A Hawaii producer deposits insurance premium funds into a properly designated premium trustee account that earns interest. The producer may retain the interest for personal use only if:
A.
the insurer or person entitled to the funds gives prior written consent
B.
the amount of interest is less than $100
C.
the producer has held a license for at least five years
D.
the producer reports the interest as taxable income
A is correct. Hawaiʻi treats premiums and other qualifying insurance funds held by a producer as fiduciary funds . HRS §431:9A-123.5 permits a producer to maintain such funds in a properly designated trustee account but imposes strict limitations on personal use or commingling. If the premium trustee account earns interest, the producer may not retain that interest for the producer's own use or benefit without the prior written consent of the insurer or other person entitled to the funds .
The statute also permits only limited additional money to be mixed into the premium account—generally funds reasonably necessary to cover bank, savings-and-loan, or financial-services account charges. The account must be identified in the institution's records as a trustee account established pursuant to HRS §431:9A-123.5 or words of similar effect.
No exception exists merely because the accumulated interest is small, eliminating B. Length of licensure does not alter the fiduciary obligation, so C is incorrect. Reporting interest for tax purposes likewise does not establish ownership of money that legally belongs to another party, eliminating D.
Improper diversion or appropriation of premium funds may expose the producer to disciplinary and other legal penalties.
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