Myth-busting: insurer money vs client money – what are brokers’ responsibilities?

Did you know our Client Money team can take on some of the risk of this highly regulated and specialised area for brokers? This includes all client money bank reconciliation and insurer payments via our market leading secure portal. But, one of the questions the team frequently hear is “do you operate client or insurer money?”.

In this post, they’re busting myths on what they can help brokers with and what your responsibilities are.

Myth: There’s no difference between client and insurer money

Reality: This isn’t quite right. There are key variations around how each are operated and regulated. As a broker, you need to be regulated by the FCA. However, how you hold the money you receive, be it client premiums, refunds and/or claims, determines whether you’re operating client or insurer money.

Client money is where you act as an agent for the client (or a combination of both the client and insurer), operating insurer TOBAs with No Risk Transfer. All client receipts are therefore deposited into a client money trust bank account.

You’ll also fall within the FCA client money (CASS) rules, which aim to regulate the way firms hold money (protection) and what can and can’t be done with it (segregation). As a result, you’ll need client money handling permissions.

Insurer money is where you operate as an agent of the insurer, having been granted Full Risk Transfer under your insurer TOBAs. Alternatively, a client can pay the insurer directly where an insurer TOBA does not give a Full Risk Transfer. With this model, all receipts are deposited into an insurer trust bank account.

Myth: CASS 5 rules apply to both client money and insurer money

Reality: Most of the CASS 5 rules do not apply if you operate insurer money. However, it is seen as best practice for insurer money firms to follow the CASS 5 rules, and is encouraged by the FCA.

Although, if you recieve just £0.01 of a client premium, refund and/or claims money that is not covered by a Full Risk TOBA this means you are operating client money. Therefore, the CASS 5 rules must be applied, including having the correct client money handling permissions.

Myth: One is better than the other

Reality: It depends on the needs of your business and those of your clients. There are pros to operating both client and insurer money.

Controlling client money could open doors to more markets or agencies which do not grant a Full Risk Transfer, allowing you to access new products and services. This creates a greater potential for GWP and profitability growth.

Operating insurer money allows you to provide financial services without many of the CASS 5 rules. This can save time and reduce capital requirements. You can also save money on operational costs, as you don’t need a CASS Audit.

Myth: I still need to conduct an audit as a Bravo Networks Client Money user

Reality: We’re pleased to say this one is incorrect. If you use our Client Money services, you won’t need to have an external audit, as Bravo Networks’ Client Money is audited on your behalf. 

Myth: Using the Bravo Networks Client Money team relinquishes my responsibilities

Reality: This is a common misconception. As an FCA regulated business, you’ll still have responsibilities. This includes, but is not limited to:

  • Credit write back procedures
  • Cash posting and banking cheques
  • Insurer settlement in line with TOBAs
  • Ensuring your ARs are operating in line with FCA regulations
  • Making sure client TOBAs retain the correct CASS clauses
  • Supplying Bravo Networks Client Money bank details to clients on any relevant documentation and communications.


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