26Insurance broking accounts

##### 26 Insurance broking accounts (1) A registered insurance broker: (a) must pay into an account maintained by the broker with a bank solely for the purposes of this section all moneys received by the broker: (i) from or on behalf of an insured or intending insured for or on account of an insurer in connection with a contract of insurance or proposed contract of insurance; or (ii) from or on behalf of an insurer for or on account of an insured or intending insured; and (b) may pay into that account any moneys received by the broker from or on behalf of: (i) an insured or intending insured; or (ii) an insurer; on the broker’s own account in connection with a contract of insurance or proposed contract of insurance. (1B) If money referred to in subsection (1) is paid to a person who is the agent of a registered insurance broker, the money is taken to have been paid to the broker at the time when it is received by the agent, whether or not the agent acted within the scope of authority granted by the broker. (2) An account maintained under subsection (1) shall be called an Insurance Broking Account, with or without other words of description. (3) Except with the written consent of ASIC, a registered insurance broker must take all reasonable steps to ensure that, at all times, the sum of: (a) the balance of an account maintained by the broker under subsection (1); and (b) the total amount previously withdrawn from the account and currently invested under subsection (4); is greater than or equal to the sum of: (c) any amounts that an insurer is entitled to receive from the account; and (d) any amounts that an insured or intending insured is entitled to receive from the account. (3A) For the purposes of paragraph (3)(c), if, at a particular time, money received by a registered insurance broker for or on account of an insurer as mentioned in subparagraph (1)(a)(i) is paid into an account, the insurer is taken to be entitled to receive payment of: (a) the amount; or (b) if any deductions from the amount are authorised by a written agreement between the insurer and the broker—the amount less the deductions; throughout the period: (c) beginning at that time; and (d) ending when the payment is actually made to the insurer; even if the amount has been invested under subsection (4). (3B) For the purposes of paragraph (3)(d), if, at a particular time, money received by a registered insurance broker for or on account of an insured or intending insured as mentioned in subparagraph (1)(a)(ii) is paid into an account, the insured or intending insured is taken to be entitled to receive payment of the amount throughout the period: (a) beginning at that time; and (b) ending when the payment is actually made to the insured or intending insured; even if the amount has been invested under subsection (4). (4) A registered insurance broker may invest in such manner as is prescribed moneys included in an account maintained by the broker under subsection (1) that were received by the broker from an insured or intending insured for or on account of an insurer in connection with a contract of insurance (not being a contract of life insurance). (5) A registered insurance broker shall pay moneys received from the realization of an investment made under subsection (4) into an account maintained by the broker under subsection (1). (6) If, upon the realization of an investment made under subsection (4), an amount is received in respect of the realization that is less than the amount invested, the registered insurance broker shall pay into the account from which the moneys were withdrawn for investment an amount equal to the difference between the amount invested and the amount received. (7) If, upon the realization of an investment under subsection (4), an amount is received in respect of the realization that is greater than the amount invested, the registered insurance broker may retain for the broker’s own benefit the amount by which the amount received exceeds the amount invested and need not pay it into, or retain it in, an account maintained under subsection (1). (8) Interest, dividends or other income received by a registered insurance broker from an account maintained under subsection (1) or from an investment made under subsection (4) may be retained by the broker for the broker’s own benefit and need not be paid into, or retained in, an account maintained under subsection (1). (9) Moneys received by a registered insurance broker as mentioned in subsection (1) or (5), both before and after those moneys are paid into an account maintained under subsection (1), moneys paid into such an account under subsection (6) and securities in which moneys are invested under subsection (4) are not capable of being attached or otherwise taken in execution or of being made subject to a set‑off, charge or charging order or to any process of a like nature. (10) Nothing in subsection (9) prevents moneys or securities being attached, taken in execution or made the subject of a set‑off, charge, charging order or like process at the suit of a person for whom or on whose account moneys have been paid into the relevant account maintained under subsection (1) and to whom or on whose account payment in respect of those moneys has not been made. (11) This section does not make a bank subject to any liability by reason only of a failure of a registered insurance broker to comply with any of the provisions of this section. Penalty: Imprisonment for 2 years. > Note: Subsection 4B(2) of the Crimes Act 1914 allows a court to impose an appropriate fine instead of, or in addition to, a term of imprisonment. If a body corporate is convicted of an offence, subsection 4B(3) of that Act allows a court to impose a fine of an amount that is not greater than 5 times the maximum fine that could be imposed by a court on an individual convicted of the same offence.