The Office of General Counsel issued the following opinion on November 22, 2004, representing the position of the New York State Insurance Department.

Re: N.Y. Insurance Law § 2120 and Regulation 29

Question Presented:

1) What should an insurance broker’s premium bank account be named?

2) Are there fiduciary concerns in naming such an account "Company's premium trust account" or "Company’s premium escrow account?"


1) An insurance agent's or broker's premium account should be appropriately identified by the name under which the broker’s license is obtained, and should specify that it is a "premium" account.

2) An insurance agent or broker is responsible in a fiduciary capacity once funds have been collected or received in such capacity, without regard to the name of the premium account.


An insurance broker would like to open a premium bank account but is concerned about the naming of this account. It would like to name the account "Company's premium trust account," however, the bank in which the account will be opened prefers that the account be named "Company's premium escrow account." The broker's concerns involve the triggering of trust and/or fiduciary laws and obligations on the part of the company and the bank. No additional facts were provided.


An insurance agent or broker is responsible in a fiduciary capacity for all funds received or collected in such capacity. Premium accounts of insurance brokers are regulated pursuant to N.Y. Ins. Law § 2120 (McKinney 2000), and N.Y. Comp. Codes R. & Regs. Tit. 11, § 20.3(b) (1996) (Regulation 29). N.Y. Ins. Law § 2120(a) (McKinney 2000) provides:

Every insurance agent and every insurance broker acting as such in this state shall be responsible in a fiduciary capacity for all funds received or collected as insurance agent or insurance broker, and shall not, without the express consent of his or its principal, mingle any such funds with his or its own funds or with funds held by him or it in any other capacity. (emphasis added)

Thus, once the insurance agent or broker has collected funds in such capacity, the insurance agent or broker takes on fiduciary responsibilities, without regard to the name of the bank account in which these funds will be held.

N.Y. Comp. Codes R. & Regs. Tit. 11, § 20.3 (b)(1) (1996) (Regulation 29) provides:

An agent or broker who does not make immediate remittance to insurers and assureds of such funds shall deposit them in one or more appropriately identified accounts in a bank or banks duly authorized to do business in this State. . . . (Emphasis added)

In deciding what to name this premium account, such accounts are commonly named "Company's Premium Account." The Department has opined that an "appropriately identified account" as required by Regulation 29, is one in the name of the licensee (the name under which the license has been obtained), and one which identifies the account as a "premium" account. Thus, a premium account named "Company's premium account" would be an appropriately identified account.

Regulation 29 does, however, refer to the funds held in premium accounts as funds held in trust for the insurer. For example, N.Y. Comp. Codes R. & Regs. Tit. 11, § 20.4 (1996) (Regulation 29), which specifies minimum bookkeeping requirements with regard to premium accounts provides:

(b)(1) Every licensee who is required to maintain a premium account shall maintain books, records and accounts in connection with their business to record:

(i) all money received in trust for insurers or members of the public. (Emphasis added)

Accordingly, "Company's premium trust account" would be an acceptable alternative name for such an account. This account would not, on the other hand, constitute an escrow account. An escrow account is one "generally held in the name of the depositor and an escrow agent that is returnable to the depositor or paid to a third person on the fulfillment of specified conditions." Black's Law Dictionary 19 (8th ed. 2004).

Accordingly, both "Company's premium account" and "Company's premium trust account" would be acceptable names for this account.

For further information you may contact Principal Attorney Paul A. Zuckerman at the New York City Office.