P&CNJmedium
A New Jersey producer collects $4,000 in premium from a client for an admitted insurer. Under the Producer Licensing Act and N.J.A.C. 11:17C, the producer must:
ADeposit the funds into the producer's personal operating account until commission is calculated
BWire the funds directly to the policyholder's mortgagee without the insurer's written authorization or consent
Hold the funds in a fiduciary capacity in a separate premium trust account and account promptly to the insurer
DConvert the funds to a cashier's check payable to DOBI within 5 business days
Why this is the answer
Under the NJ Producer Licensing Act and N.J.A.C. 11:17C-2.1, all premiums and return premiums received by a NJ producer are held in a fiduciary capacity and must be deposited in a separate premium trust account. The producer must account for and pay the funds to the insurer, insured, or other person entitled to them. Commingling premium with personal or general operating funds violates the fiduciary duty and is disciplinable as misappropriation under N.J.S.A. 17:22A-40.
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