The office of General Counsel issued the following informal opinion on July 13, 2000, representing the position of the New York State Insurance Department.
Re: Interest Charges on Old Money
Can an agency charge interest from its producer on premium "old money" not remitted within 60 days of collection?
Premium moneys collected by a producer belong to the insurer. To the extent that the producer is permitted to delay remittance to the agency is a matter of discretion on the part of the insurer. At any point in such extended period, the agency may demand interest on the retained sum. It should be noted further, that at some point the continued retention can have a harmful effect on the insurers accounting posture, since it may no longer be treated as an admitted asset, and result in a charge to surplus. The agencys efforts to forestall such delay, within the limitations of an agreement with the producer, are reasonable.
For further information you may contact Associate Attorney Nicholas C. Silletti at the New York City Office.