CHAPTER 10

Cease and Desist-

to stop or discontinue.

Commissions, Compensations, Fees-

no insurance company or agent may pay a commission, service fee, or other valuable consideration to a person for selling, soliciting or negotiating insurance in this state if that person is not properly licensed.

Commision-

payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium.

The Commissioner may require temporary license:

to be monitored by a sponsor and may revoke the license at any time. The license automatically expires when the owner disposes of the business.

3. Producer regulation-

-Appointment -Commissions, Compensations, Fees -Shared Commissions -Payment to Unlicensed Entities -Controlled Business -Disciplinary Actions -Cease and Desist Order -License Probation, Suspension, Revocation, or Refusal to Issue or Renew -Penalties with or without Suspension of License

2. Company Regulation

-Certificate Of Authority -Solvency and Financial Requirements -Record Maintenance -Producer Appointment: Insurer's Duties -Termination of Appointment -Policy Forms -Unfair Claims Settlement Practices

2. Types of Licensees

-Individual Producer -Business Entity -Resident VS Nonresident -Temporary

A Nonresident producer who moves from one state to another state or a resident producer who moves from this state to another state must file a change of address form and provide certification from the new resident state within:

30 days of the change of legal resident. No fee or license application is required.

Assumed Names-

An insurance producer using a name that has not been approved will subject to a fine up to $250. If the producer continues to use the name for 10 or more days after being notified by the Commissioner to stop using the unapproved name, the producer will be subject to an additional fine of up to $5000.

Termination of Appointment-

An insurer terminates the appointment, employment, or contract with a producer must notify Commissioner within 30 days following the effective date of the termination.

1. Commissioner's General Duties and Powers

The Commissioner of Insurance is responsible for making sure that the provisions of the Louisiana Insurance Code are enforced property. The primary goal of this office is to protect the public welfare where insurance is concerned.

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.

Statute-

a formal written law enacted by legislature; insurance statutes can be found in the State Insurance Code.

Reciprocity-

a mutual interchange of rights and privileges.

A. Licensing-

a person can not sell, solicit, or negotiate insurance in this state unless licensed for the appropriate line(s) of authority.

Expiration-

a producer's license remains in effect unless it's revoked, suspended, or nonrenewed, as long as the producer maintains satisfactory conduct, completes the continuing education requirements, and pays the required fees.

To that end, the Commissioner is in charge of the following:

-Conducting legal hearings regarding suspected violations of the Insurance Code; -Issuing cease and desist orders; -Examining insurers for solvency; -Issuing, renewing, suspending, and revoking licenses.

An applicant for an individual producer's license must meet the following qualifications:

-Is at least 18 years of age; -Resides in the state or maintains his/her principal place of business in the state; -Has not committed any act that is a ground for denial, suspension, or revocation; -Has completed a pre-licensing course of study for the lines of authority for which the person has applied; -Has paid the designated licensing fees and submitted and application; -Fulfill fingerprinting requirements (if required); -Has successfully passed the examinations for the lines of authority for which the person has applied.

Inactivity Due to Extenuating Circumstances and Inactivity Due to Military Servies:

A licensed insurance producer who is unable to comply with license renewal procedures due to military service or other extenuating circumstances, such as a long term medical disability, may request a waiver of those procedures. The producer may also request a waiver of any examination requirement or any other fine or sanction imposed for failure to comply with renewal procedures.

Certificate of Authority-

Before an insurance company can legally transact insurance, it must first obtain a Certificate of Authority from the Commissioner. This certificate indicated that the Commissioner has examined the business and found it to be financially stable and organized in accordance with the Insurance Code.

Solvency and Financial Requirements-

Every authorized insurer is required to file a statement of its financial condition with the Commissioner, quarterly and annually. In addition, insurers must file the same statements electronically with the National Association of Insurance Commissioners (NAIC).

Change Of Address-

Every licensee must notify the Commissioner of any changes to the licensee's residential, mailing, business, or email address or phone number within 30 days of the change. Failure to file will result in a $50 penalty per violation.

1. Requirements

prior to transacting insurance in this state, insurance professionals must be properly licensed for specific line of authority.

An Insurance License is NOT required if:

an insurance license is usually not required if a person does not receive any commission for transactions.

Inducement-

an offer that attempts to influence the other party.

Resident VS Nonresident-

individuals who do not reside in Louisiana.

Authorized Insurer-

insurer who has received a Certificate of Authority from the department of insurance to transact insurance in this state.

Home Office-

insurer's headquarters, principal place of business.

Business Entity-

is a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity. Business Entities can act as producer's, provided that they obtain producer's licenses.

What's the purpose of Licensing?

the purpose of licensing is to ensure that a producer meets educational and ethical standards required to fulfill producer's responsibilities to the insurer and to the public.

What are Licensing Regulations for?

Licensing Regulations set out the requirements, procedures, and fees relating to the qualification, licensure, and appointment of insurance producers.

3. Maintenance and Duration of License

-Expiration -Renewal -Change of Address -Assumed Names -Reporting of Actions -Continuing Education Requirements -Inactivity Due to Extenuating Circumstances and Inactivity Due to Military Services

Individuals who do not reside in Louisiana may obtain a Nonresident Producer License if he or she meets the following qualifications:

-Currently licensed as a resident and is in good standing in his/her home state; -Has requested a license and has paid the licensing fees; -Has provided the Commissioner with either a Uniform Application or the same licensing application that was submitted to his/her home state; -The producer's home state awards nonresident producers licenses to residents of Louisiana on the same basis (known as reciprocity).

The following producers may be exempt from CE requirements in this state:

-A producer is 65 years of age or older, and has at least 15 years of experience as a licensed producer, and who is either no longer actively engaged in the insurance business or who represents a licensed insurer in this state; -A producer who is currently serving a term as a member of the legislature; -Nonresident producers who have met CE requirements in their home state; -Individuals renewing their resident producers licenses for the first time after initial issuance.

This category of insurance professionals may include company officers, directors or employees of the insurer who perform the following duties:

-Only perform executive, administrative, managerial, or clerical activities that are not directly related to the sale, solicitation or negotiation or insurance; -Have a function that relates to underwriting, loss control, inspection or the processing, adjusting, investigating or settling of a claim on a contract of insurance; or -Are acting in the capacity of a special agent or agency supervisor assisting licensed producers, where activities are limited to providing technical advice and assistance to licensed producers and do not include the sale, solicitation or negotiation of insurance.

Commissioner of Insurance:

-Supervise Insurance Business -Licensing -Approve Policies and Forms -Enforce Insurance laws and impose penalties for violations -Conduct examinations, investigations, hearings.

Policy Forms--All policy forms issued in this state must conform to the standards set forth by the Insurance Code, and must clearly identify the following information in the policy:

-The name of the parties to the contract, and the name of the insurer; -The subject of the insurance and the risks insured against; -The time the insurance takes effect and is expected to terminate; -A statement of the premium, and the premium rate if other than life, annuity, health, or title insurance; -The conditions pertaining to the insurance.

The Commissioner is elected for a term of:

4 years.

Reporting of Actions-

An insurance producer must report to the Commissioner any administrative action taken against him/her in another jurisdiction or by another governmental agency in Louisiana within 30 days of the final disposition of the matter. within 30 days of a conviction in district court, a producer must report the conviction to the Commissioner and provide a copy of the bill of information or indictment.

Continuing Education Requirements-

Continuing education (CE) rules are established to protect the public by maintaining high standards of professional competence in the insurance industry, and to maintain and improve the insurance skills and knowledge of licensed producers. All insurance producers licensed in the state of Louisiana must complete 24 Hours of approved continuing education instruction or self study prior to each license renewal. At least 3 Hours must be on ethics. Producers licensed to write property, casualty, property and casualty, or personal lines insurance must also include 3 credit CE hours on flood insurance. Up to 10 hours of excess CE credits may be carried forward to the next renewal period for producers licensed in any combination of the lines of life, health and accident, property, casualty or personal lines. At the Commissioner's discretion, a licensed agent or broker who is a member of , and actively participates in, a state or national insurance association may be granted 4 CE credits.

Record Maintenance-

Every domestic insurer must keep its books, records, documents, accounts, and vouchers in such a manner that the Commissioner may easily verify the insurer's financial condition. Any director, officer, agent, or employee of the insurer who destroys any books and records without the Commissioner's authority may be fined for up to $5,000.

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

Temporary-

a temporary producer's license may be granted under specific circumstances. These licenses last for 180 days; after that, the person needs to take a producer's exam and receive a standard license.

Appointment-

an insurance producer cannot legally act as an agent of an insurer unless the insurance producer becomes an appointed agent of that insurer. An insurance producer who does not act as an agent of an authorized insurer does not need to become appointed.

Domicile (for insurers)-

at state in which an insurer is organized and has its main place of business.

Foreign and Alien Insurers-

licensed in Louisiana do not have to be examined by the Commissioner. Instead, the Commissioner may accept an examination report on the company as prepared by the Insurance Department of the company's state of domicile or port-of-entry state, provided that proper protocol is followed.

Effective January 2018-

licenses that end in an even number will expire in even number years. Likewise, licenses that end in an odd number expire in odd numbered years.

Individual Producer-

producers are individuals or business entities that are licensed to sell, solicit, or negotiate insurance. from a legal standpoint, producers represent their respective insurance companies, not their customers.

Renewal-

producers need to submit a license renewal application every 2 years. License renewals must be completed by the last day of the producer's birth month. The renewal window begins 90 days before expiration. If the application is received after the stated deadline, then a $25 late fee will be charged. Producers who allow their license to lapse may reinstate the same license within 2 years, upon proof of fulfilling all continuing education requirements through the date of reinstatement, and by paying all overdue fees. If the license has been lapsed for more than 2 years, the producer must apply for a new license.

Commissioner-

the head of the State Department of Insurance.

Producer Appointment: Insurer's Duties-

To appoint a producer as its agent, the appointing insurer must file a notice of appointment within 15 days from the date the agency contract is executed. The insurer is also responsible for paying producer appointment fees. Commissioner, upon receiving this notice, has 30 days to make sure that the producer is suitable for appointment. If the producer is determined to be ineligible for appointment, the Commissioner must notify the insurer within 15 days of making the determination.

Individual Producers engaged in the sale of any annuity products must:

complete a one-time, 4 hour training course. This requirement is separate and distinct from the CE requirements for a licensee, and applies to both resident and nonresident producers.

Moral Turpitude-

conduct that is contrary to community standards of justice, honesty or good morals.

B. State Regulation

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Insurance producers in this state may transact insurance in one or more of the following lines of authority:

-Life: Coverage on human lives; -Variable life and variable annuity products; -Health and accident: coverage for sickness, bodily injury, or accidental death, and disability income; -Property: coverage for the direct and consequential loss or damage to property of every kind; -Casualty: coverage against legal liability; -Personal lines: noncommercial property and/or casualty coverage; -Titile; -Credit: debt insurance (limited line); -Travel: coverage for trip cancellation, interruption, baggage, life, sickness, and accident, and personal effects limited to a specific trip; -Industrial fire; -Surety: insurance or bond that covers obligations to pay debts; -Bail Bonds; -Surplus Lines; -Limited Lines; -Any other type of insurance as determined by the Commissioner.

A temporary license may be issued to the following individuals:

-The surviving spouse, next of kin, or employee of a licensed insurance producer who is deceased or disabled (mentally or physically). The temporary license would be granted to allow adequate time for the sale if the insurance business, for the return of the producers to the business, or to provide for the training and licensing of new personnel to operate the business; -A member or employee of a business entity licensed as an insurance producer, upon the death or disability of an individual designated in the business entity application or the license; -The designee of a licensed insurance producer entering active service in the US Armed Forces; -Any other person deemed fir by the Commissioner.