How to comply with commingling changes
Changes to the regulation that governs agents’ fiduciary duties (i.e. proper handling of premium funds) took effect Jan. 1. While we limited some of the Maryland Insurance Administration’s (MIA) modifications by providing feedback – much based on your input – there are still changes.
WHAT IT MEANS TO YOU
As we previously reported in Agent Headlines, commingling is a thing of the past … unless you only hold funds for no more than five days. General guidelines:
- If you remit to the carrier premiums that are received by the agency within five business days of receipt, you can still hold the funds together.
- After five business days, you must segregate premium funds and agency operating funds.
- A consent letter from carriers to commingle funds is no longer valid.
- You may combine the premium funds of one carrier with the premium funds of another carrier in a single premium fiduciary account, as long as the carriers have not required individual segregation of their premiums.
- The agency will need to secure written consent from the carrier to be able to withhold interest earned on the fiduciary account – unless the agency contract specifically addresses the agency's right to interest earned. (See our updated online resource for a sample letter.)
We’ve updated our comprehensive resource on agents’ fiduciary duties to reflect the change – and to include the sample letter mentioned above. The resource also contains tips to leverage stronger FDIC protection from your financial institutions. Instead of getting $250,000 for the entire agency account (the current FDIC limit), it can allow you to leverage $250,000 for each customer and carrier whose funds are held in the account – and it doesn’t cost you a penny.