New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter II - Agents, Brokers And Adjusters › Part 20 - Brokers, agents and certain other licensees - general › Section 20.3 - Fiduciary responsibility of insurance agents, title insurance agents, and insurance brokers; premium accounts

Current through Register Vol. 46, No. 28, July 10, 2024
(a) This section is issued for the purpose of
				interpreting, and facilitating compliance with, Insurance Law section
				2120(a) and (c).
(b) Every insurance agent, title insurance
				agent, and insurance broker is responsible as a fiduciary for funds received by
				such insurance agent, title insurance agent, or insurance broker in such
				capacity; all such funds shall be held in accordance with the following
				paragraphs:
(1) An insurance agent, a title
				insurance agent, or an insurance broker who does not make immediate remittance
				to insurers and insureds of such funds shall deposit them in one or more
				appropriately identified accounts in a bank or banks duly authorized to do
				business in this State, from which no withdrawals shall be made except as
				hereinafter specified (any such account is hereinafter referred to as "a
				premium account").
(2) An insurance
				agent, a title insurance agent, or an insurance broker who makes immediate
				remittance to insurers and insureds of such funds need not maintain a premium
				account for such funds.
(3)
				Deposits in a premium account in excess of aggregate net premiums received but
				not remitted may be made to maintain a minimum balance, to guarantee the
				adequacy of the account, or to pay premiums due but uncollected (any such
				deposit is hereinafter referred to as "a voluntary deposit").
(4) No withdrawals from a premium account
				shall be made other than for payment of premiums to insurers, payment of return
				premiums to insureds, payment or other distribution of any other funds received
				or collected by the insurance agent, title insurance agent, or insurance broker
				in a fiduciary capacity; transfer to a non-premium account of compensation
				received pursuant to Insurance Law section
				2119 as provided in section
				20.6 
				of this Part; transfer to an operating account of (i) interest, if the
				principals have consented thereto in writing; and (ii) commissions, or
				withdrawal of voluntary deposits, provided, however, that no withdrawal may be
				made if the balance remaining in the premium account thereafter is less than
				aggregate net premiums received but not remitted.
(5) Deposit of a premium in a premium account
				shall not be construed as a commingling of the net premium and of the
				commission portion of the premium.
(6) In the case of an insurance agent or a
				title insurance agent operating under an "account current system", maintenance
				at all times in one or more premium accounts of at least the net balance of
				premiums received but not remitted shall be construed as compliance with
				Insurance Law section
				2120(a) and (c), provided
				that the funds so held for each such principal are reasonably ascertainable
				from the insurance agent's or title insurance agent's records.