Alabama: premium trust account rules
What Alabama requires of insurance producers holding premium funds, and what happens when those funds are diverted.
Citation
§§ 27-7-19; 27-7-36 to 27-7-37; 27-6A-4
Source chart last reviewed this jurisdiction: 2/25
What the jurisdiction requires
Agent shall pay premiums to the insurer. All funds collected for the account of an insurer will be held by the managing general agent in a fiduciary capacity.
Penalties for diversion
The commissioner may place on probation, refuse to renew, or revoke any license for improperly withholding, misappropriating, or converting any monies belonging to the insurers, insureds, or others received by the licensee in the exercise of his or her license. In addition, or in lieu of probation, denial, suspension, or revocation the commissioner may levy a civil fine up to $10,000 per violation. Any unlawful diversion is theft of property. Any person having an interest may file a complaint with the commissioner. After a hearing on charges of the complaint, if the commissioner or deputy finds that the grounds exist, the commissioner or deputy may impose licensee penalties against the licenses of the licensee.
This reference is not legal advice. Citations and summaries are transcribed from the NAIC's Fiduciary Responsibilities—Premiums chart (Spring 2025) and reflect that chart's own review dates, which vary by jurisdiction. Statutes change, and the chart may lag the current code. Confirm the current text of any provision with the jurisdiction's insurance department or your own counsel before relying on it.
Tie out a Alabama trust account
Tie your premium trust account out three ways — bank, ledger and what you owe — with Alabama's cited rule beside the worksheet. Runs in your browser; nothing is uploaded.
Trust account reconciliation worksheetKeep your trust account provably in balance
Policy Balance Hub tracks premium held in trust against what you owe each carrier, so the reconciliation an examiner asks for already exists.