California Insurance Code 1734 – This section applies to a person licensed, hereinafter “licensee,” …
This section applies to a person licensed, hereinafter “licensee,” whether under a permanent license, restricted license, temporary license, or certificate of convenience, to act in any of the capacities specified in Section 1733. If fiduciary funds, as defined in Section 1733, are received by the licensee, the licensee shall do one of the following:
(a) Remit premiums, less commissions, and return premiums received or held by the licensee to the insurer or the person entitled thereto.
Terms Used In California Insurance Code 1734
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Fiduciary: A trustee, executor, or administrator.
- license: includes a certificate of convenience and a permanent license, and the term "persons who are licensed" includes the holders of any such certificate or the license, but these definitions and the use of those terms in this chapter shall not confer upon a certificate of convenience or any holder thereof any property right in or to the certificate, the certificate being and remaining only a temporary permit, issued as a matter of convenience, allowing the transaction of insurance without a permanent license, but within the limits, and subject to the conditions of the certificate of convenience issued and the laws applicable thereto. See California Insurance Code 1627
- licensee: means an insurer, agent, broker, or any other person who is required to be licensed by the department. See California Insurance Code 38.6
- Person: means any person, association, organization, partnership, business trust, limited liability company, or corporation. See California Insurance Code 19
- State: means the State of California, unless applied to the different parts of the United States. See California Insurance Code 28
- Trust account: A general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies. Source: OCC
(b) Maintain those fiduciary funds at all times in a trust account in a bank or savings and loan association, within any state of the United States, which account is insured by the Federal Deposit Insurance Corporation (FDIC), and is licensed by any state government within the United States or by the United States government, separate from any other account, in an amount at least equal to the premiums and return premiums, net of commissions, received by the licensee and unpaid to the persons entitled thereto or, at their direction or pursuant to written contract, for the account of those persons. However, that person may commingle with those fiduciary funds in the account those additional funds as the licensee may deem prudent for the purpose of advancing premiums, establishing reserves for the paying of return commissions, or for those contingencies as may arise in the licensee’s business of receiving and transmitting premium or return premium funds.
(c) Maintain those fiduciary funds pursuant to Section 1734.5.
(Amended by Stats. 2021, Ch. 133, Sec. 22. (SB 272) Effective July 23, 2021.)