Claire-ification

Are you a member with a question? Contact IA&B VP-Advocacy Claire Pantaloni, CIC, CISR to find the answer at 717-918-9202 or ClaireP@IABforME.com.

Question:

Is it permissible for agencies to implement a “no cash” policy for walk-in payments?

Answer:

In Pennsylvania, the Insurance Department’s position is that an agent cannot refuse to accept cash as payment of premium. The Department’s rationale is that even though there may not be a specific prohibition in the law on refusing to take cash, it is legal tender, and refusing to accept it could cause some issues of timeliness of payment, including lapses or cancellations for non-pay. In addition, because cash payments are sometimes the only option in poorer communities where minorities may be disproportionately represented, it could be perceived as a discriminatory practice or a form of redlining. The Pennsylvania Insurance Department has always considered cash to be an acceptable form of payment, and refusing to take it would be “thin ice” for a producer, according to the Enforcement Division.

Maryland is more flexible. According to the Maryland Insurance Administration, there is nothing in statute or regulation that requires a producer to accept cash payments. As long as the producer is treating all policyholders the same in this regard, they do not view this policy as a problem. In other words, Maryland mainly focuses on consistency of treatment so that the agency does not run into a discriminatory practice issue.

Delaware’s position has changed in light of House Bill 299, a law enacted in 2022. Under the new law, businesses may not refuse cash payments, except in limited circumstances that would generally not apply to insurance agencies. Businesses also should not discriminate against individuals paying with cash. The use of machines that convert cash into prepaid cards is an acceptable alternative, so long as the device is on the premises, provides a receipt with the amount of cash deposited, does not charge a fee, and the prepaid card is not subject to an expiration date. The law becomes effective Jan, 1, 2023 or sooner if regulations are promulgated before that date.

This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Insurance Agents & Brokers nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.