What happens to unearned commissions according to the fiduciary duties of an insurance broker?

Unearned commissions are amounts paid to an insurance broker for services not yet rendered at the point of cancellation or termination of an insurance policy. According to the fiduciary duties of an insurance broker, these unearned commissions must be held in trust for the insurer. This means that the broker has a legal obligation to keep these funds separate from their own and to manage them in a manner that reflects the trust inherent in the broker-client relationship.

This requirement reinforces the broker's duty to act in the best interests of their clients and the insurance companies they represent, ensuring transparency and accountability in financial dealings. Holding unearned commissions in trust protects the integrity of the brokerage and maintains the trust of clients, as these funds do not rightfully belong to the broker until certain conditions are met, such as the completion of services or the expiration of the commission's earning period. This adherence to trust principles helps to sustain ethical practices within the insurance industry.