Insurance Premium Collection Account

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The account current referred to in the question relates to the accounting method used in the insurance industry to keep track of premiums collected by agents or brokers from policyholders. This method helps to ensure accurate record-keeping and timely payment of premiums to the insurance company.

Among the various types of account current methods used in the industry, the one described in the question is known as the "Paying commission basis". Under this method, the agent collects the premiums directly from the insureds, subtracts his or her commissions, and remits the net premiums due to the entity (i.e., the insurance company).

This method is commonly used for individual policies where the premiums are paid directly by the policyholders to the agent. The agent is responsible for collecting the premiums, deducting the agreed-upon commission amount, and forwarding the remaining balance to the insurance company. The commission amount is usually a percentage of the premium and is agreed upon in advance between the agent and the insurance company.

The "Billing basis" is another method used in the insurance industry, where the insurance company sends a bill to the policyholder for the premium amount due. The policyholder then sends the premium payment to the insurance company directly. In this method, the agent's commission is paid separately by the insurance company, usually as a percentage of the premium.

The "Item basis" method is used for commercial policies where the premium is based on specific items or goods being insured. The agent collects the premium from the policyholder and then remits it to the insurance company, along with a list of the insured items and their respective values.

Finally, "Business costs" are expenses incurred by the agent in running their business, such as rent, utilities, and marketing expenses. These costs are not directly related to the collection and remittance of premiums and commissions and are not relevant to the account current method described in the question.