Insurance Fiduciary Duty and Trust Accounts

P&C insurance agents & brokers are mandated by state laws to receive transacted premiums in a fiduciary capacity, that is, not as owners but "trustees" or "custodians" of premium funds. Fiduciary relationship of independent agents and brokers with the owners of premium funds defines the essence of insurance fiduciary duty. Premiums and return premiums must be maintained in a "trust" bank account, separate from the agency business operating funds, and be disbursed only to their legal owners.