Sec. 32.3. Fiduciary responsibility of reinsurance intermediaries

(a) Every person, firm, association or corporation acting as reinsurance intermediary in this State, is responsible as a fiduciary for funds received by such reinsurance intermediary, in such capacity. All such funds shall be held in accordance with the following rules:

(1) A reinsurance intermediary shall deposit funds received in one or more appropriately identified accounts in a bank or banks duly authorized to do business in this State, from which no withdrawals shall be made except as hereinafter specified (any such account is hereinafter referred to as “a premium and loss account”). A licensed nonresident reinsurance intermediary may use a bank not authorized to do business in this State, provided such bank is a member of the Federal Reserve System.

(2) Deposits in a premium and loss account in excess of aggregate funds received but not remitted may be made to maintain a minimum balance, to guarantee the adequacy of the account, or to pay funds due but uncollected (any deposit is hereinafter referred to as “a voluntary deposit”).

(3) No withdrawals from a premium and loss account shall be permitted except as follows: for payment or return of premiums, commission due others, losses to insurers or other parties entitled thereto, interest, if the principals have consented thereto in writing, the intermediary's commissions, and voluntary deposits, provided that no withdrawal of voluntary deposits may be made if the balance remaining in the premium and loss account thereafter is less than aggregate net premiums, commissions due other and losses received but not remitted. In computing aggregate net premiums, offsets from different principals shall not be permitted.

(4) Deposit of a premium in a premium and loss account shall not be construed as a commingling of the net premium and of the commission portion of the premium.

(5) In the case of a reinsurance intermediary dealing with more than one insurer, maintenance at all times in one or more premium and loss accounts of at least the net balance of funds received but not remitted shall be construed as compliance with this Part, provided that the funds so held for each such principal are reasonably ascertainable from the books of accounts and records of such reinsurance intermediary.

(b) Except as hereinabove provided, a reinsurance intermediary shall not commingle any premium or loss funds received or collected in such capacity with its own funds or with funds held by it as insurance agent, insurance broker or in any other capacity.