Current through Register Vol. 46, No. 39, September 25, 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.
(c) Except as hereinabove provided, an
insurance agent, a title insurance agent, or an insurance broker shall not
commingle any funds received or collected as an insurance agent, a title
insurance agent, or an insurance broker with his, her, or its own funds or with
funds held by him, her, or it in any other capacity without the written consent
of the person, firm, or corporation for whom they are held in a fiduciary
capacity.
(d) If any provision of
this section or the application thereof to any person or circumstances is held
unauthorized by law, then the remainder of the section and the application of
such provision to other persons or circumstances shall not be affected
thereby.
