Accounting & Bookkeeping ยท KBLI 66220

Insurance Broker Accounting

Brokers and insurance agents have commission-based revenue models with tiered structures: first year commission (FYC) is larger than renewal commission. Timing of revenue recognition and renewal rate tracking become keys to profitability. Arunika Consulting helps insurance brokers organize accounting so commissions and receivables from insurance companies are neatly recorded.

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What usually goes wrong

  • Tiered Commissions

    FYC (first year) can be 30-50%, renewal (following years) only 5-15%. Requires tracking per policy.

  • Receivables from Insurer

    Commissions are paid 30-60 days after premium is received, creating receivables that must be monitored.

  • Clawback Risk

    If policies are canceled within a certain period, commissions can be clawed back. Provisions are needed.

What we do

  1. 01

    Commission Tracking System

    Setup of commission recording per policy with year tracking (first year vs renewal) and payment status.

    • Accurate revenue
    • Monitored receivables
    • Clear forecasting
  2. 02

    Clawback Provision

    Calculating clawback estimates based on historical lapse rate and making appropriate provisions.

    • Adequate reserves
    • No surprises
    • Conservative reporting
  3. 03

    Renewal Dashboard

    Tracking policies nearing expiry to optimize renewal rates and commissions.

    • Recurring revenue
    • Customer retention
    • Accurate forecasting

Related regulations

  • SAK EP

    Private Entity Financial Accounting Standards

    Reporting framework for insurance brokers without public accountability.

  • PSAK 23

    Revenue

    Insurance commission revenue recognition: when policy is issued vs when payment is received.

  • POJK Broker

    OJK Regulations for Insurance Brokers

    Financial reporting and prudential provisions for OJK-licensed insurance brokers.

If the tax office starts asking questions

The team that keeps your books and files your taxes also stays with you through an SP2DK, an audit, an objection and an appeal.

How we handle tax disputes

Frequently Asked Questions

When is insurance commission recognized as revenue?

Ideally when the policy is effective and there are no material cancellation conditions. Some brokers recognize when payment is received for prudence.

How to record commission clawback?

Clawback reduces commission revenue in the period when clawback occurs. If material, create provisions based on lapse rate estimates.

Are brokers required to be audited?

OJK-licensed brokers must submit audited financial statements to OJK annually according to prudential provisions.

How do accounting services improve operating cost efficiency?

Accurate, timely financial reports help you spot cost leakage, monitor margins by product or service, and make data-based decisions.

Can financial reports be accessed in real time?

Yes. We use cloud accounting systems so you can monitor cash flow, profit and loss, and business performance from anywhere.

How do you ensure reports are ready for external audits or banks?

Reports are prepared with clear documentation and traceable transaction data.

Related Industries

Tell us about your business

Send your line of business, rough annual turnover, and what is going wrong. We reply on WhatsApp.

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