The books and records of a brokerage are based on the policy transactions processed by the brokerage, whether it is new business, renewals, endorsements or cancellations. These are the brokerage’s own records of activity within the brokerage.

In most brokers offices between 85-90% of the invoicing occurs in the 30-45 days from the effective date of a client’s policy. Whether manual or automated, the brokerage’s books and records must incorporate “effective date or invoice date”, whichever is greater, when recognizing trust assets, liability and income for the brokerage.

A brokerage’s books of account must separate and record:

  • Receipt of money in Trust for insurers.
  • Receipt of money in Trust for members of the public.
  • All disbursements out of money held in Trust.
  • Bank statements, deposit books and cashed cheques.
  • Record showing monthly totals of Trust assets and Trust liabilities.

The original books of entry described above support and verify the monthly list of trust assets and liabilities that are prepared and retained. The books and records must be prepared on the basis of generally accepted accounting principles. It is also recommended that any applicable “best practice” RIBO bulletins be adopted as part of the firm’s record keeping practice.

All of the records referred to above must be preserved and kept by members for up to seven (7) years. Please note that there are no regulatory requirements with respect to policy/client records, however, our best advice, is to keep these records for the prescribed period mentioned above and in cases of commercial liability it may be wise to consider keeping them for ten years particularly because of the possibility of a future negligence action. Your errors and omissions carrier may also have additional advice for you. Scanned files are an accepted form for record keeping, however, there must be proper back-up procedures in place to protect the integrity of the data and the files must be readily accessible.

Whether it’s a manual or computerized record keeping system that is utilized by the brokerage, the books and records must be kept current and in order at all times. It is important that a detailed verifying trail supporting any changes be prepared and retained. Also, if the brokerage engages the services of a third party accounting firm to prepare the required filings, a copy of their working papers must be obtained and retained. However, brokerages fully utilizing an insurance brokerage management system that is integrated to a general ledger set of accounts producing financial records (balance sheets, income statements, aged premium receivable lists and insurer payable listings) more than meets the regulatory record keeping requirements.