Insurance Regulation
Penalties for acting without license required by this title
Any person who performs an act without a license required by this title is guilty of a misdemeanor and, upon conviction, must be fined not more than ten thousand dollars or imprisoned for two years, or both.
What are the 4 types of licensees
1. Producer 2. Non-resident 3. Temporary 4. Broker
Broker Licensee
(1) "Admitted insurer" means an insurer licensed to engage in the business of insurance in this State. (2) "Affiliate" means, with respect to an insured, any entity that controls, is controlled by, or is under common control with the insured. (3) "Affiliated group" means any group of entities that are all affiliated. (4) "Control" means: (a) the entity directly or indirectly or acting through one or more other persons owns, controls, or has the power to vote twenty-five percent or more of any class of voting securities of the other entity; or (b) the entity controls in any manner the election of a majority of the directors or trustees of the other entity. (5) "Exempt commercial purchaser" means any person purchasing commercial insurance that, at the time of placement, meets the following requirements: (a) the person employs or retains a qualified risk manager to negotiate insurance coverage; (b) the person has paid aggregate nationwide commercial property and casualty insurance premiums in excess of one hundred thousand dollars in the immediately preceding twelve months; and (c)(i) the person meets at least one of the following criteria: (A) the person possesses a net worth in excess of twenty million dollars, as that amount is adjusted pursuant to subsubitem (ii); (B) the person generates annual revenues in excess of fifty million dollars, as that amount is adjusted pursuant to subsubitem (ii); (C) the person employs more than five hundred full-time or full-time equivalent employees per individual insured or is a member of an affiliated group employing more than one thousand employees in the aggregate; (D) the person is a not-for-profit organization or public entity generating annual budgeted expenditures of at least thirty million dollars as that amount is adjusted pursuant to subsubitem (ii); or (E) the person is a municipality with a population in excess of fifty thousand persons. (ii) Effective on the January 1, 2017, and each fifth January first thereafter, the amounts in sub-subitems (i)(A), (B), and (D) of subitem (c) shall be adjusted to reflect the percentage change for the five-year period in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor. (6)(a) "Home state", with respect to an insured, means: (i) the state in which an insured maintains its principal place of business or, in the case of an individual, the individual's principal residence; or (ii) if one hundred percent of the insured risk is located out of the state referred to in subsubitem (i), the state to which the greatest percentage of the insured's taxable premium for that insurance contract is allocated. (b) Notwithstanding the provisions of subitem (a), if more than one insured from an affiliated group are named insureds on a single surplus lines insurance contract, the term "home state" means the home state, as determined pursuant to subitem (a), of the member of the affiliated group that has the largest percentage of premium attributed to it under the insurance contract. (7) "Independently procured insurance" means insurance procured directly by an insured from a surplus lines insurer. (8)(a) "Insurance broker" means a property and casualty insurance producer licensed by the director or his designee who: (i) sells, solicits, or negotiates insurance on behalf of an insured; (ii) takes or transmits other than for himself an application for insurance or a policy of insurance to or from an insured; (iii) advertises or otherwise gives notice that he receives or transmits a surplus lines application or policy; (iv) receives or delivers a policy of surplus lines insurance for an insured on behalf of a surplus lines insurer; (v) receives, collects, or transmits a premium of surplus lines insurance; or (vi) performs another act in the making of a surplus lines insurance contract for or with an insured. (b) An insurance broker's license is not required of: (i) a broker's office employee acting within the confines of the broker's office, under the direction and supervision of the licensed broker and within the scope of the broker's license, in the acceptance of request for insurance and payment of premiums and the performance of clerical, stenographic, and similar office duties; or (ii) a producer licensed for property and casualty insurance who places surplus lines insurance through a licensed insurance broker. (c) An insurance broker, or an insurance producer as provided in subitem (b)(ii), may place that insurance either with an eligible surplus lines insurer or with a licensed insurance producer appointed by an insurance carrier licensed in this State. (9) "Municipal agent" means the Municipal Association of South Carolina or other designated agent of the municipality for the purpose set forth in this chapter. (10) "Surplus lines insurance" means any property and casualty insurance permitted to be placed directly or through a surplus lines broker, or an insurance producer as provided in subitem (b)(ii), with a surplus lines insurer eligible to accept the insurance as defined in Section 38-1-20(56). (11) "Surplus lines insurer" means an insurer not licensed to engage in the business of insurance in this State, but does not include a risk retention group, as that term is defined in Section 2(a)(4) of the Liability Risk Retention Act of 1986 (15 U.S.C. 3901(a)(4)). (12) "Premium tax" means, with respect to surplus lines or independently procured insurance coverage, any tax, fee, assessment, or other charge imposed by a governmental entity directly or indirectly based on any payment made as consideration for an insurance contract, including premium deposits, assessments, registration fees, and any other compensation given in consideration for a contract of insurance. (13) "Broker's premium tax rate" means a blended tax rate of six percent. The rate is comprised of a four percent state broker's premium tax and a two percent municipal broker's premium tax. (14) "Qualified risk manager" means, with respect to a policyholder of commercial insurance, a person who meets all of the following requirements: (a) the person is an employee of, or third-party consultant retained by, the commercial policyholder; (b) the person provides skilled services in loss prevention, loss reduction, or risk and insurance coverage analysis, and purchase of insurance; and (c)(i)(A) the person has a bachelor's degree or higher from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by the director or other state regulatory official or entity to demonstrate minimum competence in risk management; and (B) has three years of experience in risk financing, claims administration, loss prevention, risk and insurance analysis, or purchasing commercial lines of insurance; or (aa) has a designation as a Chartered Property and Casualty Underwriter (CPCU) issued by the American Institute for CPCU/Insurance Institute of America; (bb) has a designation as an Associate in Risk Management (ARM) issued by the American Institute for CPCU/Insurance Institute of America; (cc) has a designation as Certified Risk Manager (CRM) issued by the National Alliance for Insurance Education & Research; (dd) has a designation as a RIMS Fellow (RF) issued by the Global Risk Management Institute; or (ee) any other designation, certification, or license determined by the director or other state insurance regulatory official or entity to demonstrate minimum competency in risk management; (ii)(A) has at least seven years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; and (B) has any one of the designations specified in subitems (c)(i)(B)(aa) through (c)(i)(B)(ee); (iii) has at least ten years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; or (iv) has a graduate degree from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by the director or other state regulatory official or entity to demonstrate minimum competence in risk management. (15) "State" includes any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, the Virgin Islands, and American Samoa.
Probation, revocation, suspension of license, or denial of reissuance
(A) The director or his designee may place on probation, revoke, or suspend a producer's license after ten days' notice or refuse to issue or reissue a license when it appears that a producer has been convicted of a crime involving moral turpitude, has violated this title or any regulation promulgated by the department, or has willfully deceived or dealt unjustly with the citizens of this State. (B) For purposes of this section, "convicted" includes a plea of guilty or a plea of nolo contendere, and the record of conviction, or a copy of it, certified by the clerk of court or by the judge in whose court the conviction occurred is conclusive evidence of the conviction. (C) The words "deceived or dealt unjustly with the citizens of this State" include, but are not limited to, action or inaction by the producer as follows: (1) providing incorrect, misleading, incomplete, or materially untrue information in the license application; (2) violating insurance laws, or violating any regulation, subpoena, or order of the director or of another state's director or his designee; (3) obtaining or attempting to obtain a license through misrepresentation or fraud; (4) improperly withholding, misappropriating, or converting any monies or properties received in the course of doing insurance business; (5) intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance; (6) having been convicted of a felony; (7) having admitted or been found to have committed any insurance unfair trade practice or fraud; (8) using fraudulent, coercive, or dishonest practices, or demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of business in this State or elsewhere; (9) having an insurance producer license, or its equivalent, denied, suspended, or revoked in another state, province, district, or territory; (10) forging another's name to an application for insurance or to any document related to an insurance transaction; (11) improperly using notes or any other reference material to complete an examination for an insurance license; (12) knowingly accepting insurance business from an individual who is not licensed; (13) failing to comply with an administrative or court order imposing a child support obligation; or (14) failing to pay state income tax or comply with any administrative or court order directing payment of state income tax. (D) If upon investigation the director or his designee finds that a producer has obtained a license by fraud or misrepresentation, he may suspend immediately the license. The director or his designee, in an order suspending a license, shall specify the period during which the suspension is to be in effect. The period may not exceed two years. A licensee whose license has been revoked or an applicant who has been refused a license by the director or his designee may not reapply for another license until a two-year period of time has lapsed from the effective date of the revocation or refusal or, if judicial review before the Administrative Law Court of the revocation or refusal is sought, after two years from the date of a final court order or decree affirming the revocation or suspension. (E) If, after notice of a hearing before the Administrative Law Court or notice of an opportunity for hearing before the Administrative Law Court, the director or his designee finds that one or more grounds exist for the revocation or suspension of, or the refusal to issue or reissue a license, the director or his designee, in his discretion, instead of revocation, suspension, or refusal, may impose upon the producer or applicant an administrative penalty as provided in Section 38-2-10 for each offense or ground. (F) The director or his designee may allow the producer or applicant a reasonable period, not to exceed thirty days, within which to pay to the director or his designee the amount of the penalty imposed. If the producer or applicant fails to pay the penalty in its entirety to the director or his designee at his office in Columbia within the period allowed, the license or application stands revoked, suspended, or renewal refused, as the case may be, upon expiration of the period and without any further proceedings. (G) Whenever the director or his designee nonrenews or denies an application for a license, the director or his designee shall notify the applicant or licensee and advise, in writing, the applicant or licensee of the reason for the denial or nonrenewal of the applicant's or licensee's license. The applicant or licensee may make written demand upon the Administrative Law Judge within thirty days for a hearing before the Administrative Law Judge to determine the reasonableness of the director or his designee's action. The hearing must be held pursuant to the Administrative Procedures Act. (H) The license of an agency may be placed on probation, suspended, revoked or refused if the director or his designee finds, upon an investigation, that an individual licensee's violation was known or should have been known by one or more of the partners, officers, or managers acting on behalf of the agency and the violation was neither reported to the director or his designee nor corrective action taken. (I) In addition to or in lieu of any applicable denial, probation, suspension, or revocation of a license, a person violating this title may, after a hearing, be subject to an administrative penalty according to Section 38-2-10. (J) The director shall retain the authority to enforce the provisions of and impose any penalty or remedy authorized by this chapter and title against any person who is under investigation for or charged with a violation of this title even if the person's license or registration has been surrendered or has lapsed by operation of law.
Cease and Desist Order
SECTION 38-57-200. Findings and order. If, after a hearing, the director or his designee determines that a method of competition or an act or practice is unfair or deceptive as defined in this title and that the person complained of has engaged in the method of competition, act, or practice in violation of this title, he shall reduce his finding to writing and shall issue and cause to be served upon the person charged with the violation: (1) an order requiring the person to cease and desist from engaging in the method of competition, act, or practice; and (2) an order imposing penalties provided in Section 38-2-10.
Continuing Education
SECTION 38-43-106. Continuing education requirements; administrator; advisory committee; exemptions from requirements. (A)(1) An applicant or producer licensed to sell property and casualty insurance or to sell life, accident and health insurance, or both, or qualified for this licensure, shall complete biennially a minimum of twenty-four hours of continuing insurance education in order to be eligible for licensure for the following two years. A person who falsely represents that he or another person has met the continuing insurance education requirements of this section, after being afforded notice and an opportunity for a hearing by the Administrative Law Court, is subject to the penalties provided in Section 38-2-10. (2) However, if a producer is licensed in both property and casualty and life, accident and health, the producer shall complete at least one-third of the twenty-four required biennial continuing insurance education hours in courses related to each of these types of licenses or qualification for licensure. Notwithstanding the provisions of this subsection or another provision of law, a maximum of eighteen credit hours earned may be carried forward to the next biennial continuing insurance education period, as long as the hours carried forward are in excess of the required minimum for a particular reporting period. (3) However, a licensed resident producer who has obtained one of the following designations may use the credit hours earned to maintain the designation toward the fulfillment of the twenty-four hour requirement: Chartered Life Underwriter (CLU), Fellow, Life Management Institute (FLMI), Certified Financial Planner (CFP), Life Underwriter Training Council Fellow (LUTCF), Registered Health Underwriter (RHU), Registered Employee Benefit Consultant (REBC), or Chartered Financial Consultant (CHFC) for a life, accident, and health license, or Chartered Property and Casualty Underwriter (CPCU) or Certified Insurance Counselor (CIC) for a property and casualty license. (4) A producer may repeat a continuing education course, but credit must not be given more than once for a course repeated during a biennial compliance period. (B)(1) The director or his designee shall administer these continuing education requirements and shall approve courses of instruction which qualify for these purposes. However, the director may enter into reciprocal agreements with the insurance commissioners of other states regarding the approval of continuing education courses, sponsors, instructors, or proctors if, in his judgment, the arrangements or agreements are in the best interest of the State and if the proposed courses, sponsors, instructors, or proctors submitted meet the minimum statutory requirements of this State for approval. However, the director or his designee may not enter into or continue a reciprocal agreement unless the other state has requirements similar to this State in approving courses, sponsors, instructors, or proctors. In administering this program, the department, in its discretion, may promulgate regulations producers provide to a continuing education administrator established within the department proof of compliance with continuing education requirements as a condition of license renewal or, in the alternative, contract with an outside service provider to provide recordkeeping services as the continuing education administrator. The costs of the continuing education administrator must be paid from the continuing insurance education fees paid by producers in the manner provided by this section, except that course approval responsibilities may not be designated to the continuing education administrator. The continuing education administrator shall compile and maintain, in conjunction with insurers and producers, records reflecting the continuing insurance education status of all licensed or qualified producers subject to the requirements of this section. The continuing education administrator shall furnish to the insurer, as specified by regulation, a report of the continuing insurance education status of all of its producers. All licensed producers shall provide evidence of their continuing insurance education status to the continuing education administrator by the last day of the individual's month of birth. An individual born in an odd-numbered year shall comply every odd-numbered year. An individual born in an even-numbered year shall comply every even-numbered year. (2) The department may promulgate regulations prescribing the overall parameters of continuing education requirements, and these regulations expressly must authorize the director or his designee to recognize product-specific training offered by insurers. The director shall appoint an advisory committee to make recommendations with respect to courses offered for approval, but the director or his designee shall retain authority with respect to course approvals. When the advisory committee is approved, it shall meet regularly as needed, but no less than semiannually, to review new course applications. Also, the advisory committee shall review modifications of courses previously approved and review previously promulgated regulations to make recommendations regarding any need for modifications, deletions, or new regulations. In making these appointments, the director may accept nominations for qualified individuals from the Professional Insurance Agents of South Carolina; the Independent Insurance Agents of South Carolina; the South Carolina Association of Automobile Insurance Agents; the South Carolina Association of Insurance and Financial Advisers; the Association of South Carolina Life Insurance Companies; the Direct Writers Insurance Companies; insurers that are not members of any national insurance trade association; and another individual, group, or trade or professional association. (3) A vacancy on the advisory committee must be published in newspapers of general, statewide circulation. Each advisory committee member must be appointed for a term of two years and shall serve until his successor is appointed and qualified. A vacancy must be filled for the unexpired term only. (C) The appointment of a producer may not be renewed unless the producer has completed the mandated continuing insurance education requirements during the previous two-year accreditation period. The license of a producer who fails to comply with the provisions of this section shall lapse in accordance with the provisions of Section 38-43-110. Each insurer is responsible, biennially before renewal, for furnishing to the department certification that its producers meet the continuing insurance education requirements. Each producer is responsible for payment to the continuing education administrator a reasonable annual fee for operation of the continuing insurance education program. These fees are not refundable nor proratable and must be used to administer the provisions of this section. (D) This section also applies to nonresident producers unless otherwise provided in this section. However, a nonresident producer who successfully satisfies continuing insurance education requirements of his home state is considered to have satisfied the requirements of this section regardless of the requirements of that other state. (E) An insurance producer licensed for limited lines insurance is exempt from the provisions of this section. (F) The department is authorized to promulgate regulations to implement the provisions of this section. (G) All information received by the advisory committee in the course and scope of its duties must be treated as confidential and proprietary and not used or disclosed outside the requirements of the duties imposed on it by law.
Reporting of Actions
SECTION 38-43-247. Reporting administrative actions and criminal prosecutions. (A) A producer shall report to the director or his designee any administrative action taken against the producer in another jurisdiction or by another governmental agency in this State within thirty days of the final disposition of the matter. This report shall include a copy of the order, consent to order, or other relevant legal documents. (B) Within thirty days of the initial pretrial hearing date, a producer shall report to the insurance director any criminal prosecution of the producer taken in any jurisdiction. The report shall include a copy of the initial complaint filed, the order resulting from the hearing, and any other relevant legal documents.
Temporary Licensee
(A) The director or his designee may issue a temporary insurance producer license for a period not to exceed one hundred eighty days without requiring an examination if the director or his designee considers the temporary license is necessary for the servicing of an insurance business in the following cases: (1) to the surviving spouse or court-appointed personal representative of a licensed insurance producer who dies or becomes mentally or physically disabled to allow adequate time for the sale of the insurance business owned by the producer or for the recovery or return of the producer to the business or to provide for the training and licensing of new personnel to operate the producer's business; (2) to a member or employee of an agency licensed as an insurance producer, upon the death or disability of an individual designated in the business entity application or the license; (3) to the designee of a licensed insurance producer entering active service in the armed forces of the United States of America; or (4) except for continuing education purposes, in any other circumstance where the director or his designee considers the public interest will best be served by the issuance of this license. (B) The director or his designee may by order limit the authority of any temporary licensee in any way considered necessary to protect insureds and the public. The director or his designee may require the temporary licensee to have a suitable sponsor who is a licensed producer or insurer and who assumes responsibility for all acts of the temporary licensee and may impose other similar requirements designed to protect insureds and the public. The director or his designee may by order revoke a temporary license if the interest of insureds or the public are endangered. A temporary license may not continue after the owner or the personal representative disposes of the business for which the temporary license was issued
A producer is someone who:
1. Sells, solicits or negotiates insurance on behalf of an insurer. 2. Takes or transmits other than for himself an application for insurance or a policy of insurance to or from an insurer. 3. Advertises or otherwise gives notice that he will receive or transmit insurance applications or policies. 4. Receives or delivers a policy of insurance of an insurer. 5. Receives, collects, or transmits any premium of insurance. 6. Performs any other act in the making of an insurance contract for or with an insurer, other than for himself; whether these acts are done by an employee of an insurer or at the instance or request of an insurer, must be an appointed producer of the insurer for which the act is done or the risk is taken unless provided otherwise.
Hearings
All hearings, unless otherwise specifically provided, must be held at the time and place designated in a written notice given by the director or his designee to the person cited to appear at least thirty days before the designated date. The notice shall state the subject of the inquiry and specific charges, if any. It is sufficient to give notice either by delivering it to the person or by depositing it in the United States mail, postage prepaid, addressed to the last known address of the person and registered with return receipt requested.
Non-resident Licensee
(A) Unless denied licensure pursuant to Section 38-43-130, a nonresident person shall receive a nonresident producer license with the same lines of authority held in the home state if the: (1) person is currently licensed as a resident and in good standing in his home state; (2) person has submitted the proper request for licensure and the fees have been paid as provided for in Section 38-43-80; (3) person has submitted or transmitted to the director or his designee a certified copy of the application for licensure that the person submitted to his home state, or instead of the certified copy an original completed Uniform Application; and (4) person's home state awards nonresident producer licenses to residents of this State on the same basis. (B) The director or his designee may verify the producer's licensing status through the Producer Database maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries. (C) A nonresident producer who moves from one state to another state or a resident producer who moves from this State to another state shall file a change of address and provide certification from the new resident state within thirty days of the change of legal residence. No fee or license application is required. (D) Notwithstanding any other provision of this section, a person licensed as a surplus lines broker in his home state shall receive a nonresident surplus lines broker license pursuant to subsection (A) of this section. Except as to subsection (A) of this section, nothing in this section otherwise amends or supersedes any provision of Section 38-45-30. (E) Notwithstanding any other provision of this section, a person licensed as a limited line credit insurer or other type of limited lines producer in his home state shall receive a nonresident limited lines producer license, pursuant to subsection (A) of this section, granting the same scope of authority as granted under the license issued by the producer's home state.
Assumed Names
SECTION 38-43-10. Persons considered producers of insurers; excess and surplus lines brokers; using assumed name. (A) A person who: (1) sells, solicits, or negotiates insurance on behalf of an insurer; (2) takes or transmits other than for himself an application for insurance or a policy of insurance to or from an insurer; (3) advertises or otherwise gives notice that he will receive or transmit insurance applications or policies; (4) receives or delivers a policy of insurance of an insurer; (5) receives, collects, or transmits any premium of insurance; or (6) performs any other act in the making of an insurance contract for or with an insurer, other than for himself; whether these acts are done by an employee of an insurer or at the instance or request of an insurer, must be an appointed producer of the insurer for which the act is done or the risk is taken unless provided otherwise in Section 38-43-20. (B) This chapter does not apply to excess and surplus lines brokers licensed pursuant to Section 38-45-30 except as provided in Section 38-43-70. (C) An insurance producer doing business under any name other than the producer's legal name is required to notify the director or his designee prior to using the assumed name.
In how many days should a producer notify the department if change of address or name occurs?
Within 30 days
Violation of cease and desist order
Any person who contemptuously violates a cease and desist order of any practice issued by the director or his designee shall, upon due notice, receive a hearing before the director or his designee. Upon the determination of the director or his designee that the contemptuous violation has been committed, the director or his designee shall issue his order to the effect that the person is in contempt of his order to cease and desist. Any person who contemptuously violates a cease and desist order of the director or his designee shall pay a fine set by the director or his designee but not to exceed fifty dollars for each day of violation. However, if the violation is willful, the fine may be assessed in an amount not to exceed one hundred dollars per day of violation.
Reinstatement of License
SECTION 38-43-110. Renewal of license; conditions; lapse; request for military waiver. (A) A producer's license continues on a biennial basis unless revoked or suspended subject to the following requirements: (1) an individual producer license must be renewed by the last day of the licensee's month of birth based on the producer's year of birth as provided for in regulation; (2) an individual producer license may not be renewed unless the continuing education requirements of Section 38-43-106 are met; and (3) an individual producer license may not be renewed unless the biennial license renewal fee is paid as provided in Section 38-43-80. (B) A producer who allows his license to lapse for failure to comply with Section 38-43-106, within six months from the compliance deadline, may reinstate the same license if continuing education requirements have been met and a penalty fee set forth by regulation is paid. (C) A licensed insurance producer who is unable to comply with license renewal procedures due to active military service or some other extenuating circumstance (e.g., a long-term medical disability) may request a waiver of those procedures. The producer also may request a waiver of any examination requirement or any other fine or sanction imposed for failure to comply with renewal procedures.