State RegulationsTX specificDifficulty 1/5
A Texas agency deposits premiums collected from applicants into the agency's general operating account and pays its own overhead from that account. What is the violation?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under TIC 1104.024, premiums and other money received by an agent or agency in a fiduciary capacity must be held separately and may not be commingled with the agent's or agency's own funds. Keeping a positive balance is not a defense, because the duty is to keep fiduciary money identifiable and separate at all times. Commingling supports TDI discipline under TIC 4005.101-.102 and commonly surfaces during a records examination under TIC 4001.254-.255.
Why the other options are wrong
- A) Separation is required regardless of the account balance; a solvent account does not cure commingling.
- B) Rebating under TIC 541.056 concerns inducements offered to buy insurance, not the handling of premiums already collected.
- D) Unfair discrimination under TIC 544.002 concerns differences in rates or benefits among insureds of the same class.
Memory hook
Premiums are trust money — never in the same account as your own overhead.