Insurance director general powers
Fiduciary Responsibilities Handling of funds
A producer must hold premiums in a fiduciary capacity. Any insurer issuing a policy is deemed to have received the premium if the insured pays any producer for the coverage. The insurer is responsible to the insured for any return of premium. A producer may add a late payment charge of up to 1.5% per month to overdue balances on open accounts.
Bond requirement
A producer must maintain a bond to place insurance with an insurer with which the producer does not have an agent contract. An appointed producer does not need to maintain a bond to transact insurance for the appointing insurer.
A producer knowingly misappropriating funds held in a fiduciary capacity is guilty of:
■ A Class A misdemeanor for the 1st offense, and a felony for subsequent offenses, if $150 or less per offense ■ A Class 3 felony if over $150
Business Entities
A business entity must obtain a producer license in order to transact any insurance business in Illinois. It must also appoint at least 1 licensed producer responsible for its compliance with insurance law.
Hearings
A licensee may demand a hearing within 30 days after being notified that the Director is sanctioning his/her license. The hearing must be held within 20-30 days after the date that the notice of hearing is mailed.
Preload sing education requirements
An applicant must complete 20 credit hours of pre-licensing 7.5 hours in a classroom setting) before taking the licensing exam for life, accident/health, property, casualty, or personal lines insurance. 12.5 credit hours (5 hours in a classroom setting) are needed for motor vehicle insurance.
Reinstatement
An individual producer who allows his/her license to lapse may be issued a license, without exam, by paying twice the renewal fee within 12 months after the original renewal fee's due date.
Penalties
Any of these violations are subject to a fine of up to $10,000, for up to a total of $100,000, in addition to denial, suspension, or revocation of the producer's license. An individual whose license is denied or revoked may not reapply for a license for 3 years.
Violations of Report and Hearing
Anyone violating a written order may be fined up to $5,000. If the order is issued as a result of an examination, the violator may be fined up to $10,000; if a licensed producer, the violator may be fined up to $20,000 and subjected to license revocation or suspension.
Controlled business
Controlled business is insurance written to cover the risks of the producer or his/her spouse, employer, or business. Controlled business may not comprise more than 50% of any producer's premiums.
Change of address
Licensees must inform the Director of a change of address within 30 days after the change.
Report and Hearing
The Director must disclose an examination report to the examinee before making the report public. The examinee must be given 10 days to request a hearing from the Director. If a hearing is granted, the Director must give the examinee at least 10 days' notice. Within 90 days after the report on the hearing is filed, the Director must issue a written order based upon the report.
The director may appoint other examiners to investigate on his behalf. Examinees must provide free access
To all books records, document and papers relating to the company's business and operations. The examinee must pay all expenses incurred to help with an examination. Anyone refusing to cooperate may be fined up to $2,000.
Maintaining a license
Unless a licensee completes continuing education (CE) biennially (every 2 years), his/her license will be terminated. 24 hours of approved CE courses are required, 3 of which must consist of classroom instruction on ethics. Up to 12 excess credit hours of continuing education may be carried over to the next biennial reporting period.
The premium fund trust account
■ With a financial institution in Illinois ■ Subject to the jurisdiction of the courts of Illinois ■ Designated "Premium Fund Trust Account," and those words must be displayed on the face of all checks of the account ■ Maintained for 7 years
Nonresidents - A person who is not a legal resident of Illinois may be licensed to act as a nonresident producer without taking a written exam if he/she meets all other licensing requirements and if his/her home state:
■ Allows reciprocal licensing of Illinois residents on the same basis ■ Certifies that he/she holds a current, valid license in good standing in that state ■ Certifies that he/she has passed a similar exam or that it does not require an exam
Premium Fund Trust Account
A producer must maintain a premium fund trust account if he/she holds any premium for 15 or more days before remitting it, deposits any premiums into a financial institution account, or uses the premiums. The producer must keep records showing transaction dates and amounts, and identifying fund sources and destinations by name, type, and policy number. Producers maintaining a premium fund trust account must pay or credit any return premiums to the insured within 15 days after receipt, and must post the account's journal entries at least once every 30 days. producer must maintain a premium fund trust account if he/she holds any premium for 15 or more days before remitting it, deposits any premiums into a financial institution account, or uses the premiums. The producer must keep records showing transaction dates and amounts, and identifying fund sources and destinations by name, type, and policy number.remitting it, deposits any premiums into a financial institution account, or uses the premiums. The producer must keep records showing transaction dates and amounts, and identifying fund sources and destinations by name, type, and policy number.
Examinations
To determine the financial business practices, performance, and operations of any company, applicant for, or licensee, the Director may examine: ■ The insurance business transacted in Illinois by any authorized company. Anyone forming, promoting, soliciting shares of, or making capital contributions to a company. ■ Anyone under contract to manage or control a company as a general agent, managing agent, or attorney-in-fact. ■ A registered or licensed individual, firm, or administrator, or an applicant for such registration or license. ■ Anyone adjusting losses or financing premiums.
Cease and Desist Order
When a cease and desist order is served, the Director must issue notice that a hearing is to be held within 20-30 days from the notification date. If, after a hearing, any statements in the notice are found to be true, the Director may make orders to correct, eliminate, or remedy the illegal or improper conduct, conditions, or grounds. Any person violating a Cease and Desist Order or Circuit Court order must pay a fine of $100/ day up to a total of $5,000. The license or Certificate of Authority of a producer or insurer may also be revoked.
A person may not offer paid advice about a policy's benefits unless the person is one of the following:
■ A licensed producer, limited representative, or temporary producer ■ An attorney ■ A licensed public adjuster ■ A bank trust officer, actuary, or CPA performing professional duties incidental to his/her position Any person acting as a producer without a license is guilty of a Class A misdemeanor; misappropriation of collected funds is a Class 4 felony.
Exemptions From Licensing Requirement
■ A regular salaried employee or officer of an insurer engaged in technical advice, loss control, claims processing, adjusting, or settling. ■ A salaried employee devoted full time to clerical or administrative duties and not receiving commissions. ■ Any person securing and furnishing information for group life and health insurance who does not receive commission. ■ A trustee of an employee trust plan, including an employer or officer who administers the program for the plan's own employees. ■ Any person or organization employed by an insurer only to train licensees or to inspect, rate, or classify risks. ■ Any person who advertises insurance without the intent to solicit. ■ Any salaried employee who only counsels or advises an employer about its insurance
License fees - A producer's license remains in effect so long as the biennial fee is paid, the required bond is filed (if applicable), and education requirements for resident producers are met by the due date. The Department charges the following licensing fees:
■ An insurance producer license: $180 ($250 for nonresidents), payable every 2 years ■ A temporary producer license: $50 ■ A business entity license: $150, payable every 2 years ■ A limited line producer license: $50 annually ■ Processing fee for an insurance producer exam application: $50 Note
Suspension, Revocation or Denial The Director may revoke, suspend, refuse to issue, or nonrenew a license for any of the following:
■ Any reason that would have resulted in the license not being ■ Violation of state law ■ Attempting to obtain a license by fraud, misrepresentation, or material misstatement ■ Acting as an agency through persons not licensed as agents or brokers ■ Felony conviction ■ Misappropriation of funds ■ Having a license suspended or revoked in another state ■ Intentionally misrepresenting a contract's terms ■ Demonstrating a lack of trustworthiness or competence ■ Committing fraud in connection with any insurance transaction ■ Failing to respond to a subpoena issued by the Director, without reasonable cause ■ Improperly using notes or other reference materials to complete a license exam ■ Committing an unfair trade practice ■ Failing to pay state income tax, penalty, or interest, to repay the Illinois Student Assistance Commission for a delinquent student loan, or to pay court-ordered child support ■ Failing to comply with any provision of the Viatical Settlements Act of 2009 Hearings
Limited Lines Producer An individual at least 18 years of age, competent, trustworthy, and of good business reputation may obtain a limited lines producer license for one or more of the following classes of insurance:
■ Baggage, trip cancellation, or limited travel accident and health sold in connection with transportation on a common carrier. ■ Industrial life or industrial accident and health insurance. ■ Legal expense insurance. ■Limited health care plans issued by an organization with a Certificate of Authority under the Limited Health Service Organization Act. ■ Credit life or credit accident and health. ■ Limited lines producers are exempt from exam, bonding, and prelicensing requirements. ■ Limited lines producers must be appointed by the companies they represent, but may represent more than one company. Licenses remain in effect perpetually as long as fees are paid. ■ HMO enrollments of public aid or Medicare recipients. ■ Limited health care plans issued by an organization with a Certificate of Authority under the Limited Health Service Organization Act.
Obtaining a license qualifications
■ Be at least 18 years old ■ Complete a pre licensing course ■ Have not committed any act that is a ground for denial, suspension, or revocation ■ Unless exempt, file a bond for the greater of $2,500 or 5% of the premiums brokered in the previous year, up to $50,000 ■ Pass a written test
A producer's license will be denied or nonrenewed if the producer:
■ Has written more controlled than regular business in either of the last 2 years before the license renewal date ■ Will write more controlled than regular business (based on premium amount) in the 12-month period after his/her license is issued or renewed
Money may be taken from the account only to pay:
■ Net premium to the insurer ■ Commissions, and any authorized interest to the producer. ■ Returns of premiums due to an insured ■ Non-premium monies (e.g. service fees, late charges, inspection fees, etc.) that have been matched and identified with prior non-premium deposits Any other withdrawals constitute misappropriation of funds. The account may not be used as a general operating or claims payment account.
Temporary insurance producers In order to permit the continuation of business following the death or disability of a licensed producer, the Director may issue a temporary producer's license to:
■ The surviving spouse or court-appointed representative of a deceased or disabled producer ■ A member or employee of a business entity licensed as a producer, when the entity's designated producer dies or becomes disabled ■ The designee of a producer entering active duty in the U.S. armed forces A temporary license is issued for 180 days, and can be extended an additional 180 days by the Director. A sponsoring insurer must forward a prospective producer's temporary license application to the Director, who may refuse the application if less than half the insurer's temporary licensees in a 6-month period obtain a permanent license. The Director may grant a temporary insurance producer license for 90 days without requiring an exam; renewal is not allowed. An applicant must be enrolled in a training course conducted by the appointing insurer, and must fulfill the prelicensing requirements. An individual applicant may not hold more than one temporary license in his/her lifetime.