Definition:Statement of account
📋 Statement of account is a periodic financial document exchanged between parties in an insurance or reinsurance relationship that summarizes the premiums owed, claims paid, commissions deducted, and the resulting net balance due from one party to the other. In the Lloyd's market, between coverholders and managing agents, and across global treaty reinsurance arrangements, the statement of account serves as the primary instrument for reconciling financial obligations over a defined reporting period — typically monthly or quarterly. It is sometimes referred to as a "bordereau settlement" or simply a "technical account," though its exact format and naming conventions vary by market and contractual arrangement.
🔄 The mechanics are straightforward but demand precision. The party with delegated authority or ceding responsibility compiles a statement showing gross premiums collected or due during the period, subtracts agreed brokerage or commission percentages and any claims or loss adjustment expenses already settled, and presents the net figure payable to or receivable from the counterparty. In reinsurance, ceding companies prepare statements for their reinsurers reflecting ceded premiums net of ceding commissions and any paid recoveries. Binding authority agreements and reinsurance treaties typically prescribe the format, frequency, currency, and submission deadlines for these statements. Increasingly, platforms built by insurtech firms and market infrastructure providers like the Lloyd's London market's PPL or central settlement systems aim to automate the generation and reconciliation of statements of account to reduce errors and accelerate cash flow.
💰 Accurate and timely statements of account underpin the financial health of insurance relationships and the broader market's cash-flow cycle. Delays or discrepancies in account rendering can cascade into credit risk issues, regulatory reporting problems, and strained commercial relationships. Regulators in multiple jurisdictions — including the UK's FCA and the NAIC in the United States — expect that intermediaries and carriers maintain auditable records of account settlements. For reinsurers, timely receipt of statements is essential to booking accurate reserves and recognizing earned premium under both IFRS 17 and US GAAP. In a market where billions of dollars move between counterparties every quarter, the humble statement of account is a linchpin of operational discipline.
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