CHAPTER Ins 4300 FIDUCIARY
OBLIGATION OF PRODUCERS
Statutory
Authority: RSA 400-A:15,
REVISION
NOTE:
Document
#8935, effective 8-1-07, adopted Chapter Ins 4300, containing rules from the former
Part Ins 1303 entitled “Fiduciary Obligation of Agents and Brokers.” The former Part Ins 1303 was deleted by
Document #8934, also effective 8-1-07.
Document # 8935 made extensive changes to the wording, format,
structure, and numbering of rules in the former Part Ins 1303 and supersedes
all prior filings for that rule. The
filings affecting the former Part Ins 1303 include the following documents:
#4176,
eff 12-2-86
#4287,
eff 7-1-87
#4492,
eff 9-23-98
#5227,
eff 9-23-91
#5650,
eff 7-1-93
#7029,
eff 7-1-99, INTERIM
#7124,
eff 10-29-99
PART Ins 4301
FIDUCIARY STANDARDS AND PROCEDURES
Ins 4301.01 Purpose and Scope.
(a) The purpose of this part is to provide
standards and requirements regarding the fiduciary obligation of insurance producers.
(b) This part
shall apply to all resident and non-resident insurance producers licensed
pursuant to RSA 402-J.
Source. (See Revision Note at chapter heading for Ins
4300) #8935, eff 8-1-07; ss by #10963, eff 10-26-15
Ins 4301.02 Definitions.
(a)
"Commissioner" means the insurance commissioner.
(b)
"Producer" means a resident or non-resident producer pursuant
to the provisions of RSA 402-J.
Source. (See Revision Note at chapter heading for Ins
4300) #8935, eff 8-1-07; ss by #10963, eff 10-26-15
Ins 4301.03 Fiduciary Obligation.
(a) Insurance
producers shall hold premiums and return premiums as a trustee, and not as the owner
of the beneficial title to the funds.
(b) Any money,
or thing of value received by a producer as premium or return premium on or
under any policy of insurance or application therefor, shall be received by the
producer in a fiduciary capacity.
(c) Any
producer who appropriates to his/her own use, or, with intent to appropriate to
his/her own use, takes, secretes, withholds, lends, invests or otherwise
disposes of, uses or applies any such premium or return premium received by
him/her, contrary to the instructions or without the consent of the insurer for
or on account of which the same was received by him/her, shall be deemed to
have violated this part, irrespective of whether he/she has or claims to have
any commission or other interest in such premium or return premium.
(d) Premiums
and return premiums shall be received by an insurance producer in the
producer's fiduciary capacity and the diversion of premiums or return premiums to
the insurance producer's personal use shall violate the provisions of Ins
4301.04.
(e) Insurance
producers shall treat all premiums and return premiums as trust funds and
segregate them from their own funds.
(f) The
insurance producer shall keep an accurate record of all fiduciary funds in
accordance with Ins 4301.08. The
insurance producer's financial statement shall clearly show those funds that
are held in trust accounts for the benefit of insurers and that the liability
section of the producer's statement shall reflect the balances due companies
from such trust accounts. An insurance
producer shall not use fiduciary funds as collateral for a personal or business
loan or treat insurance premiums or return premiums as personal assets.
(g) In order to
meet fiduciary obligations, an insurance producer shall set up a premium trust
account pursuant to Ins 4301.04 in a bank or financial institution and maintain
all fiduciary funds in such bank or financial institution until actually
remitted to the insurer or person entitled thereto. The remittance of premiums shall be governed
by the terms of the individual contracts or agreements between the producer and
insurer.
Source. (See Revision Note at chapter heading for Ins
4300) #8935, eff 8-1-07; ss by #10963, eff 10-26-15
Ins 4301.04 Establishment of Premium Trust Account.
(a) Each
insurance producer shall establish a premium trust account if the insurance
producer expects to receive premiums or return premiums on
(b) An
insurance producer shall only utilize such accounts that require no advance
notice for the withdrawal of funds, and all insurance producers shall arrange
all such accounts so that the funds therein contained shall be immediately
available during normal business hours.
(c) Fiduciary
funds held on business written in New Hampshire shall at all times be
maintained in the premium trust account separate from any other account or
depository. Such account shall be in an
amount at least equal to the premiums and return premiums, net of commissions,
received by him and unpaid to the persons entitled thereto, or, at their
direction or pursuant to written contract, for the account of such persons.
(d) The balance
in the premium trust account, plus premiums due from insureds less an amount
equal to 110 percent of the average bad debts figured over the preceding 3
years, shall at all times be equal to or exceed the balance due the insurers.
(e) The
insurance producer's
"This is an insurance premium trust account
maintained under the provisions of New Hampshire Chapter Ins 4300."
(f) Checks drawn
on the premium trust account shall display a notice “Premium Trust Account New
Hampshire."
Source. (See Revision Note at chapter heading for Ins
4300) #8935, eff 8-1-07; ss by #10963, eff 10-26-15
Ins 4301.05 Commingling
of Funds Prohibited.
(a) Under no
circumstances shall an insurance producer place fiduciary funds in a personal
or business operating account. The
insurance producer may retain commission income or other funds in the premium
trust account in order to advance premiums, establish reserves for paying
return commissions or for such contingencies as may arise in the producer's
business of receiving and transmitting premiums or return premium funds.
(b) Insurance
producers may retain a portion of their unearned commissions in the premium
trust account in order to avoid being short in the event of a policy
cancellation. When a policy is cancelled
and the return premium is received by the insurance producer by means of a
credit or otherwise, those funds shall be placed in the premium trust account
until remitted to the insured entitled thereto.
(c) Cash
premium payments shall not be deposited into the insurance producer's personal account
in order to draw a personal check in the amount of net premium payment to the
insurer. The use of personal checks to
transmit fiduciary funds shall be prohibited in any situation as it results in
commingling the fiduciary funds with the producer's personal funds.
Source. (See Revision Note at chapter heading for Ins
4300) #8935, eff 8-1-07; ss by #10963, eff 10-26-15
Ins 4301.06 Return Premiums. The insurance producer
shall hold the return premiums as a fiduciary. The producer shall retain the
return premium in the trust account until remittance to the client is made
which is to occur no later than 15 days from the date the return premium is
determined by the carrier. If the return
premium cannot be delivered to the insured entitled thereto, the funds shall be
returned to the insurer. The insurer
shall report the funds escheated to the state of
Source. (See Revision Note at chapter heading for Ins
4300) #8935, eff 8-1-07; ss by #10963, eff 10-26-15; ss by #10963, eff 10-26-15
Ins 4301.07 Exchange Terms. Transactions
that are handled simply as exchange items, such as
Source. (See Revision Note at chapter heading for Ins
4300) #8935, eff 8-1-07; ss by #10963, eff 10-26-15
Ins 4301.08 Recordkeeping Requirements.
(a) The following records relative to the premium
trust account shall be maintained at all times by the insurance producer
pursuant to RSA 400-B:3:
(1) Periodic
statements of account supplied by the bank for all premium trust accounts
maintained pursuant to this part;
(2) Records of
all deposits made into each premium trust account;
(3) Cancelled checks
drawn on, or records of withdrawal of funds from, such premium trust accounts;
and
(4) An accounts
receivable listing or similar record.
(b) All records
described above shall be kept in the principal office of the insurance
producer.
(c) All records
shall be maintained:
(1) In an
orderly manner so that the information therein is readily available;
(2) So that the
records are open to inspection or examination by the commissioner at all times;
and
(3) To include references
to the individual insurance contracts with a breakdown of commission versus
premium.
Source. (See Revision Note at chapter heading for Ins
4300) #8935, eff 8-1-07; ss by #10963, eff 10-26-15
Ins 4301.09 Penalty.
(a) Any
insurance producer who shall knowingly violate any provision of this part shall be subject to the provisions of RSA
400-A:15, III.
(b) In addition
to (a) above, violations involving possible criminal acts shall be referred to
the office of the attorney general or to the county attorney for investigation
and prosecution.
Source. (See Revision Note at chapter heading for Ins
4300) #8935, eff 8-1-07; ss by #10963, eff 10-26-15
Rule
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Ins 4301.01 |
RSA 400-A:15, |
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Ins 4301.02 |
RSA 400-A:15, |
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Ins 4301.03 |
RSA 400-A;15, |
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Ins 4301.04 |
RSA 400-A;15, |
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Ins 4301.05 |
RSA 400-A:15, |
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Ins 4301.06 |
RSA 400-A:15, |
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Ins 4301.07 |
RSA 400-A;15, |
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Ins 4301.08 |
RSA 400-A;15, |
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Ins 4301.09 |
RSA 400-A;15, |