https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3APass-through_fundingDefinition:Pass-through funding - Revision history2026-06-14T01:53:52ZRevision history for this page on the wikiMediaWiki 1.43.8https://www.insurerbrain.com/w/index.php?title=Definition:Pass-through_funding&diff=11532&oldid=prevPlumBot: Bot: Creating new article from JSON2026-03-12T00:13:28Z<p>Bot: Creating new article from JSON</p>
<p><b>New page</b></p><div>💰 '''Pass-through funding''' is a cash-flow arrangement in [[Definition:Insurance | insurance]] and [[Definition:Reinsurance | reinsurance]] programs where [[Definition:Premium | premium]] payments collected at one level of the distribution chain are forwarded — or "passed through" — to the next party with minimal delay and without being commingled with the intermediary's own operating funds. The structure is particularly relevant in [[Definition:Delegated underwriting authority (DUA) | delegated authority]] channels, where a [[Definition:Managing general agent (MGA) | managing general agent]] or [[Definition:Coverholder | coverholder]] collects premiums from [[Definition:Policyholder | policyholders]] on behalf of an [[Definition:Insurance carrier | insurer]] or [[Definition:Lloyd's syndicate | Lloyd's syndicate]] and must remit those funds promptly under the terms of a [[Definition:Binding authority agreement | binding authority agreement]].<br />
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🔄 Operationally, pass-through funding relies on clear contractual timelines and segregated bank accounts. The intermediary typically holds collected premiums in a [[Definition:Trust account | fiduciary trust account]] and transmits them to the carrier or reinsurer on a scheduled basis — often monthly, though some agreements specify shorter windows. Because the intermediary never takes economic ownership of the funds, they do not appear as revenue on the intermediary's income statement; instead, they flow directly through as a [[Definition:Liability | liability]] until remitted. Technology platforms supporting [[Definition:Insurtech | insurtech]] distribution increasingly automate this process, using [[Definition:Application programming interface (API) | API]]-driven payment reconciliation to reduce settlement lag, minimize errors, and generate real-time reporting for all parties.<br />
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🛡️ Rigorous pass-through funding disciplines protect every participant in the value chain. Carriers gain assurance that their [[Definition:Earned premium | earned premium]] arrives predictably, which supports accurate [[Definition:Cash flow underwriting | cash-flow forecasting]] and [[Definition:Investment income | investment planning]]. [[Definition:Insurance regulation | Regulators]] — especially those overseeing [[Definition:Lloyd's of London | Lloyd's]] and other markets with extensive delegation — view reliable premium flow as a key indicator of intermediary governance, and lapses can trigger audit findings or suspension of [[Definition:Binding authority agreement | binding authority]]. For intermediaries themselves, demonstrating clean pass-through accounting builds trust with capacity providers, strengthening their competitive position when negotiating new or expanded programs.<br />
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'''Related concepts:'''<br />
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* [[Definition:Fiduciary duty]]<br />
* [[Definition:Premium trust fund]]<br />
* [[Definition:Binding authority agreement]]<br />
* [[Definition:Delegated underwriting authority (DUA)]]<br />
* [[Definition:Bordereaux]]<br />
* [[Definition:Premium settlement]]<br />
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