Insurance Premium Management: Insights into Received vs. Outstanding Balances
The foundation of any insurance company's or brokerage's financial viability is efficient premium management. It is the process of monitoring and managing the flow of policyholder premium payments. Accurately differentiating between Outstanding Balances—the money owed but not yet collected—and Received Balances—the money successfully collected and applied to the policy—is the main problem in this procedure. Accurately reporting financial health, preserving regulatory compliance, and optimizing cash flow all depend on managing this gap. 1. Recognizing Balances Received The total amount of premium money successfully collected from policyholders and entered into the policy ledger for a given time period is known as the Received Balance. Definition and Key Metrics: Definition: Money received from the insured in the form of a binder deposit, installment, or full payment. Cash Flow: These figures show the insurer's immediate accessible liquidity, which covers investment capit...