What include balances due from the insurer's brokers (collectively referred to as agents' balances) for premium on policies written?

Question

Options

• Acollected premiums
• Baccount premiums
• CDirect balance
• DAgents' balances

• A
  2% (1)
• B
  9% (4)
• C
  4% (2)
• D
  85% (40)

Explanation

Agents' balances (option D) directly names the accounting category that captures amounts owed to an insurer by its brokers and agents for premiums on written policies - the term is its own definition, making it the unambiguous correct answer.

Why the distractors are wrong:

• A (Collected premiums) refers to premiums already received and processed, not outstanding amounts still owed by intermediaries.
• B (Account premiums) is not a standard insurance accounting term and has no recognized definition in this context.
• C (Direct balance) relates to business written directly with policyholders, bypassing agents entirely - the opposite of what the question describes.

Memory tip: Think of it this way - agents hold the money on the insurer's behalf, so the insurer has a balance due from agents. The name "agents' balances" tells you exactly who owes what: the agent owes the balance.

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