Chapter 10 Insurance Regulation
Types of Licenses
These types can be issued in NY State Insurance Agent Insurance Broker Business Entity Consultant Adjuster Non resident Temporary
Certificate of Authority
No person, firm, association, corporation, or joint stock company may conduct insurance business unless authorized by a Certificate of Authority, issued by the state. Certificate of Authority states that a company may do business in NY state. Penalty of 1,000 first violation 2,500 for subsequent.
False advertising
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Refuse to Issue a License
The Superintendent may refuse to issue any insurance agent's license if the proposed licensee is found not to be trustworthy and competent, or has not complied with any prerequistes.
Insurer
appoints producer to act as agent and files notice of agent appointment and pays related fees with the Department of Insurance
Negotiate
means the act of directly conferring with or offering advice to a purchaser or potential purchaser of a particular insurance contract concerning any of the substantive benefits, terms or the conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from licensed insurers, fraternal benefit societies, or HMO for purchasers.
Certificates of Appointment are valid
until the license is terminated by the appointing insurer after termination in accordance with the provisions in the agency contract the license is suspended or revoked by the Superintendent or the license is expired and is not renewed
Renewal
Insurance agent 's or broker's license must be renewed every 2 years. On birthday of odd/even birth year. An agent must file an application for renewal of license with the Superintendent at least 60 days before the license expires. If submitted late, the applicant will be subjected a late filing fee of 10 dollars. 40 dollars for renewal.
Adjusters
An independent adjuster is any person, firm, or corporation, who, for a commission acts on behalf of an insurer in the work of investigating and adjusting claims. Works for the insurance company.
Penalties
If a licensee is in violation of insurance licensing laws, the Superintendent may issue a penalty in lieu of revoking or suspending the person's license. The penalty may be up to 500 for each offense and up to 2500 aggregate for all offense. Unless the court orders a stay, the licensee has 20 days after a receipt to pay the penalty. Any violation of the Insurance code provisions will be considered a misdemeanor unless specifically categorized as a felony.
Public adjuster
a public adjuster is any person, firm, association or corporation, who for a commission, acts on behalf of the insured in negotiating a settlement or claim for loss or damage to property. Works for the insured.
Fiduciary Responsibility
Agents, brokers and reinsurance intermediaries have a fiduciary relationship, a position of financial trust because they are handling money so they have financial responsibilities.
Law and Regulations concerning records
An insurer must keep records for 6 years or until the filing of a review of record whichever is longer. Anything and all retentions 6 years.
Reporting of Actions
A licensee must report any administrative action taken against him in another jurisdiction or state within 30 days of the final disposition of the matter. The report, filed with the Superintendent must include a copy of any relevant legal documents. 500.00 fine if not. no minor traffic infractions
Suspension, Revocation, and Non Renewal
Anything wrong concerning money or fraud signing someone's name lose your license. An individual, corporation, firm or association whose license has been revoked can not obtain any license for a period of one year after such revocation or if such revocation be judicially reviewed for one year after the final judgment. May apply.
Controlled business
Controlled business is any coverage written on a producer's own life, health, and or that of the producer's immediate family or business associates. No more than 10 percent of business can be on friends and family a year or 12 moths period.
Agent Appointment
Every insurer, fraternal benefit society or HMO in NY must file a certificate of appointment for its agents with the Superintendent. The certificate states that the appointed agent is trustworthy and competent to transact insurance business. To appoint an agent, the appointing insurer must file , in a format approved by the Superintendent, a notice of appointment within 15 days from the date the agency contract is executed or the first insurance application is submitted. Company has 15 days to confirm that you are an agent.
Consultants
Insurance consultants offer advice to the public about the benefits, advantages, and disadvantages of insurance policies for a fee.
Termination of an Agent Appointment
When an insurer or HMO terminates an agent's certificate of appointment, it must file a statement to the Superintendent within 30 days explaining the cause of termination and facts surrounding it. The insurer and HMO must also provide a copy of this notice to the producer within 15 days of the date of filing with the Superintendent.
Superintendent notification
When the Superintendent grants an approval, authorization, permission or any other order that affects the insurer, insurance agent, or broker the order will not be effective unless it is in writing and signed by the Superintendent. The notice will be considered delivered if it is given to the person affected by the order or has been placed in the US mail and addressed to the person's last known place of either business or residence.
Sharing Commissions
An insurer or fraternal benefit society may not pay commission to any person or organization that is not licensed in NY. Commissions may be split among agent/brokers provided that the agents and brokers are licensed with the same insurer for the designated lines of authority. License to License.
Licensing Exam Exemptions
DO NOT HAVE TO TAKE THE WRITTEN EXAM ticket selling agents or representatives (bus, train, or sea) for a one time issuance of baggage or accident insurance Any individual whose license has been revoked or suspended (at the discretion of the Superintendent) An individual seeking to be a representative of a fraternal benefit society as its agent example Knight of Columbus , Free Mason In connection with any certificate of appointment for an additional insurer, as long as it is under the same line of authority already licensed A nonresident licensee currently licensed in another state At the Superintendents discretion, applicants who are chartered life underwriters. All or part of the exam may be waived as well as prelicensing requirments A licensee who was licensed on July 1, 1987 to represent any assessment corporation Fraternal benefit representatives do not have to be licensed if 50 percent or less of their time is addressed to life sales
Who is eligible for a temporary license?
The Superintendent may issue a temporary license to an agent or broker or both without requiring an examination, in the following cases: To the surviving spouse, next of kin or court appointed personal representative of an agent who dies, or becomes mentally or physically disabled. To a member or employee of a business entity licensed as an insurance agent upon death, disability, or termination of a designated individual in the business entity or To the designee of an agent entering active military service. MUST BE FULLY DISABLED
Needs of ALL adjusters
All adjusters must file and pay a surety bond of 1,000 to the Superintendent before a license is issued or renewed. A requirement of 15 hours continuing education must be completed before an adjuster's license may be renewed.
Misrepresentation
It is illegal for an agent to show an incomplete comparison of policies to induce a presto to lapse, forfeit, or surrender a policy. example a 10 page document has to have all 10 pages. It is fraud and Insurance fraud is a felony.
Guaranty Association
The association will pay covered claims up to certain limits set by the law. The Association is funded by its members(through assessment). All authorized insurers, which are required to be the members of the Association, contribute to a fund to provide the payment for claims for insolvent insurers. Insurances companies must be part of the Association. Like the FDIC established to protect policy owners, insured, beneficiaries,
Unfair trade practice
to make any statement that an insurer's policies are guaranteed by the existence of the Insurance Guaranty Association. You can't tell an client to buy cheaper insurance because if that company goes under they are protected. But if a client asks about a companies finances then you are permitted to reveal the protection,.
License Display
License has to be visible always on prominent display.
Continuing education
To renew a license, any resident or non resident must complete 15 hours of instruction by an approved provider of continuing education every 2 years. Excess credit hours accumulated during a 2 year licensing period cannot be carried over the next period for the same class of license.
Commissions and Compensation
insurers and agents may not pay a commission or compensation to a person or organization not licensed in NY. anything of value example a vacation or dinner
The Superintendent will make an examination of insurers as follows:
Every domestic fraternal benefit society and domestic property/casualty insurance company at least every 3 years. If the Superintendent determines that every 3 years is not necessary for property/casualty it can be changed to 5 years. Every domestic life insurer must be examined at least once every 5 years. Every other authorized domestic insurer and every rate service organization which makes or file rates at least once every 5 years.
Non resident
a nonresident insurance agent or nonresident insurance broker is an individual who is a resident of another state, who is authorized to act as an agent or broker in the state of NY. If a person licensed in another state moves to NY and wants to become a resident agent, he must apply for a license within 90 days of the cancellation of the applicant's previous license.
How long is the temporary license?
The temporary license may be issued for a term of not more than 90 days unless the Superintendent renews additional 90 day terms, not to exceed an aggregate of 15 months. In the case of military service, the temporary license may continue up to 60 days after discharge.
Solicit
means attempting to sell insurance or asking or urging people to apply for a particular type of insurance from a particular licensed insurer, fraternal benefit society, or HMO
Temporary
A temporary license may only be used to service existing business, not to solicit, negotiate, or procure new business.
Aiding Unauthorized Insurer
Neither a person nor a corporation may act as an agent or broker for an insurer that is not licensed to solicit, sell, negotiate, or effect any insurance or annuity contract, or aid any such insurer in effecting any insurance transaction. Any person who violates this regulation may be subject to a 500 penalty for each transaction, in addition to any other penalties provided by state law.
Termination and Responsibilities of a producer
After producers receive the notice of termination, they have 30 days to file written comments concerning the content of notice with the Superintendent. The producer must also send a copy to the insurer at the same time.
Insurance Agents
an individual who represents an insurance agency/company The agent represents the insurer, not the insured May work for multiple insurance companies
Insurance Broker
an individual who represents the insured , not the insurer and acts on the best interest of the insured
Superintendent
Doe not hold a license and is nominated by the Governor (nepotism) The Superintendent is appointed by the Governor and continues in office until the end of the Governor's term. The Superintendent has very broad powers, both expressed and implied with the business of insurance, that extends to all financial service providers. FIRST AND FOREMOST THE SUPERINTENDENT HAS THE POWER OF AUTHORITY TO RECOMMEND, WITHDRAW, OR AMEND REGULATIONS FOR THE PURPOSE OF REGULATING INTERNAL AFFAIRS OF THE DEPT OF INSURANCE, INCLUDING GOVERNING THE PROCEDURES USED IN PRACTICE, PRESCRIBINB FORMS AND REGULATIONS AND TO INTREPET STATE INSURANCE LAWS AND PROVISIONS
Unfair and Prohibited Practices
It is considered an unfair trade practice to knowingly commit and unfair trade method of competition or to engage in such actions with enough frequency that the commission of unfair marketing practices indicates a general business practice.
Exemption from Licensing
An insurance producer license is not required of any officer, director, or employee of an insurer or organizations employed by insurers, provided that they are not directly or indirectly involved with the actual sale of an insurance contract and do not receive any commission. Example janitor, receptionist, Human Resource manager
Prohibitions
In addition to any criminal liability, the Superintendent may levy a civil penalty up to 5,000 and the amount of the claim for each violation upon any person who committed fraudulent insurance act or knowingly and with the intent to defraud.
Who is not a public adjuster
A public adjuster is not an employee, agent , broker or other representative of any insurer or attorney at law.
Examination of Books and Records
The Superintendent may examine books and records of any insurer, any pension fund, retirement system, or organization authorized in the state of NY as often as deemed necessary for the protection of the public.
Unfair Claims Settlement Practices
The following are improper claims practices if committed in conscious disregard to the law or is committed with such frequency as to indicate a general business practice to engage in that type of conduct: Misrepresenting to insured pertinent facts or policy provisions relating to coverage at issue Failing to acknowledge and act reasonably and promptly upon communications with respect to an insurance claim Failing to adopt and implement reasonable standards for prompt investigation and processing of insured's claims Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements are completed and submitted by insureds Not attempting in good faith to effect prompt, fair and equitable claims on which liability has become reasonably clear or compelling insured to initiate suits to recover amounts due under an insurance policy by offering substantially less than the amount ultimately recovered in those suits
Sell
or sale means to exchange the contract of insurance by any means, for money or its equivalent, on behalf of a licensed insurer, fraternal benefit society or HMO.
Reporting
Any licensee that believes that fraudulent insurance transaction has taken place or is about to take place has 30 days from the point of determination to submit the transaction to the Superintendent.
Solvency
An insurer is considered solvent if it has the assets to meet it financial obligations. The Superintendent makes sure that you are solvent and have money to continue business. Each entity transacting insurance in NY must file with the office of Superintendent an annual statement on or before March 1st of each year showing its financial condition.
Change of address
The department of insurance must be notified within 30 days of any change of address: residence, business, or email. 500 fine if not.
Cease and desist
If the Superintendent finds that the licenses is in violation of an unfair method of competition, claim, act of practice, the Superintendent will issue a cease and desists. This means the person must stop doing whatever the Superintendent suspects is in violation of the insurance laws immediately. Violate a cease and desist fined up to 5000 a violation.
Producer
Insurance producer means an insurance agent, insurance broker, intermediary, excess lines broker, or any other person required to be licensed under the laws of this state to sell, solicit, or negotiate insurance.
Business entities
A business entity is a corporation, association, partnership, limited liability company, limited liability partnership or other legal entity. Before any original insurance agent's license is issued, the prospective licensee must apply to the Superintendent. Insurance agency must have a license.
Hearing
At the hearing the aggrieved party has the opportunity to appear in person or by counsel give evidence why an order shall not be made inspect all documentary evidence and witnesses obtain witnesses on the person's behalf All hearings will be open to the public unless the Superintendent or the person authorized by the Superintendent to conduct the hearing believes that a private hearing would be of the best interest of the public. Once it has been determined that a person is liable for a civil penalty, the determination may be entered 120 later as a judgment and enforced, without court proceedings. The Superintendent sends a written report of his finding to the person charged.
Hearing
Because the Superintendent's role is to enforce insurance laws to protect the public if the Superintendent suspects an insurer or agent has committed a violation or is engaged in unfair trade practice the Superintendent may issue a statement of charges and hold a hearing for any purpose deemed necessary. Hearing is 10 days after notification.
Assumed names
Every licensee must notify the Superintendent upon changing of legal name. So if you name is Bob but every calls you Frank , Bob is on your license unless it is a legal name change.
Licensing
Insurance professionals must be properly licensed for a specific line of authority in order to transact insurance. The purpose of licensing is to ensure that a producer meets educational and ethical standards to fulfill producer's responsibilities to the insurer and public.
Home State
means any state, district, or territory of the US in which a producer maintains his principal placer of residence or business and is licensed to act as an producer.
Qualifications for an insurer license
1. be a resident of NY state 2. be at least 18 3. have no felony convictions 4. fulfill the prelicensing education requirement of classroom work or equivalent in correspondence work of similar instruction (20 hours a single line of authority agent or broker, such as Life only agent or broker, 40 hours for a Life, accident, and Health agent or broker, Personal lines agent or broker and Public Adjuster, 90 hours for a Property/Casualty agent or broker) 5. Pay the applicable fees 6.Pass the applicable exam for each line of authority