State RegulationsMA specificDifficulty 2/5
A Massachusetts producer collects renewal premiums from several policyholders, deposits the money into a personal account, and spends it. Which Massachusetts statute does this conduct violate?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
M.G.L. c. 175, § 170 targets premium fraud: an agent's or broker's misappropriation, conversion, or theft of premium funds entrusted in the course of the insurance business. Diverting policyholder premiums into a personal account and spending them is the conduct the statute condemns, and the Massachusetts Division of Insurance pursues discipline alongside any criminal exposure. The law protects the policyholders whose money vanished and the insurers whose coverage was never funded.
Why the other options are wrong
- A) Coercion under M.G.L. c. 176D, § 3(4) concerns forcing parties' market conduct; the producer's wrong was taking the money, not pressuring anyone to buy.
- C) M.G.L. c. 175I, § 4 governs notices about personal information practices; it has no application to stolen premiums.
- D) Unfair discrimination under M.G.L. c. 175, § 120 concerns unequal rates among similarly situated individuals, not misappropriation of premium funds.
Memory hook
Premiums parked in a personal account = § 170 premium fraud — client money is not the producer's money.