State RegulationsGA specificDifficulty 2/5
A Georgia producer collects premium payments from clients and holds them before remitting to the insurer. How must the producer treat these funds?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under O.C.G.A. § 33-23-35, premiums collected by a Georgia producer are held in a fiduciary capacity in trust for the party entitled to them, and commingling premium funds with the producer's own money is prohibited. Willful misuse of premium funds also carries criminal exposure under that section, in addition to discipline by the Insurance Commissioner.
Why the other options are wrong
- B) There is no month-end grace period that converts premium money into personal funds; the fiduciary duty applies from collection.
- C) Commissions are the producer's own compensation; premium dollars collected for the insurer are trust funds and cannot be treated as earned income.
- D) Premiums are not a loan from the client, and investing them for the producer's benefit is a misappropriation of fiduciary funds.
Memory hook
Premiums in trust, never in your pocket.