OGC Opinion No. 06-07-07

The Office of General Counsel issued the following opinion on July 12, 2006, representing the position of the New York State Insurance Department.

Re: Commingling of funds

Question Presented:

May an insurance agent commingle premium funds with non-premium funds?


No. Pursuant to N.Y. Comp. Codes Rules and Regs. tit. 11, § 20.3 (2006) (Regulation 29), an insurance agent may not commingle premium funds with non-premium funds, except as specifically provided therein.


No facts were provided; it was a general inquiry.


N.Y. Comp. Codes Rules and Regs. tit. 11, § 20.3 (2006) (Regulation 29) ("Fiduciary responsibility of insurance agents and brokers; premium accounts") provides:

(a) This section is issued for the purpose of interpreting, and facilitating compliance with, section 2120(a) and (c) of the Insurance Law.

(b) Every insurance agent and every insurance broker is responsible as a fiduciary for funds received by such agent or broker in such capacity; all such funds shall be held in accordance with the following paragraphs…

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(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 assureds, 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...

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(c) Except as hereinabove provided, an agent or broker shall not commingle any funds received or collected as agent or broker with his or its own funds or with funds held by him 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.

Except as provided in the above regulation, an insurance agent or broker may not commingle premium funds with non-premium funds.

For further information you may contact Principal Attorney Paul A. Zuckerman at the New York City Office.