Illinois Administrative Code
Title 50 - INSURANCE
Part 3113 - PREMIUM FUND TRUST ACCOUNT
Section 3113.40 - Premium Fund Trust Account
Current through Register Vol. 48, No. 12, March 22, 2024
a) All licensees required to maintain a PFTA, pursuant to subsection (c), shall establish and maintain a PFTA in a financial institution. All resident and quasi-resident licensees required to maintain a PFTA pursuant to this Section shall maintain such PFTA with one or more financial institutions located within the State of Illinois and subject to the jurisdiction of the Illinois courts. Licensees are not required to maintain a separate PFTA for each insurer unless required by an insurer(s).
b) All licensees required to maintain a PFTA, pursuant to subsection (c), shall certify at each license renewal or reinstatement date that premiums are held in a PFTA. The account must be designated as a Premium Fund Trust Account on the bank records and those words shall be displayed on the face of the checks of that account.
c) A PFTA must be established and maintained if a licensee:
d) The absence of a PFTA does not relieve the licensee of the obligation to hold the premiums in a fiduciary capacity, and the premiums shall not be used for purposes other than those authorized by this Part.
e) All licensees who maintain or are required to maintain a PFTA must deposit all premiums received into the PFTA.
f) Non-premium monies received by the licensee for soliciting, negotiating, effecting, procuring, renewing, continuing or binding policies of insurance may be deposited into the PFTA. Examples of non-premium monies are service fees, policy fees, late charges, inspection fees and surplus lines premium taxes.
g) All monies deposited into the PFTA are considered to be fiduciary funds until lawfully withdrawn.
h) The following disbursements may be lawfully withdrawn from the PFTA:
i) The PFTA shall not be used as a general operating account or claim payment account.
j) The PFTA balance in the financial institution shall at all times be the amount deposited less lawful withdrawals. If the balance in the financial institution is less than the amount deposited less lawful withdrawals, the licensee shall be deemed to have misappropriated fiduciary funds and to have acted in a financially irresponsible manner.
k) All licensees may place PFTA funds in interest bearing or income producing assets and retain the interest or income thereon, provided the licensee obtains the prior written authorization of the insurer on whose behalf the funds are to be held. The written authorization from the insurer shall be on a form the same as Exhibit A or other written form signed and dated by the licensee and the insurer. Employing the use of specialized techniques or strategies which incur additional risks to generate higher returns or to extend maturities is not permitted. Such prohibited techniques include but are not limited to the use of financial futures, options, or other derivatives, swaps, synthetic assets, margin purchases, short sales, pledging or other encumbrance of PFTA assets or balances, and when issued trading. In addition to savings and checking accounts in a financial institution, a licensee may invest in the following assets:
l) Each investment transaction authorized pursuant to subsection (k) shall be made in the name of the licensee's PFTA. The licensee shall maintain evidence of any such investments. Each investment transaction shall flow through the licensee's PFTA.