Insurance regulation

Licensing process

complete relicensing education pass exam submit application and fees

Agent regulation

only one license of the same type is allowed per agent must be licensed in the line of authority for which the agent transacts insurance. Avoid unfair trade practices

Maintenance and duration

must be renewed every 3 years can be reinstated within a short period of time after lapse continuing education - must be completed every reporting period disciplinary actions: suspension, revocation, denial of license cease and desist order monetary fines

[[Insurer]] --> appoints producer to act as agent [[producer]]

[[Insurer]] --> files notice of agent appointment, pays appointment fees [[department of insurance]]

inducement

an offer that attempts to influence the other party

Exempt

not subject to an obligation

Licensing and Appointment Requirements:

18: minimum age to apply for producers license 21: minimum age to apply for public adjusters license 180 days: maximum period for temporary license 20 days: for special brokers to file affidavit with Commissioner 3 years: advisers license and reinsurance intermediary's license 10 years: reinsurance intermediaries must maintain complete records of reinsurance 3 years: reinsurance intermediary license applicants must have producer or broker license in line appleid for 12 months: to reinstate a license if lapsed 15 days: for insurer to file with the commissioner a notice of producer appointment 30 days: to notify commissioner of termination of appointment 15 days: after noticing commissioner, to notify producer of termination of appointment

Coercion

To require as a condition to a loan, that the applicant purchase insurance from a specific insurer

fair credit reporting act

Protects consumers against the circulation of inaccurate or obsolete personal or financial information consumer report - info about a consumers credit, character, reputation or habits investigative consumer report - similar to a consumer report, only the info is obtained through investigation and interviews consumer has the right to know what was in the report

insolvent

unable to meet financial obligations

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.

The title of insurance adviser also applies to any person who, in any form of advertisements, uses the title "insurance adviser", "insurance specialist", "insurance counselor" insurance analyst, policy holder adviser, policyholder counselor, or any other combination of words indicating that the person is engages in the business of providing advice, counsel, recommendations or info to holders of policies.

The following are NOT considered to be advisers: Offers or regular salaried employees of any company licensed insurance brokers or producers attorneys at law certified public accountants

Reinsurance Intermediaries

1. Reinsurance intermediary brokers plan reinsurance cessions or retrocessions on behalf of a ceding insurer, without the authority to bind reinsurance on the insurers behalf 2. Reinsurance intermediary managers bind and/or manage the assumed reinsurance of the reinsurer and act as the reinsurer's agent

Termination of producer appointments

An insurer or authorized representative of the insurer that terminates the appointment, employment contract or other insurance business relationship with a producer must notify the commissioner within 30 days, following the effective date of the termination

Finally, the commissioner may order that an insurer or its producer make restitution to any claimant who has suffered actual economic damage as a result of violation committed by the insurer or its producer. In any action to recover on an insurance policy, a court may award punitive damages, in addition to the amount of the claim. This cannot excess 25% of the claim if the court finds the the party seeking the recover on the insurance policy has been damaged by a violation as determined by the commissioner.

Any person who violates a cease and desist order after it has become final but pay a fine of up to $10,000 for each violation, which may be recovered in a civil action. Upon order of the commissioner the person will be subject to suspension or revocation of their license.

In order to obtain a public insurance adjuster license in Mass, an individual must meet the following requirements:

Be at least 21 years old Be a resident of the commonwealth Successfully complete a written exam Submit a written application with all required components (passport-sized photos and a certified copy of a criminal background check) have 2 years of experience performing services in connection with adjusting of property losses Be trustworthy and competent

Disciplinary Actions

Hearings Cease and Desist Order Probation, Suspension, Revocation, Refusal to Issue or Renew Penalty and Fines

Cease and desist order

If after a hearing, the commissioner determines that someone has engaged in an unfair or deceptive act or practice, the commissioner can issue a copy of the findings and an order requiring that person to cease and desist from engaging in the act of violation. The commissioner may suspend, or in the case of repeated violations, revoke the person's license and impose conditions for license reinstatement. In addition, the person may be fined up to $1,000 per ac for violations

Unfair and deceptive insurance practices

Insurers and insurance producers may not engage in any trade practice that is defined as, or determined to be an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.

Special brokers

Licensed to negotiate, continue, or renew insurance contracts (except for accident and health, workers comp, compulsory motor vehicle liability, and life policies, with non admitted foreign insurers. Such insurance may only be procured if the required amounts of insurance for the specified risks cannot be obtained in the market of admitted insurers

Pretext interviews

Means an interview by a person who attempts to obtain information about a natural person and who commits one or more of the following acts: pretends to be someone he/she is not pretends to represent a person they are not in fact representing misrepresents the True purpose of the interview refuses to identify themselves upon request Insurers, there representative, or insurance support organization may not use or authorize the use of pretext interviews for the purpose of obtaining information in connection with an insurance transaction, except in the cases of criminal activist or fraud

In the event of an adverse underwriting decision, the insurer or its representative responsible for the decision must provide the applicant, policy holder or individual proposed for coverage the following:

The specific reason for the adverse underwriting decision in writing or a notice sating that the person can request this information a summary of the rights

Miscellaneous Producer Regulations:

30 days: to report change of address 30 days: to report any criminal action taken against a licensee 60 hours: continued education required in first compliance period of new license 45 hours: CE required each compliance period after first 36 months: CE compliance period 2 years: maintain complaint records

Cease and desist

to stop or discontinue

Statute

a formal written law enacted by legislature; insurance statues can be found in the state insurance code

False financial statements

Those that are intended to deceive public officials ro 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

Producer regulation

Impersonation larceny unlicensed persons compensation

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 reports, and other public sources.

obtaining information under false pretenses

Any person who knowingly and willfully obtains under false pretenses about an individual from an insurance institution insurance representative or insurance support organization will be fined a maximum of 10,000. imprisoned for a maximum term of 1 year, or both

To become a life settlement broker, an individual must meet one of the following eligibility requirements:

Be licensed in this state as life insurance producer or licensed in another state with at least 1 year of experience and a nonresident license Be licensed as an attorney, certified public accountant, or financial planner whose compensation is not paid by the life settlement provider or purchaser The commissioner may examine a life settlement broker's business and affairs at any time. The broker is responsible for any costs arising from the examination

The commissioner may issue a license to act as an insurance adviser to any applicant who

Pays the required fee submits a written application on a form provided by the commissioner (must be executed an oath by the applicant and kept on file by the commissioner Deemed trustworthy and competent

Nongroup, guaranteed issue

Insurers that issue non group, guaranteed issue health plans may establish rates based upon age. In addition, the insurer may establish rate adjustments ranging from .8 to 1.2 for each of the 5 geographic rating areas determined by the commissioner. The rate each individual pays is the base premium rate multiplied by the area rate adjustment

Boycott, coercion, and intimidation

It is illegal to commit or be involved in any act of boycott, coercion, or intimidation that is intended to restrict fair trade or to create a monopoly. This would include unfair behavior that influences not only clients, but competing agents and brokers

Unlicensed persons compensation

No company or its officers, producers, or employees may compensate someone who is not fully licensed for acting as an insurance producer in this state. Anyone who knowingly violates this provision of the law can be punished by a fine of an amount between $50 and $500.

aggrieved

injured party; someone entitled to begin a lawsuit or request a hearing

Producers

A person required to be licensed under the laws of this state to sell, solicit, or negotiate insurance. Applicant for a license must comply with the following standards: Be at least 18 years old have not commuted nay act that is ground for denial, suspension, or revocation based on state insurance law Have completed any required relicensing course of study have paid the required fees have successfully passed all required exams

Address change

Licensees must inform the commissioner of a change of address within 30 days of the change

types of licenses

individuals:resident and nonresident reinsurance intermediaries business entities temporary license - valid for 180 days; issued to maintain the existing business

Commissioner of insurance

regulates the internal affairs of the department of insurance does not write laws examines all authorized users

Life settlement brokers

Someone who offers or attempts to negotiate life settlements between an owner and a life settlement provider (on behalf of the owner) for a fee, commission, or other consideration A person rating as a life settlement provider must first obtain a license from the commissioner. Life settlement broker licenses are renewable on the same basis as the producer licenses

A portable electronics insurance license may be used to a vendor for the sale, solicitation, or negotiation of portable electronics insurance. a vendors license authorizes any employee or authorized representative of the vendor to sell or offer coverage under the policy to customers at each location at which the vendor engages in portable electronic transactions (either directly or indirectly)

The license is valid for a 2 year period and no examination is required for licensure. The portable electronics insurance limited lines license issued to a vendor of portable electronics authorizes the sale of portable electronics insurance and no other line of insurance

A life settlement broker found guilty of committing fraudulent acts may be subject to the following:

A civil penalty of up to $10,000 for each violation The revocation of licensee for at least 1 year

Assumed names

An insurance producer doing business under any name other than the producer's legal name shall notify the Commissioner before using the assumed name.

company regulation

certificate of authority submitting rates and forms for departments approval appointments of agents

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 personal or financial information

Department of Insurance Regulations:

21 days: after serving notice for commissioner to hold hearing 10 days: prior notice of haring concerning rating plans 30 days: for aggrieved insurer or rating organization to request hearing 15 days: prior notice of hearing for aggrieved insurer or rating organization 5 years: commissioner must examine domestic and foreign insurers

Business entity producers

A business entity acting as an insurance producer is required to obtain an insurance producer license. Application must be made using the uniform business entity application. The business entity must do the following: Pay the fees prescribed Designate a licensed producer responsible for business entity's compliance with the insurance laws, rules, and regulations of commonwealth Each insurer that sell, solicits, or negotiates limited line credit insurance must provide to each individual who will sell, solicit, or negotiate limited line credit insurance a program of instruction that may be approve by the commissioner.

Impersonation

A person not licensed as an insurance producer, broker, or adjuster may not represent himself or herself as being one, and may not imply as being engaged in the insurance business by means of advertisements, cards, letterheads, or any other methods of communicating with the public unless duly licensed. The penalty for impersonation is between $10 and $100.

Upon receipt of the notice of appointment the commissioner must verify within 30 days that the insurance producer is eligible for appointment if the insurance producer is determined to be ineligible for appointment the commissioner must notify the insurer within 5 days of its determination

An insurer must pay any applicable appointment and appointment renewal fees

False advertising Advertising covers a wide scope of combination, from publishing an ad in the newspaper or magazine, to broadcasting a commercial on television or the internet. Ads 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 ads specifically include misrepresentation 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 apology 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.

Defamation of insurer

Occurs when an oral or written statement 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

procure

to obtain

Once the license is issued it will remain in force for 3 years unless revoked or suspended. The license can be renewed without additional written examination as long as continuing education requirements are satisfied (15 hours of approved continuing eduction instruction) before the renewal date

Acting as a public insurance adjuster without a license or with a suspended license is punished by a fine not to exceed $10,000 or by imprisonment for not more than 6 months Public adjuster contacts must give insureds the right to cancel the contract without recourse within 3 calendar days of receipt

Solvency

An insurer is solvent if it has the assets to meet its financial obligations. If at any time an insurer becomes unable to meet financial obligations, it is considered insolvent If the capital of a domestic stock company is impaired - but this company can still safely transact insurance - the commissioner will notify the company of the situation. In addition, the commissioner will instruct the company to correct its financial situation. If the company does not improve its finances within 3 months of receiving such notice, the commissioner may apply to the supreme judicial court to become the receiver for the company and the company may be restrained from further business

Filings

Every insurer must file with the commissioner all rates, every rating plan, and every medication of any of the foregoing which is proposes to use at least 15 days prior to the proposed effective date of such plan. The commissioner may delay the effective date for maximum of 30 additional days in order to properly examine the filing. If such filing is made by medical malpractice insurer regarding medical malpractice insurance, the commissioner may further delay the effective date of such fine for maximum of 90 days. A filing and any supporting information must be open to public inspection after the filing become effective An insurer if it so chooses, may satisfy its obligation to make such filings by becoming a member of, or a subscriber to, a licensed rating organization which makes such filings, and by authorizing the commissioner to accept such filings on its behalf

It is considered an unfair trade practice to knowingly commit an unfair method of competition or to engage in such actions with enough frequency that the commission of unfair marketing practices indicates a general business practice

If, after a hearing the department determines that a producer or an insurer has committed an unfair trade or competition 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

Rates

The purpose of rate regulation is to promote the public welfare by regulating insurance rates in order to assure that they are not excessive, inadequate, or unfair discriminatory, and to authorize and regulate cooperate action among insurers in rate-making. This regulation is not intended to prohibit or discourage reasonable competition or to prohibit or encourage uniformity in insurance rates, rating systems, rating plans, or rating practices

Investigative Consumer Report

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 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 info concerning the report and the insurer or reporting agent has 5 days to provide the consumer with the additional information

Rebating

Any inducement offered in the sale of insurance products that is not specified in the policy. Both the offer and acceptance of a rebate are illegal. Rebates may include, but are not limited to: 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

In the Absence of actual malice an insurer, the authorized representative of the insurer a producer, the commissioner or an organization of which the commissioner is a member and which complies information and makes it available to other insurance commissioners or regulatory or law enforcement agencies will not be subject to civil liability and a cilvil cause of action of any nature cannot arise against these entities as a result of any statement of information.

Neither the commissioner nor any person who received documents, materials, or other information while acting under the authority of the commissioner will be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information

Temporary

The commissioner may issue a temporary insurance producer licenser for a period not to exceed 180 days without requiring an examination if the commissioner determines that the temporary license is necessary for the servicing of an insurance business in the following cases: To the surviving spouse or court-appointed personal rep of a licensed insurance producer who dies or become mentally ill or physically disabled in order to allow adequate time for the sale fo insurance business owned by the producer or for the recovery or return of the producer to the business or to provide for the train and licensing of new personnel to operate the producers business To a member or employee of a business entity lined as an insurance producer, upon death or disability of an individual designated in the business entity application or license To the designee of a licensed insurance producer entering active service in the armed forces of the U.S in any other circumstance where the commissioner deems that the public interest will best be served by the issuance of this license

Excess classroom hours accumulated during any licensing period may be carrier forward to the next period. The continuing education requirements not apply to the following:

persons holding a residents licenses for which an examination is not required persons holding a nonresident license, who also hold an equivalent resident license in their home state any limited or restricted license which the commissioner may exempt

Unfair discrimination

In rates, premiums, or policy benefits for person with the same class or with the same life expectancy is illegal. No discrimination may be made on the basis of an individuals marital status, race, national origin, gender identity, sexual orientation, creed, or ancestry unless the distinction is made for a business purpose required by law.

Public insurance adjusters

a person (or partnership) who for compensation represents an insured in connection with the assessment of damages, negotiation, settlement, appraisal, or reference of a loss under any of the following insurance policies: fire homeowners commercial multi peril business interruption fidelity bond or crime inland or ocean marine other property damage

Notice of information practices

an insurance company or its agents must provide a notice of information practices to all applicants or policyholders in connection with insurance transactions in any of the following circumstanced: no later than at the time the application for insurance is made in the case of a policy renewal, no later than the policy renewal date, except that no notice is required in connection with a policy renewal in the case of either of the following: -personal information is collected only from the policy holder or from public records -a notice meeting the requirements has been given within the previous 24 months in the case of a policy reinstatement or change in insurance benefits, no later than the time a request for a policy reinstatement or change in insurance benefits is received by the insurance institution, except that no notice is required if personal information is collected only from the policy holder or from public records

Coercion

Forceful act or threat aimed to influence a person to act against their will

Commissioner

the head of the state department of insurance

Producer appointments

An insurance producer cannot act as an agent of an insurer unless the producer becomes appointed by the insurer. An insurance producer who is not acting as an agent on an insurer is not required to become appointed. 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 or the first insurance application is submitted

Reinsurance intermediary brokers may represent or work for an insurer only if a written contract is in place, specifying each party's responsibilities. Reinsurance intermediary managers must also have written contract with the reinsurer before representing that reinsurer and a true copy of this contract must be filed with the commissioner at least 30 days before the manager assumed or cedes (gives up the right to) any business. The commissioner may require reinsurance intermediary managers to file a bond for protection of the insurer and to maintain errors and omissions insurance.

All reinsurance intermediaries must maintain complete record of reinsurance transactions for at least 10 years after the expiration of the policy Application or a reinsurance intermediary license must have held a producer's or broker's license for at least 3 years in the lines applied for. A reinsurance intermediary license may be renewed every 3 years by paying the prescribed fees

All policy forms must meet the following requirements: The texts achieves a minimum Flesch scale readability score of 50 it is printed (except for tables) in not less than 10-point type, 1-point leaded The style, arrangement and overall appearance of the policy give no undue prominence to any portion of the text of policy and any endorsements or riders It contains a table of contents or an alphabetical subject index The width of margins and ink to paper contrast do not unreasonably interfere with the readability of the form The organization of the content of the policy and the summary of the policy is conducive to the understandability of the form

If a policy form has been on file for at least 30 days, an approval by the commissioner is not required prior to its use. Every policy form filed with the commissioner must be accompanied by a certificate stating that the Flesch scale readability score is achieved All provisions relative to the filing of policy forms also apply to all forms of riders, endorsements, and applications designed to be attached to policy forms and in being attached, functioning as part of the contract

The commissioner must notify the applicant or licensee and explain the reason for the denial or nonrenewable of the license. The applicant or licensee then has 30 days to submit a written request for a hearing before the commissioner in order to determine the reasonableness of the commissioners actions The license of a business entity may be suspended, revoked, or refused if the commissioner finds, after hearing, that an individual license's violation was known or should have been known by one or more of the partners, officers more managers acting on behalf of the partnership or a corporation, and the violation was neither reported to the commissioner nor corrective action taken.

In additional to or in lieu of any applicable denial, suspension, or revocation of a license or person may after hearing be subject to a civil fine The commissioner has the authority to enforce the provisions of and impose any penalty or remedy authorized against any person who is under investigation for or charge with a violation of insurance laws, even if the persons license or registration has been surrendered or has lapsed.

Insurance fraud regulation

Insurance producers that knowingly procure payment of any premiums - by fraud representations - will be punished by a fine of between $100 and $1000. or by impression meant for up to 1 year Producers and insurers are prohibited from making any settlements that misrepresent the terms of a policy. Violating this provision may result in a fine up to $1000 or imprisonment for no more than 6 months. Insureds that are affected by these misrepresentations may recover all premiums paid - if action is brought within 2 years of their policy issuance.

Premiums for small business

Insurers must establish a base rate premium for each class of business. Group rates charged for any group of individual may not exceed 2 times the lowest rate that the insurer charged for the same business classification in the geographic area. If a small employer does not meet an insurers minimum participation requirements, the insurer may rate each employee separately on an individual basis Insurers may establish rate adjustments, but those rate adjustments must apply to both group and individual insureds. If industry wide rate adjustments are established, all eligible groups in that industry must receive the same adjustment.

Types of licensees

Producers Business entity producers Non resident producers Temporary Special brokers Advisers Public insurance adjusters Reinsurance intermediaries Life settlement brokers Portable electronics insurance limited lines license

State regulation Commissioners General duties and powers

The commissioner administers and enforces all the insurance provisions. If upon a complaint or other evidence the commissioner believes that nay insurance provision has been violated, they report the facts to the attorney general, who then may prosecute the offender. The commissioner has the power the investigate the affairs of any person engaged in the business of insurance in order to determine whether the person has been or is engaged in any unfair method of competition

The commissioner may revoke or limit the authority of any temp licensee in any way considered necessary to protect insureds and the public

The commissioner may require the temporary licensee to have a suitable sponsor who is a licensed producer or insurer and who assumed responsibility for all acts of temporary licensee. A temporary license may not continue after the owner or the personal representative despises of the business

Insurers or their representative ay not base an adverse underwriting decision in whole or in part on the following

The fact of a previous adverse underwriting decision or on the fact that an individual previously obtained insurance coverage through a residential market mechanism personal info received from an insurance-support organization whose primary source of info is insurance institutions the basis of sexual orientation: national origin, martial status, lifestyle or living arrangements, occupation, gender, medical history, beneficiary designation, zip code or other territorial classification of the applicant may not be used to establish or aid in establishing the applicants sexual orientation

VIOLATIONS AND PENALTIES

VIOLATION: -An insurer or agent is suspected of committing a violation or being invalid in an unfair trade practice - Commissioner is noticed, and may issue a statement of charges -----> HEARING: -aggrieved party may contest and request a hearing - advance notice of hearing - hearing held promptly -aggrieved party has a chance to be heard -----> CEASE AND DESIST ORDER: -Issued by the commissioner (may also be issued before a hearing) -----> OTHER PENALTIES -established by state laws -imposed based upon hearing outcome -license denial/suspension/revocation -monetary fines

Within 15 days after making the notification requires, the insurer must mail a copy of the notification to the producer at his her last known address

Within 30 days after the producer has received the original or additional notification the producer may file written comments concerning the substance of the notification with the commissioner. The producer must, by the same means, simultaneously send a copy of the comments to the reporting insurer, and the comments will then become a part of the commissioners file and accompany every copy of a report distributed or disclosed about the producer

Unfair claim settlement practices The Massachusetts insurance code protects consumers in the area of claim settlements by identifying certain claim practices that are illegal:

Misrepresenting provisions of coverage failing to respond promptly to claims and claim investigations failing to settle legitimate claims compelling insureds to sue for damages by offering less than rightful amounts settling claims by altering an application without the consent of the insured paying claims by altering an application without the consent of the insured paying claims without the proper accompanying statement encouraging insureds to accept settlements for amounts less than arbitrated awards delaying investigation or payment of claims by requiring preliminary claims reports that replicate formal proof of loss forms failing to pay claims promptly under one portion of the policy in order to influence settlement under other portions failing to affirm or deny coverage within a reasonable time after proof of loss statements have been completed failing to provide prompt fair settlements of claims in which liability has become reasonably clear settling a claim for less than the amount that the insured would reasonably expect to received because of the ad material accompanying his or her application telling claimants that if they appeal an arbitration award they may be granted a smaller settlement at the next arbitration than what they would be entitles now failing to use reasonable standards to promptly investigate claims refusing to pay claims without a reasonable effort to investigate them letting insureds or claimants know that the insurer routinely appeals arbitration awards in favor of the insureds or claimants with the intention of compelling them to accept settlements that are less than the amount awarded in arbitration Failing to promptly give a reasonable explanation of the reason for denying a claim or for offering a compromise settlement

Insurance Information and Privacy Protection Act

applies to an insurance institution, insurance representative, or insurance-support organization that collects, receives, or maintains information in connection with an insurance transaction which pertains to a natural person who is a resident of the state

Adverse Underwriting Decision

means any of the following actions with the respect to insurance transactions involving insurance coverage which is individually underwritten in the following ways: a declination of insurance coverage a termination of insurance coverage failure of an insurance representative to apply for insurance coverage with a specific insurance institution which the insurance representative represents and which is requested by an applicant in the case of life, health or disability insurance coverage, an offer to insure at higher-than-standard rates

Important Dollar Amounts:

$500: maximum fine per violation of rate-making laws $1000: fine for each unfair deceptive act $1000: maximum fine for refusing to submit examination $2500: fine for willful noncompliance of fair credit reporting act $10,000: fine per violation of cease and desist order $50,000: fine per violation of section 18 USC section 1033 (Interstate commerce)

Failure to maintain complaint record

A complaint is any written communication primarily expressing a grievance. Producer, brokers, and adjusters must maintain any written communications received by them which expresses a grievance. The complaint record must include the following: the total number of complaints their classification by line of insurance the nature, disposition and time fo processing of each complaint Records must be kept for period of 2 years and must be available for examination by the commissioner at any time.

Company regulation

Certificate of authority Prior to conducting business in this state, a domestic company must obtain from the commissioner a certificate of authority stating the company has complied with all the conditions and provisions of the law. Certificates will not be issued until the commissioner is satisfied that the company has: complied with the laws of the state adopted a proper system of accounting employed a competent accountant, claim manager, and underwriter Filed an affidavit stating the company is without liabilities (not including reasonable organization expenses), employee a competent actuary and that officers and directors are of good reputations and competent to manage If the commissioner believes that granting such certificate would be detrimental to the public interest, they may refuse to issue the certificate

Portable electronics insurance limited lines license

The term portable electronics refers to electronic devices that are portable in nature (such as cell or Mobile phones, laptops, tablets, GPS tracking devices, portable media devices, or other portable electronic devices) their accessories, and services related to the use of the device Portable electric insurance provides coverage to the repair of replacement of portable electronics against: Theft, inoperability due to mechanical failure, malfunction, damage, or other similar causes of loss This does NOT include: Service contracts, policies of insurance covering a sellers or manufactures obligations under a warranty, or a homeowners, renters, private passenger automobile, commercial multi peril or similar policy

Maintenance and duration Reinstatement and renewal: an insurance producer license will remain in effect unless revoked or suspended, as long as the licensing fee is paid and continuing education requirements for resident individual producers are met by the due date Any individual insurance producer who allows his or her license to lapse may within 12 months, from the due date of the real fee, reinstate the same license without passing a written exam. A penalty in the amount of double the unpaid renewal fee will be required for any renewal fee received after the due date

A licensed insurance producer who is unable to comply with license renewal procedures due to military services or some other extenuating circumstance may require a waiver of this 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 Upon payment of renewal fees, the commissioner may renew insurance advisers licenses for any succeeding 3 year period without requiring the detailed information that was required for issuance of the initial insurance advisers license

Non resident producers

A non resident producer can receive a nonresident producer license upon meeting the following requirements: The person is currently licensed as a resident and in good standing in their home state The person has submitted the proper request for licensure and has paid the fees prescribed The person has submitted or transmitted to the commissioner the application for licensure that the person submitted to their home state, or in lieu of the same, a completed uniform application The person's home state awards nonresident producer licenses to residents of the commonwealth on the same basis

The commissioner may verify the producer's licensing status through the producer database maintained by the National Association of Insurance committees (NAIC) its affiliates ,or subsidiaries

A non resident producer who moves from one state to another state or a resident producer who moves from Massachusetts to another state must file a change of address and provide certification from the new resident state within 30 days of the change of legal residence. No fee or license application is required. Producers licensed as surplus lines producers in their home states can receive nonresident surplus lines producer licenses. Producers licensed to sell limited line credit insurance or other types of knits lines insurance in their home states can receive non resided limited lines producer licenses granting the same scope of authority as granted under the license issued by the producers home states

Reporting of actions

A producer must report to the commissioner any administrative action taken against such producer in another jurisdiction or by another government agency in the state within 30 days of the final disposition of the matter. This report must include a copy of the order, consent to order or other relevant legal documents Within 30 days of any initial pretrial hearing date, a producer must report to the commissioner any criminal prosecution against that produce take in any jurisdiction. The report must include a copy of the initial complaint filed, the order resulting from the hearing, and any other relevant legal documents.

An advisors license expires 3 years from the effective date, unless it is revoked or suspended. Whoever acts as an insurance adviser without a license or with a suspended license can be punished by a fine of between $50 and $500, by imprisonment for a maximum of 6 month or both

An advisers license may be issued to a partnership as long as each named party in the partnership is found to be qualified for a license as an advisor. An advisers' license may be issued to a cooperation if the majority of the officers qualify for advisers licenses.

Advisers

An insurance adviser is any person who for a fee, offers to examine any insurance, annuity, or pure endowment contract for the purpose of giving advice, counsel, recommendation, or info in respect to he contacts terms, conditions, benefits, coverage, or premium

Larceny

An insurance producer or broker who receives any money of substitute for money as a premium for a policy or contract from the insured is deemed to hold those premiums in trust for the company if the producer fails to pay the premiums collected to the company after written demand is made, the failure is evidence that the producer has used or applied the premium for a purpose other than paying the premiums to the company. The producer upon conviction would be guilty of larceny

Policy forms Companies must submit to the commissioner copies of: any policy form used by the company, a form of any rider, endorsement or application used in connection with policy forms, and copies of any circular or other advertising matter the company issues.

Any company, officer, or agent that neglects or refuses to submit copies within 30 days of the commissioner's written request faces a fine of at least $100 and up to $500 If an insurance policy form is going to be delivered to more than 50 policy owners, the copy of the form must be on file with the commissioner for at least 30 days before it can be delivered or issued for delivery unless, before the expiration of the 30 day period, the commissioner approves the form in writing

Personal information

Any individually identifiable information gathered in connection with an insurance transaction from which judgments can be made about an individuals character, habits, avocation finances, occupation, general reputation, credit, health or any other personal characteristics. This includes an individuals name and address and medical record information but does not include privileged information If an individual (or an authorized representative of the individual) submits a written request for the personal information the insurance institution collected, the institution must make it viable within 30 business days

Penalty for rate violation

Any person or organization willfully violating any provision of rate-making provisions of the law can be punished by a maximum fine of $500 for each such violation, in addition to other penalties indicated by the law The commissioner may also suspend the license of any rating organization or insurer which fails to comply with a commissioner's order within the order's time limit. The commissioner may not suspend the license of any rating organization or insurer for failure to comply with an order until the time prescribed for an appeal of the order has expired or, if an appeal has been taken until the order has been affirmed. The commissioner determines when a suspension of license will become effective, as well as the suspensions duration. This cannot change without the commissioners permission, unless the order upon which the suspension is based is modified, rescinded, or reversed. No license can be suspended or revoked except upon a written order of the commissioner, made after a hearing held upon not less than 10 days written notice to the organization

Applicants must apply tot he commissioner on the uniform application and declare under penalty of refusal, suspension, or revocation of the license that the statements made in the application are true, correct, and complete to the best of their knowledge and belief.

Applicants must pass a written exam unless exempt by the commissioner. The examination tests the knowledge of the individual concerning the lines of authority for which the application is made, the duties and responsibilities of an insurance producer, and the insurance laws and regulations of the state. Each exam applicant must remit a nonrefundable exam fee as prescribed by the commissioner When required by the commoner, the applicant must show proof that they have cmpleted a relicensing course of study for the lines of authority for which the person has applied. Persons who have met the requirements prescribed by the commissioner are issued an insurance license. An insurance producer may receive qualification for a license in one or more liens of authority.

Hearings Because the commissioner's role is to enforce insurance laws and to protect the public from unfair trade practices, if the commissioner suspects that an insurer or its agent has committed a violation or is engaged in an unfair trade practice, the commissioner may issue a statement of charges and hold a haring for any purpose deemed necessary (within the scope of the insurance code). The hearing may be held 21 days after the date notice is served. At the hearing, the accused person must have an opportunity to be heard and to show cause why an order soul not be made by the commissioner requiring the person to cease and desist from those acts. The commissioner may administer oaths, examine witnesses, receive evidence, subpoena witnesses, and require the production of relevant documents

In the event of nonrenewable or denial of a license, the commissioner must notify the affected individual. Within 30 days of the notice, the individual may make written demand for a hearing regarding the action.

Licensing Process

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 required to fulfill producer's responsibilities to the insurer and to the public. Licensing regulations set out the requirements, procedures, and fees relating to the qualification, licensure, and appointment of insurance producers

Continuing education requirements, exemptions, and penalties

Licensees must complete the following number of classrooms hours (in an approved continuing education course) during 36 licensing period: during the licensee's first licensing period: 60 hours (including 3 hours in ethics) after the initial period: 45 hours (including 3 hours in ethics)

obtaining a license Requirements: - education and examination - age and residency - good character Application and fees

Maintaining a license CE every 3 years Renewal fees Current name, address Reinstatement within 12 months

Insurance producers, advisers, insurers, or their representatives are prohibited from making, issuing or using any written or oral statement that

Misrepresents the terms benefits or privilege of any insurance policy or annuity contact Misrepresents or makes incomplete or misleading comparisons to induce one to lapse, forfeit or surrender an insurance policy or an annuity contract or to alter, convert or exchange the same for any other such policy Misrepresent a persons financial condition Misuses titles or classes of policies Deceptively induces a pledge or assignment of a loan against a policy; or misrepresents policies as stock shares

Such acts are punishable by a fine of up to $1,000 or up to 6 months imprisonment. Anyone who purchase life insurance policy or annuity contract because of the misrepresentation of an officer or producer of the insurer that issues or executes it may recover all premiums, less any indebtedness to the insurer and any payments made nay the insurer, by bringing an action against the insurer within 2 years of the policy or contract issue date

No misrepresentation made by the insured during the negotiation of an insurance policy will be deemed material unless it is made with the intent to deceive or increased the risk of loss

Probation, suspension, revocation, refusal to issue or renew

The commissioner ma place on probation, suspend, revoke, or refuse to issue or renew an insurance producers license or may levy a civil penalty for any one or more of the following causes: Providing incorrect, misleading, incomplete or materially untrue information in the license application Violating any insurance laws or regulation, subpoena, or oder of the commissioner Obtaining or attempting to obtain a license through misrepresentation or fraud Improperly withholding, misappropriating, or converting any money or property received in the course of doing insurance Buisness Intentionally misrepresenting the terms of an actual or proposed insurance contact or application for insurance Having been convicted of a felony Having admitted or been found to have committed any insurance unfair trade practice or fraud Using fraudulent, coercive, or dishonest practices or demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of Buisness in the commonwealth or elsewhere Having an insurance producer license or its equivalent denied suspended or revoked in any other state, province, district, or territory Forging another's name to an application for insurance or to any document relate to an insurance transaction Improperly using notes or any other reference material to complete an examination for an insurance license Knowingly accepting insurance business for an individual who is not licensed Failing to comply with an administrative or court order imposing a child support obligation Failing to pay state income tax or comply with any administrative or court order directing payment of state income tax

Penalties and fines The following penalties for violations of insurance and licensing laws of this state:

Violation: An agent trying to obtain any premium payment by fraudulent representations Penalties: fine of $100 - $1000, imprisonment for 1 year Violation: An unlicensed person impersonating an agent, broker, or adjuster Penalties: fine of $10 - $100 Violation: Knowingly paying an unlicensed person acting as a producer Penalties: fine of $50 - $500 Violation: Engaging in unfair or deceptive acts in connection with insurance transactions Penalties: fine up to $1000 per act Violation: Any other violation, not specified for a penalty Penalties: fine up to $500

Examination of books and records

The commissioner regulates insurance companies authorized to do business in this state. The purpose of the examination of insurers books and records is to ensure that the companies remain solvent and conduct business in compliance with state laws and regulations pertaining to licensing, policy forms, rates, claim, and market conduct. The commissioner may examine any company at any time, but at least once every 5 years. The costs of the examination are paid by the company being examined . In lieu of an examination of foreign and alien insurers, the commissioner may accept an examination report from the accredited departments of insurance of their state of domicile or port of entry The refusal of any person to submit to examination is grounds for suspension, refusal, or nonrenewable of any license or authority. A find of up to 1,000 or imprisonment of a maximum term of 1 year may be imposed

When such insurance is procured, a special broker must file an affidavit with the commissioner within 20 days that states that, after diligent effort, the full amount of insurance required was not obtainable from admitted insurers and that the foreign insurance is in excess over the amount of insurance procurable from admitted insurers.

This affidavit is not required if the insured is a commercial account and a representative acknowledges, in writing, that he/she understands the insurer is not admitted in this state and that the mass insurers insolvency fund will not pay any losses in the case of insurer insolvency. A special brokers license must be renewed annually

Restrictions on disclosure of privileged information

in most cases, an insurance institution may not disclose any personal or privileged information about an individual collected or received in connection with an insurance transaction unless the applicable individual gives his or her written authorization

Commission

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

The acceptability of a risk is determined by checking the individual risk against many factors directly related to the risks potential for loss. Besides these facts, 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 be used by someone with a legitimate business purpose, including insurance underwriting, employment screening, and credit transactions