# COMAR Title 31 — Maryland Insurance Administration

## Subtitle 03 — Insurance Producers and Other Insurance Professionals

### Chapter 03 — Fiduciary Responsibility of Insurance Producers: Premium Accounts — Commingling of Funds

**Authority:** Insurance Article, §§2-109 and 10-126, Annotated Code of Maryland

**Administrative History:** Effective date: January 1, 1967

**Administrative History:** Amended effective May 1, 1968

**Administrative History:** Chapter recodified from COMAR 09.30.20 to COMAR 31.03.03 effective September 7, 1998 (25:18 Md. R. 1439)

**Administrative History:** Regulation .01 amended effective April 10, 2006 (33:7 Md. R. 675)

**Administrative History:** Regulation .02 amended effective April 10, 2006 (33:7 Md. R. 675)

**Administrative History:** Regulation .04 amended effective April 10, 2006 (33:7 Md. R. 675)

**Administrative History:** Regulation .05 repealed effective April 10, 2006 (33:7 Md. R. 675)

**Administrative History:** Chapter revised effective January 1, 2018 (44:20 Md. R. 947)

#### Regulation .01 Definitions.

*COMAR 31.03.03.01*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Carrier” means a person that is:

    (a) An insurer that holds a certificate of authority in the State and provides insurance in the State;

    (b) A health maintenance organization that is licensed to operate in the State;

    (c) A nonprofit health service plan that is licensed to operate in the State; or

    (d) Any other person or organization that provides insurance or health benefit plans subject to State insurance regulation.

  (2) “Operating account” means an account owned by an insurance producer containing monies that are utilized primarily for the day to day operation of the insurance producer’s business.

  (3) “Personal account” means an account owned by an individual who is an insurance producer containing monies that are utilized primarily for the individual’s personal expenses.

  (4) “Premium” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.

  (5) “Premium account” means an account in a bank or banks authorized to do business in this State or subject to jurisdiction of this State containing premium monies or voluntary deposits, from which withdrawals may not be made except as specified in COMAR 31.03.03.02C.

  (6) “Prompt remittance” means remittance of premium monies to carriers or insureds not later than the close of the fifth business day following receipt of the funds.

  (7) “Voluntary deposit” means a deposit into a premium account in excess of aggregate net premiums, return premiums, and deposits received but not remitted, made for the purpose of maintaining a minimum balance, to guarantee the adequacy of the account, or to pay premium due but uncollected.

#### Regulation .02 General Requirements.

*COMAR 31.03.03.02*

A. Premium Account. An insurance producer that does not make prompt remittance of a carrier or insured’s premium shall maintain such premium in one or more premium accounts, which shall be separate from any operating accounts or personal accounts.

B. Commingling of Premium.

  (1) An insurance producer acting as such in this State may not commingle any premium account with any operating account or personal account.

  (2) An insurance producer acting as such in this State may:

    (a) Make voluntary deposits into the insurance producer’s premium account.

    (b) Unless prohibited by the carrier, or by Regulation .04 of this chapter, commingle a single carrier’s premium with the premium of one or more other carriers into one or more premium accounts.

C. Withdrawals.

  (1) Withdrawals from a premium account may not be made other than for the following purposes:

    (a) Payment of premiums to carriers.

    (b) Transfer to an operating account of bank interest, if the carrier has consented to it in writing.

    (c) Transfer to an operating account of commissions either actual or average. If average commissions are used, the insurance producer shall maintain on file in the insurance producer's office at all times a letter from each carrier stating the percentage of the average commission.

    (d) Withdrawal of voluntary deposits.

    (e) Payment of return deposits to insureds.

    (f) Payment of return premiums to insureds in the ordinary course of business when a written agreement with the carrier authorizing this practice exists.

  (2) A withdrawal may not be made if the balance remaining in the premium account thereafter is less than aggregate net premiums, return premiums, and deposits received but not remitted.

D. Deposit of a premium in a premium account may not be construed as a commingling of the net premium and of the commission portion of the premium.

#### Regulation .03 Account Current System.

*COMAR 31.03.03.03*

In the case of an insurance producer operating under an account current system, maintenance at all times in one or more premium accounts of at least the net balance of premiums as determined by either actual or average commissions, return premiums, and deposits received but not remitted, shall be construed as compliance with this chapter, provided that the funds so held for each  carrier are readily ascertainable from the insurance producer's records.

#### Regulation .04 Substantial Interest.

*COMAR 31.03.03.04*

In those instances when the officers, directors, or principal management of a carrier have a substantial interest in either the conduct or operation of the agency or brokerage business, or when the officers, directors, or principal management of an agency or brokerage business have a substantial interest in the conduct or operation of the carrier, the agency or brokerage business shall maintain one or more premium accounts to be used exclusively for any premium collected from the carrier, which shall be separate from premium accounts for other carriers.