Florida 2-15 Life, Health and Variable Annuity AgentFlorida Laws and Regulations Common to Life and Health InsuranceMedium
A Florida licensed life and health agent receives a client's premium payment in cash. According to Florida's insurance laws regarding fiduciary duties, what is the agent obligated to do with this payment?
- ARemit the payment to the insurer or place it in a separate trust account without commingling.
- BDeposit it into their personal checking account for convenience and then transfer the equivalent amount to the insurer.
- CHold the cash in their office safe until the insurer sends a representative to collect it.
- DUse the cash to pay for immediate business expenses, deducting it from the amount owed to the insurer.
Show answer & explanationAnswer & explanation
Correct answer: A. Remit the payment to the insurer or place it in a separate trust account without commingling.
Agents have a fiduciary duty to handle client funds responsibly. This means they must remit premiums promptly to the insurer or deposit them into a separate trust account, never commingling them with personal funds.
Why the other options are wrong
- B. This is commingling, which is a severe violation of fiduciary duty.
- C. Holding cash in an office safe is not secure or compliant; funds must be handled through proper financial channels.
- D. Using client funds for personal or business expenses is misappropriation and commingling.
Agent Fiduciary Duty (Premiums)
Florida licensed agents must handle client premiums in a fiduciary capacity, meaning they must be kept separate from personal funds and promptly remitted to the insurer or placed in a trust account.
- No commingling with personal funds
- Prompt remittance to insurer
- Funds held in trust for the insurer/insured
Memory trick: Trust the funds, separate the money, act in the client's best interest.