Compensating balance plan

{
  "id": "MLC-T-INS-003614",
  "term": "Compensating balance plan",
  "field": "Insurance and risk management",
  "definition": "An arrangement in which a business pays its insurance premium to the insurer, which keeps its charges for expenses, taxes, and profit and deposits the rest in a bank account at the business's lender, held in the insurer's name. The lender regards the deposit as meeting its minimum-balance requirement on the business's borrowing, so the business's own cash is released for other uses.",
  "url": "https://mlchart.com/terminology/insurance/compensating-balance-plan/"
}