Sweep Accounts for Commissions Also?

[mica.cooper]

We are setting up sweep accounts in a number of states. Companies sweep premiums collected by agents directly into a company account from the agent account.

Some agents would like for the companies to sweep commissions back the same way. An issue was raised that perhaps a sweep account cannot be used for this purpose and a separate account must be used by the agent to collect commissions.

Can anyone cite state laws regarding this issue?

Thanks
MC

[InsMgmt]

I will not list state specific rulings, but simply point out that these premiums are being swept out of trust accounts. It would seem to me that proper accounting practices would require that agent commissions and policyholder premium be kept separate, so commissions being swept into an account should be directed to the operations account. For those premium payments which include the agent commission (typically, high risk auto and E&S premium down payments), the agency needs to transfer the commission into the operations account once the premium payment has been uploaded. Agents need to be careful not to co-mingle funds, or risk being financially disciplined by their respective Insurance Departments.

[jshall]

I'm a CA Broker and I have my Trust account for prem and the an Opperating account for broker fee's and direct deposit of commisions. I know in Ca it's a BIG no no to deposit commisions into a Premium Trust account. I would immagine it
would be the same for all states!

[mica.cooper]

We will make a provision for the agents to have a separate account to do commissions.

Thank you for the help!
MC