Direct bill commission “receivable” is revenue for the brokerage as it is the commission due to the brokerage from an insurer. It not a trust asset as the funds are not held on behalf of an insurer or an insured.

Direct bill commission receivables are not protected funds. If a brokerage becomes insolvent, the direct bill commission receivable from an insurer is available to satisfy general creditors. If an insurer becomes insolvent, the full agency bill payable (without offset) would still be outstanding to the Receiver.

If a brokerage experiences a trust deficit, without the inclusion of direct bill commission receivable as an asset to correct it, it may be an indication that trust funds are being used for general purposes and not for purposes for which the funds were received.

Brokerages that have both “agency bill” and “direct bill” accounts with the same insurer should only be using the agency billed items in calculating the insurance company payables.