Separate premium accounts
Washington state law (see RCW 48.17.480, RCW 48.17.600 and RCW 48.15.180 (www.leg.wa.gov) requires insurance producers, title agents, and surplus line brokers to promptly account for all funds they receive that represent premiums and return premiums. Premium includes surplus line premium taxes.These licensees must also deposit these funds into a separate account, and maintain those funds in the account, until the funds are paid to the person entitled to them.
Amendments to the rule (PDF, 274KB), which took effect August 16, 2012, prohibit separate premium accounts from being used as a personal asset by licensed producers, title insurance agents, and surplus line brokers. It also clarifies that premium taxes must be deposited into the account and cannot be withdrawn from the account, except for payment to the state or refund of unearned taxes.
Does the rule also apply to premium taxes?
Yes. RCW 48.18.170 (www.leg.wa.gov) defines premium; premium tax is included in this definition because it is part of the consideration for the issuance of insurance (other than title insurance). So, producers and brokers must deposit the premium tax into the separate premium account and maintain it there until paid to the party entitled to the funds.
Can the account be set up in a bank not located in Washington state?
Yes. The commissioner did not amend the financial-institution requirement. If a trust company is used for the separate premium account, the trust company must be located in the state. That is the sole type of financial institution that must be located in the state of Washington.
When can I withdraw my commissions out of the separate premium account?