2006 Utah Code - 31A-23a-409 — Trust obligation for funds collected.

     31A-23a-409.   Trust obligation for funds collected.
     (1) (a) Every licensee is a trustee for all funds received or collected for forwarding to insurers or to insureds.
     (b) Except for amounts necessary to pay bank charges, and except for funds paid by insureds and belonging in part to the licensee as fees or commissions, a licensee may not commingle trust funds with:
     (i) the licensee's own funds; or
     (ii) funds held in any other capacity.
     (c) Except as provided under Subsection (4), every licensee owes to insureds and insurers the fiduciary duties of a trustee with respect to money to be forwarded to insurers or insureds through the licensee.
     (d) (i) Unless the funds are sent to the appropriate payee by the close of the next business day after their receipt, the licensee shall deposit them in an account authorized under Subsection (2).
     (ii) Funds deposited under this Subsection (1)(d) shall remain in an account authorized under Subsection (2) until sent to the appropriate payee.
     (2) Funds required to be deposited under Subsection (1) shall be deposited:
     (a) in a federally insured trust account in a depository institution, as defined in Section 7-1-103, which:
     (i) has an office in this state;
     (ii) has federal deposit insurance; and
     (iii) is authorized by its primary regulator to engage in the trust business, as defined by Section 7-5-1, in this state; or
     (b) in some other account, approved by the commissioner by rule or order, providing safety comparable to federally insured trust accounts.
     (3) It is not a violation of Subsection (2)(a) if the amounts in the accounts exceed the amount of the federal insurance on the accounts.
     (4) A trust account into which funds are deposited may be interest bearing. The interest accrued on the account may be paid to the licensee, so long as the licensee otherwise complies with this section and with the contract with the insurer.
     (5) A financial institution or other organization holding trust funds under this section may not offset or impound trust account funds against debts and obligations incurred by the licensee.
     (6) Any licensee who, not being lawfully entitled thereto, diverts or appropriates any portion of the funds held under Subsection (1) to the licensee's own use, is guilty of theft under Title 76, Chapter 6, Part 4. Section 76-6-412 applies in determining the classification of the offense. Sanctions under Section 31A-2-308 also apply.

Amended by Chapter 2, 2004 General Session