18 Del. Admin. Code § 2001-18.0
Current through Register Vol. 28, No. 5, November 1, 2024
Section 2001-18.0 - Producer's Commission18.1 The payment of commissions on the sale of insurance policies and the return of unearned commissions upon the cancellation of insurance policies prior to expiration is a matter of agreement or contract between the producer (agent or broker) and the insurer. The insured or licensee is not a party to such agreement and is not obligated or responsible in any way for the payment of earned commissions or for the return of earned commissions. An insurer may not pay or delegate its responsibility for paying commissions to a licensee. If such an attempt is made by an insurer it must be immediately reported to the Commissioner by the licensee. A licensee, in the event of cancellation, shall not accept the return of net unearned premiums or promise to hold the insurer harmless for failure to pay the difference between that and the gross unearned premium.18.2 After an insurance policy is cancelled, 18 Del.C. § 4809 mandates that the insurer shall return the gross unearned premium. By remitting a net unearned premium to its producer who forwards same to the licensee, the insurer is in violation of said section. Thus, the insurer has illegally imposed the burden upon the licensee of attempting to collect the balance of the unearned premium from the producer who may not be responsible therefor.18.3 A broker has earned his commission in full when the policy has been issued and the premium paid. Under these circumstances the broker is under no obligation to make any refund of a portion of his commission to the insurer unless the broker has made an express agreement to refund a portion of his commission in the event of cancellation or where the policy is an audit policy, or where the broker has induced cancellation.18.4 The right of a duly appointed agent to retain commissions under like circumstances is dependent upon the terms of the agency contract between himself and the appointing insurer.18.5 The following is the procedure to be employed by insurers for returning gross unearned premiums to a licensee subsequent to cancellation of insurance policies: 18.5.1 Whenever a financed insurance contract is cancelled, the insurer shall promptly return whatever unearned premiums are due under the insurance contract to the licensee, either directly or via the agent, agency, or broker placing the insurance, for the account of the insured or insureds; provided, however, that if the insurer elects to return such unearned premiums to the licensee for the account of the insured or insureds via the agent, agency or broker placing such insurance, the insurer shall be directly responsible to the licensee for all unearned premiums due to the licensee under the contract which are not properly returned to the licensee within 90 days of date of the policy cancellation.18.6 All unearned premiums must be handled and transmitted in a reasonable and expeditious manner. Any unreasonable delay by the insurer or producer, even if payment to the licensee is achieved within 90 days of policy cancellation, will be subject to appropriate action by the Commissioner. Any unreasonable delay in transmitting funds due an insured by a licensee will be subject to the sanctions of 18 Del.C. § 4804.18 Del. Admin. Code § 2001-18.0