the IMD`s cash assistance requirements, the FSA introduced the concept of risk transfer agreements between insurers and intermediaries, whereby money paid to an intermediary for an insurance policy is considered to be paid to the insurer. 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.” When an insurer grants a risk transfer to an intermediary, it means that the client`s money is actually the insurer`s money as soon as the intermediary receives invoiced funds: and the money that is reimbursed by the insurers (for example. B refunds or claims) is the insurance money until it is paid to the customer. Q: I don`t have any customer money, how can I make a zero return? A: The client`s money resource is the amount of the customer`s money that is separated from the corresponding accounts. Brokers were forced to make a decision as to whether they should rely entirely on risk transfer, thereby avoiding the need to maintain trusted client accounts. 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. Some insurers simply request that insurance funds be transferred separately to the insurer or product provider. Others allow the risk transfer funds to be mixed with the client`s money in the real estate agent`s trust account, as stipulated by the rules, the subordination of their participation in the account to the clients of the company. 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. Tracking customers` money through chains of intermediaries. CASS 5.5 provides more detailed information on customer bank account management requirements.

Brokers have always recognized the need to protect potentially large amounts of money held in transactions. They are legally required to do so with respect to customers and insurers. Some brokers are also unable to show whether or not they have a risk transfer, co-mix or subordination of the interests of insurers and wholesalers/MGA. The terms and conditions of sale of these parties should have a section on these requirements. The requirement for the customer`s money is the amount of money that a company must separate to fulfill its obligations to customers. Q: What is the difference between the customer`s greatest need for money and the highest level of account? A: Of all general insurance intermediaries, customer money control is required: Q: Is there an exemption from client money for property management companies? A: First, the company must determine whether it receives or holds money in connection with the distribution of insurance (Q11 on the RMA-C).