When collecting insurance premiums from a client, a producer MUST

• A. forward premiums to the insurer on a timely basis
• B. inform the insurer but keep the premiums
• C. deposit into a trust
• D. collect and hold for 60 days

Answer: (A)

The key idea is that a producer who collects premiums acts as a conduit for funds belonging to the insurer and must remit them promptly. When a premium is received, it represents money owed to the insurer, and delaying or keeping that money can affect the policy’s status and create fiduciary risk. By forwarding premiums to the insurer on a timely basis, the policy remains in force, and the producer is fulfilling their duty to handle client funds responsibly.

Holding the money, depositing it into a trust, or delaying remittance for an extended period would jeopardize coverage and could violate regulatory and contractual duties. So the required action is to forward premiums to the insurer promptly.