Bulletin: MT000009

Dear Associates:

You are reminded that premiums received by an insurance producer in the State of Montana are to be deposited into a separate trust account and not co-mingled with other funds as provided by MCA 33-17-1102:

33-17-1102. Reporting and accounting for premiums--misappropriation.

All insurance premiums or return premiums received by an insurance producer must be held in a separate trust account. The insurance producer shall at all times act in a fiduciary capacity and shall, in the applicable regular course of business, account for and pay the insurance premiums or return premiums he receives to the insured, insurer, or insurance producer entitled to them. Except for a title insurance producer as defined in 33-25-105, an insurance producer may deposit and co-mingle in the same separate deposit all funds belonging to others so long as the amount of the deposit held for each respective person is reasonably ascertainable from the records and accounts of the licensee.

Any insurance producer not lawfully entitled to the funds may not divert or appropriate the funds or any portion of the funds to his own use.

An insurance producer who unlawfully diverts or appropriates insurance premiums or return premiums to his own use is, upon conviction, guilty of theft and is punishable as provided by law.

It would appear that the regular trust account used by agents in their settlement or closing business is not the appropriate place to deposit such funds. These funds should be deposited upon receipt following closing or settlement, either by payment from your regular trust account, or upon receipt of the payment by invoice, directly into a premium trust account. Thereafter, you may divide the premium, leaving the portion due to the Company to be remitted at the end of the month by check drawn on that account.

Beginning January 1, 1995, the Company will ask to examine this trust account and receive copies of the bank reconciliation, outstanding checklist and other materials as are typically required for your other trust accounts. If you have any questions or need assistance, Mike Watson, Region F Controller, is available to provide assistance with this matter. He can be reached at (303) 331-0333.