insurance regulation

FAIR CREDIT REPORTING ACT

the fair credit reporting act established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used. the law also protects consumers against the circulation of inaccurate or obsolete information. the acceptability of a risk is determined by checking the individual risk against may factors directly related to the risk's potential for loss. besides these factors, an underwriter will sometimes request additional information about a particular risk from an outside source. these reports generally fall into 2 categories: consumer reports and investigative consumer reports. both reports can only be used by someone with a legitimate business purpose, including insurance underwriting, employment screening, and credit transactions. consumer reports include written and/or oral information regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit records, and other public sources. investigative consumer reports are similar to consumer reports in that they also provide information on the consumer's character, reputation, and habits. the primary difference is that the information is obtained through an investigation and interviews with associates, friends and neighbors of the consumer. unlike consumer reports, these reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested. the consumers must be advised that they have a right to request additional information concerning the report, and the insurer or reporting agency has 5 days to provide the consumer with the additional information. the reporting agency and users of the information are subject to civil action for failure to comply with the provisions of the fair credit reporting act. a person who knowingly and willfully obtains information on a consumer from a consumer reporting agency under false pretenses may also be fined and/or imprisoned for up to 2 years. an individual who unknowingly violates the fair credit reporting act is liable in the amount equal to the loss to the consumer, as well as reasonable attorney fees incurred in the process. an individual who willfully violates this act enough to constitute a general pattern or business practice will be subject to a penalty for up to $2,500. under the fair credit reporting act, if a policy of insurance is declined or modified because of information contained in either a consumer or investigative report, the consumer must be advised and provided with the name and address of the reporting agency. the consumer has the right to know what was in the report. the consumer also has a right to know the identity of anyone who has received a copy of the report during the past year. if the consumer challenges any of the information in the report, the reporting agency is required to reinvestigate and amend the report, if warranted. if a report is found to be inaccurate and is corrected, the agency must send the corrected information to all parties which they had reported the inaccurate information within the last 2 years. consumer reports cannot contain certain types of information if the report is requested in connection with a life insurance policy or credit transaction of less than $150,000. the prohibited information includes bankruptcies more than 10 years old, civil suits, records of arrest or convictions of crimes or any other negative information that is more than 7 years old. as defined by the act, negative information includes information regarding a customer's delinquencies, late payments, insolvency or any other form of default.

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. no one may accept a commission, service fee, or other valuable consideration for selling, soliciting or negotiating insurance in this state if that person is required to be licensed and is not so licensed. renewal or other deferred commissions may be paid to a person for selling, soliciting or negotiating insurance in this state if the person was properly licensed at the time of the transaction.

TWISTING

twisting is a misrepresentation, or incomplete or fraudulent comparison of insurance policies that persuades an insured/owner, to his or her detriment, to cancel, lapse, or switch polices. twisting is prohibited.

ASSUMED NAMES

an insurance producer doing business under any name other than his or her legal name is required to notify the commissioner prior to using the assumed name. this also applies to trade names, which must be registered. an insurance producer using a name that has not been approved will be fined up to $250. if, 10 days after being notified by the commissioner to stop using the unapproved name, the producer continues to use the name, the producer will be subject to a fine of up to $5,000.

SOLVENCY AND FINANCIAL REQUIREMENTS

every authorized insurer is required to file a statement of its financial condition (solvency) with the commissioner, quarterly and annually. in addition, insurers must file the same statements electronically with the national association of insurance commissioners. (NAIC)

UNFAIR TRADE PRACTICES

insurers and insurance producers may not engage in any trade practices which is defined as, or determined to be, an unfair method of competition or an unfair or deceptive act or practice in the business or insurance. if, after a hearing, the department of insurance determines that a producer or an insurer has committed an unfair trade practice, the department may issue an order requiring the person to cease and desist from engaging in the method of competition, act, or practice, and/or impose penalties for violation of insurance laws.

REBATING

rebating is defined as any inducement offered to the insured in the sale of insurance products that is not specified in the policy. rebates may include, but are not limited to, the following: *rebates of premiums payable on the policy *special favors or services *advantages in the dividends or other benefits *stocks, bonds, securities, and their dividends or profits both the offer and acceptance of a rebate are illegal.

LICENSE PROBATION, SUSPENSION, REVOCATION, OR REFUSAL TO ISSUE OR RENEW

the commissioner has the power to suspend, revoke, or refuse to renew a producer's license. in addition, fines may be imposed upon producers who are found guilty of any of the following: *failure to comply with any prerequisite of state or federal law or regulations for the issuance of such license *the act of providing incorrect, misleading, incomplete, or materially false information in the license or renewal application *failure to account for or remit any premiums, monies, or properties belonging to another which come into the possession of the applicant in the course of doing insurance business, or improperly withholding, misappropriating, converting, or failing to timely remit any premiums, monies, or properties received in the course of doing insurance business *using fraudulent, coercive, or dishonest practices *demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of business *misrepresenting the terms of an actual or proposed insurance contract, binder, rider, plan, or application for insurance, including all forms or documents that are attached to an insurance contract *having admitted or been found to have committed any insurance unfair trade practice *the conviction or nolo contendere plea to any felony, participation in a pretrial diversion program pursuant to a felony charge, or conviction of any misdemeanor involving moral turpitude or public corruption *obtaining or attempting to obtain a license through misrepresentation or fraud, or improperly using notes or any other reference material to complete an examination for an insurance license, or otherwise cheating or attempting to cheat on an examination for an insurance license *the adjudication of bankruptcy with debts related to the receipt of transmittal of insurance premiums or other funds to an insurer or insured in any fiduciary capacity of the applicant, or issuance to the department of insurance of an insufficient fund or no- fund check *forging another's name to an application for insurance or to any document related to an insurance transaction *knowingly accepting insurance business from a person who is not licensed as a producer *the procurement of a license for the purpose of writing controlled business *having an insurance producer license denied, suspended, or revoked in this or any other state *the violation of any insurance laws of the US *the refusal to submit physical evidence of identity or the conviction of a felony *the failure to comply with an administrative or court order imposing a child support obligation *the failure to pay state income taxes or comply with any administrative or court order directing payment of state income taxes *the producer has employed or has allowed to associate with his business any person engaged in the business or insurance who has been convicted of a felony in the US or any foreign country *the conviction of a felony involving dishonesty or breach of trust if a producer commits any of these violations, the commissioner may impose a fine of no more than $500 for each violation or a total of $10,000 for all violations that occur during a calendar year. if the commissioner denies any application for a license, the commissioner must notify the applicant and explain the reasons for the denial. within 30 days of receiving notification of denial, the applicant may make written demand to the commissioner for a hearing. similarly, if the commissioner decides to suspend or revoke a license, the licensee must be notified in writing. the producer can request a hearing on the matter within 30 days of receiving the notice.

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 LA within 30 days of the final disposition. 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.

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. the records may be presented for examination in their original form, or maybe photographed or reproduced electronically. at a minimum, all original records must be maintained by the insurer for a period of 5 years, or until the commissioner's next examination - whichever is later. 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

LICENSING

the term insurance transaction includes any of the following (by mail or any other means): *solicitation or inducement *negotiations *effectuation of a contract of insurance *advising an individual concerning coverage or claims

CERTIFICATE OF AUTHORITY

before an insurance company can legally transact insurance, it must first obtain a certificate of authority from the commissioner. this certificate indicates that the commissioner has examined that business and found it to be financially stable and organized in accordance with the insurance code.

DEFAMATION

defamation occurs when an oral or written statement is made that is intended to injure a person engaged in the insurance business. this also applies to statements that are maliciously critical of the financial condition of any person or a company.

CONTROLLED BUSINESS

it is illegal to use a producer's license for the sole purpose of writing controlled business. controlled business is insurance that covers the producer or the producer's immediate family or employer. if, during any 12-month period, the aggregate commissions earned from controlled business have exceeded 25% of the aggregate commissions earned on all business written by a producer during the same period, then the commissioner will determine that the license has been used solely for writing controlled business.

COMMISSIONER'S GENERAL DUTIES AND POWERS

the commissioner of insurance is responsible for making sure that the provisions of the LA insurance code are enforced properly. the primary goal of this office is to protect that public welfare where insurance is concerned. 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 the commissioner is elected for a term of 4 years

CHANGE OF ADDRESS

every licensee must notify the commissioner of any changes to the licensee's residential, mailing, business, or e-mail address or phone number within 10 days of the change. the same regulation applies to changes in the licensee's name

BUSINESS ENTITY

a business entity is a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity. business entities can act as producers, provided that they obtain producer's licenses. if a member or employee of the business entity wants to transact insurance, that person must first register with the department of insurance under the business entity's license and obtain an individual producer's license.

CEASE AND DESIST ORDER

if the commissioner has determined that a producer is guilty of engaging in an unfair trade practice or other deceptive act, the commissioner can issue a cease and desist order. this order specifies the practice in violation and legally requires the person to stop committing it. any person who violates the commissioner's cease and desist order may be subject to a monetary fine or license suspension or revocation.

RENEWAL

producers need to submit a license renewal application every 2 years. if the application is received after the stated deadline, then a $25 late fee will be charged. as part of the license renewal process, producers must comply with the state continuing education requirements.

PRIVACY OF CONSUMER FINANCIAL INFORMATION

this regulation was designed to protect the confidentiality of consumers personal financial records. it assures consumers that their financial records cannot be accessed without their consent and prevents insurers (or other financial entities) from requiring the release of financial records as a condition of doing business. this regulation also states that customers have a right to access a record of all disclosures. insurers must provide individuals with a notice about the company's privacy policies and practices when the client relationship is established and on an annual basis.

UNFAIR DISCRIMINATION

discrimination in rates, premiums, or policy benefits for persons within the same class or with the same life expectancy is illegal. no discrimination may be made on the basis of an individual's marital status, race, national origin, gender identity, sexual orientation, creed, or ancestry unless the distinction is made for a business purpose of required by law.

HEARINGS

if a producer is suspected of acting in violation of the insurance code, the commissioner may request a legal hearing. if someone who is aggrieved by the alleged violations demands a hearing, the hearing must be conducted within 30 days of the demand. the hearing may be postponed by mutual consent of the parties, but may not be held more than 60 days from the date of the original demand for the hearing unless all parties agree to that. the commissioner (or a designated representative) has the power to subpoena individuals, administer oaths, and examine the business, conduct, or affairs of any company that is subject to the rules of the insurance code. this examination may include interrogation of individuals and the review of any relevant documents. if a person fails to obey the commissioner's subpoena or fails to produce records as required without reasonable cause, the person will be fined at least $100 and no more than $2,000 at the discretion of the court. a person who fails to appear and testify as ordered by the court is subject to fine and imprisonment.

TERMINATION OF APPOINTMENT

if an insurer terminates a producer's appointment, the commissioner must be notified within 30 days after the effective date of the termination. if, however, the reason for the termination is due to the producer engaging in fraudulent activity, the commissioner must be notified within 15 days after the effective date of the termination. the insurer then must mail a notice to the producer within 15 days after the notification is sent to the commissioner. the producer has a right to send comments to the commissioner regarding the termination within 30 days of receiving the notice. these comments become a part of the commissioner's file on that person.

PAYMENT TO UNLICENSED ENTITIES

if producers or business entities conduct business in LA, but are not properly licensed in this state, it is illegal for them to accept money or commissions related to the insurance that was transacted. violators of this rule are subject to a fine of between $2,000 and $50,000, and/or imprisonment for a maximum of 3 years. their licenses may also be suspended or revoked. violations of regulations pertaining to commissions will result in fines between $1,000 and $5,000, and/or imprisonment for up to 2 years. producers and business entities that transact insurance in LA but are not properly licensed in this state will be liable for the full amount of any loss that is covered by the contracts that they issue.

PENALTIES WITH OR WITHOUT SUSPENSION OF LICENSE

in addition to issuing a cease and desist order, suspending a license, or revoking a license, the commissioner may fine a producer no more than $1,000 for every violation or, in the case of multiple violations, a maximum of $100,000 for all violations combined. if, however, the person knew or should have known that he/she was acting illegally, these amounts can be increased to $25,000 per violation and a maximum of $250,000 for all violations that occur within a 6-month period.

PRODUCER APPOINTMENT

an insurance producer cannot legally act as an agent of an insurer unless the insurance producer becomes an appointed agent of that insurer. if an insurance producer chooses not to act as an agent of an authorized insurer, appointment is not necessary. 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. the 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. appointments remain in effect until the following date of recordation, unless the insurer terminates the appointment or the license of the appointed producer is revoked by the commissioner.

FALSE FINANCIAL STATEMENTS

false financial statements are those that are intended to deceive public officials or the general public about the financial condition of an insurer. this often occurs when an important fact about the financial status of an insurer is deliberately withheld in order to present the company in a more favorable light.

CONTINUING EDUCATION REQUIREMENTS

all insurance producers licensed in the state of LA must complete 24 hours of approved continuing education (CE) instruction or self-study prior to each license renewal. at least 3 hours must be on ethics. these requirements apply regardless of the line or number of lines of insurance for which the producer is licensed. 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 unused continuing education 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. the following producers may be exempt from CE requirements in this state: *a producer is 65 years old or older as of Jan. 1, 2012. and has at least 15 years of experiences 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 producer licenses for the first time after initial issuance

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 each form, including riders and endorsements, must be identified by a form number in the lower left-hand corner of each page. each printed portion of the text policy and any endorsements must be printed in at least 10-point type.

RESIDENT VS. NONRESIDENT

individuals who do not reside in LA may obtain a nonresident producer license if he or she meets the following qualifications: *currently licensed as a resident and is in good standing with 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 license application that was submitted to his/her home state *the producer's home state awards nonresident producer licenses to residents of LA on the same basis (known as reciprocity) a non resident 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 residence. no fee or license application is required.

BOYCOTT, COERCION AND INTIMIDATION

it is illegal to be involved in any activity of boycott, coercion, or intimidation that is intended to restrict fair trade or to create a monopoly

EXPIRATION

a producers license cannot expire. it will remain in effect so long as the producer maintains satisfactory conduct, completes the continuing education requirements, and pays the required fees. however, the commissioner can revoke a license at any time and may choose to not renew it.

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. 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 of the insurance business, for the return of the producer 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 fit by the commissioner the commissioner may require temporary licensees to be monitored by a sponsor that may revoke the license at any time. the license automatically expires when the owner disposes of the business.

SHARED COMMISSIONS

an insurer or producer may not pay or accept any commissions without being properly licensed to transact insurance. however, renewal or other deferred commissions may be paid to a person for selling, soliciting, or negotiating insurance if the person was licensed at the time that the insurance was transacted. if a person illegally pays or accepts commissions, a hearing will be conducted. upon conviction, the violator can be fined an amount between $1,000 and $5,000 and/or be imprisoned for a maximum of 2 years. the violator's license may also be suspended or revoked.

INACTIVITY DUE TO EXTENUATING CIRCUMSTANCES AND INACTIVITY DUE TO MILITARY SERVICES

a licensed producer who is unable to comply with license renewal procedures due to military service or other extenuating circumstance, 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.

FALSE ADVERTISING

advertising covers a wide scope of communication, from publishing and ad in a newspaper or magazine, to broadcasting a commercial on television or the internet. advertisements cannot include any untrue, deceptive, or misleading statements that apply to the business of insurance or anyone who conducts it. the violation of this rule is called false advertising. it is prohibited to advertise or circulate any materials that are untrue, deceptive, or misleading. false or deceptive advertising specifically includes misrepresenting any of the following: *terms, benefits, conditions, or advantages of any insurance policy *any dividends to be received from the policy, or previously paid out *financial condition of any person or the insurance company *the true purpose of an assignment or loan against a policy representing an insurance policy as a share of stock, or using names or titles that may misrepresent the true nature of a policy also will be considered false advertising. in addition, a person or an entity cannot use a name that deceptively suggests it is an insurer.

UNFAIR CLAIM SETTLEMENT PRACTICES

all of the following can be classified as unfair claims settlement practices if they are committed frequently enough to indicate a general business practice: *misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue *failing to act reasonably promptly when claims are presented *refusing to pay claims without conducting a reasonable investigation based upon all available information *failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed *not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonable clear *compelling insured to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by the insured's *attempting to settle a claim for less than the amount to which a reasonable person would have believed that he/she was entitled due to advertising material accompanying an application *attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured *making claims payments to insured's or beneficiaries not accompanied by statement setting forth the coverage under which the payments are being made *making known to insured's or claimants a policy of appealing from arbitration awards in favor of insured's or claimants for the purpose of compelling them to accept settlements compromises less than the amount awarded in arbitration *delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information *failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage *failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement *failing to provide forms necessary to present claims within 15 calendar days of a request with reasonable explanations regarding their use, if the insurer maintains the forms for that purpose

OTHER FEDERAL REGULATIONS - TELEMARKETING SALES RULE

in 2013, the federal trade commission (FTC) and the federal communications commission (FCC) worked together to create the national do not call registry, allowing consumers to include their telephone numbers on the list to which solicitation calls cannot be made by telemarketers. insurance companies need to comply with this regulation when making solicitation phone calls. to comply with the telemarketing sales rules, telemarketers must not do any of the following: *call any number on the national do not call registry or on that seller's do not call list *deny someone a right to be placed on the do not call registry *call outside permissible calling hours (before 8 am and after 9 pm) *abandon calls *fail to transmit caller ID information *threaten or intimidate a consumer or use obscene language *cause any telephone to ring or engage a person in conversation with the intent to annoy, abuse, or harass the person called. some exceptions to the do not call registry include the following calls: *from or on behalf of organizations which have established a business relationship with the consumer (established business relationships last 18 months from the date of a sale or transaction) *for which the consumer has given prior written permission *not commercial or that do not include unsolicited advertisements *by or on behalf of tax-exempt nonprofit organizations to keep in compliance with the Do Not Call rules, organizations must consult the registry every 31 days. any phone numbers on the registry must be dropped from the organization's call lists.

FRAUD AND FALSE STATEMENTS

it is considered unlawful insurance fraud for any person engaged in the business of insurance to willfully, with the intent to deceive, make any oral or written statement that contains either false statements or omissions of material fact. this includes information and statements made on an application for insurance, renewal of a policy, claims for payment or benefits, premiums paid, and financial condition of an insurer. anyone engaged in the business of insurance - whose activities affect interstate commerce - and knowingly make false material statements may be fined, imprisoned for up to 10 years or both. if the activity jeopardized the security of the accompanied insurer, the punishment can be up to 15 years. anyone acting as an officer, director, agent, or other insurance employee, that is caught embezzling funds, faces the aforementioned fines and imprisonment. however, if the embezzlement was in an amount that is less that $5,000, prison time may be reduced to 1 year. federal law makes it illegal for any individual convicted of a crime involving dishonesty, breah of trust or a violation of the Violent Crime Control and Law Enforcement Act of 1994 to work in the business of insurance affecting interstate commerce without receiving written consent from an insurance regulatory official (Director of Insurance, Commissioner of Insurance, etc) - a 1033 waiver. the consent form the official must specify that it is granted for the purpose of 18 U.S.C. 1033. anyone convicted of a felony involving dishonesty or breach of trust, that also engages in the business of insurance, will be fined, imprisoned for up to 5 years or both. any person who engages in conduct that is in violation of section 1033 may be subject to civil penalty of not more than $50,000 for each violation or the amount of compensation the person received as a result of the prohibited conduct - whichever is greater.

MISREPRESENTATION

it is illegal to issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms, the payment of dividends, etc. this also refers to oral statements. committing this illegal act is called misrepresentation.

INDIVIDUAL PRODUCERS

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. an applicant for an individual producers 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 prelicensing course of study for the lines of authority for which the person has applied *has paid the designated licensing fees and submitted an application *has successful passed the examinations for the lines of authority for which the person has applied.

INSURANCE FRAUD

the commissioner can conduct investigations and background criminal checks on all applicants for a license or certificate of authority to transact a business of insurance. if it is determined that there may be a violation of any criminal law, the investigation will be turned over to the LA department of justice, the department of public safety and corrections, public safety services, office of state police, and other appropriate law enforcement agencies for further investigation, enforcement, or prosecution. the commissioner may deny a license or certificate of authority when the applicant has been convicted of a felony. fraudulent insurance acts are committed by a person who, with the intention to defraud, does any of the following: *presents or prepares any statement which he knows to contain materially false information concerning any fact material to the following -an application for the issuance of any insurance policy -the rating of any insurance policy -a claim for payment or benefit pursuant to any insurance policy -premiums paid on any insurance policy -payments made in accordance with the terms of any insurance policy -an application for certificate of authority -the financial condition of any insurer *solicits or accepts new or renewal insurance risks by or for an insolvent insurer, reinsurer, or other entity regulated under the insurance laws of this state *attempts to remove or conceal the assets (or record of assets) and transactions from the place of safekeeping or an insurer and/or attempts to conceal the records from the insurance department *attempts to illegally divert funds of an insurer *supplies false or fraudulent material information pertaining to any document or statement required by the department of insurance nobody who furnishes information to the department concerning suspected fraud (without malice or bad faith) can be taken to court for providing that information any person who knowingly commits insurance fraud will be guilty of a felony and will be subject to a prison term of up to 5 years or a fine of up to $5,000 for each count. however, if the benefit pursued does not exceed $1,000, the term of imprisonment cannot exceed 6 months or $1,000 for each count.

EXAMINATION OF BOOKS AND RECORDS

the commissioner has the power to examine and investigate the affairs for every person engaged in the business of insurance, in order to determine whether the person has been or is engaged in any unfair trade practices. these examinations may occur at any time. the commissioner can examine insurers for solvency and compliance with the insurance code is frequently as deemed necessary, but at least once every 5 years. newer insurers may be examined more frequently. if the commissioner has received at least 3 complaints about a producer within a 30-day period, the commissioner will most likely investigate the producer's business practices. the commissioner can conduct such examinations, however, whenever he/she deems appropriate. every insurer being examined, its officers, employees, and representatives must be able to provide the commissioner with all relevant accounts, records, documents, and files. foreign and alien insurers licensed in LA 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 domicile or port-of-entry state, provided that proper protocol is followed.