PLPennsylvaniamedium
A Pennsylvania producer collects a personal-auto premium check from a client. Under PA fiduciary rules, how must the producer handle those funds?
ADeposit the premium in the producer's general operating account and remit to the insurer monthly
BHold the premium personally for up to 90 days before remitting
CDeposit the premium into the producer's personal savings account until the policy renews
Hold the premium in a fiduciary capacity and remit it to the insurer or insured entitled to it
Why this is the answer
40 P.S. § 310.96 makes a Pennsylvania producer responsible in a fiduciary capacity for all funds received or collected as a producer. The producer may not mingle those funds with its own without the express consent of the insurance entity, and even with consent the fiduciary funds must remain reasonably ascertainable from the producer's books (31 Pa. Code § 37a.22). Improperly withholding, misappropriating or converting the money is a prohibited act under 40 P.S. § 310.11(4), punishable under § 310.91.
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