State RegulationsFL specificDifficulty 2/5
A Florida life agent collects a premium payment from a client at the agent's Tampa office. In what capacity must the agent hold and handle these funds?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under Chapter 626, Florida Statutes, and rules enforced by the Department of Financial Services (DFS), a licensed agent acts in a fiduciary capacity with respect to premiums and other insurance funds entrusted to the agent by the public. The money belongs to the insurer, must be kept separate from the agent's personal funds, and must be promptly forwarded to the insurer; converting fiduciary funds exposes the agent to license discipline and criminal liability.
Why the other options are wrong
- A) Premiums collected from an applicant are entrusted funds belonging to the insurer, not the agent's pay; the agent's commission is separately paid by the insurer.
- B) Commingling fiduciary funds with the agent's personal account is prohibited; premium money must be kept separate and promptly remitted.
- D) The client's payment is premium for the insurer's policy, not client-directed escrow money; the agent's fiduciary duty runs to the insurer.
Memory hook
Fiduciary means the money is not yours: collect it, protect it, forward it.