State RegulationsTX specificDifficulty 2/5
A Texas agency collects premiums from applicants and holds the money before remitting it to insurers. What does the Texas record maintenance requirement demand of those funds?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under TIC 4001.254-.255, a license holder must keep records sufficient to identify money received in a fiduciary capacity, including premiums, and the person on whose behalf it is held. Premiums collected from applicants are held in trust for the insurer or the applicant, not owned by the agency, so the records must keep those funds identifiable and separate. Depositing them into the agency's own operating account is commingling, which is separately prohibited by TIC 1104.024.
Why the other options are wrong
- B) Putting fiduciary money into the agency's own operating account is commingling; keeping a ledger does not cure it.
- C) Money collected for an applicant or insurer is held in a fiduciary capacity and is never the agency's own property.
- D) The duty to record fiduciary funds does not depend on whether a commission will be deducted before remittance.
Memory hook
Premiums are somebody else's money — identify it, segregate it, record it.