Insurance Regulations

Superintendent's General Duties & Powers

the Superintendent is appointed by the Governor, and continues in office until the end of the Governor's term. First & foremost, the Superintendent has the power and authority to recommend, withdraw, or amend regulations.

Unfair Discrimination

discrimination in rates, premiums, or policy benefits for persons within the same class or with the same life expectancy is illegal.

Adjuster

an independent adjuster is any person, firm, association or corporation, who, for a commission, acts on behalf of an insurer in the work of investigating and adjusting claims.

1033 Waiver

federal law makes it illegal for any individual convicted of a crime involving dishonesty, breach 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 form an insurance regulatory official, a 1033 waiver.

Penalties

for violating insurance licensing laws, the Superintendent may issue a penalty up to $500 for the each offense, up to $2,500 aggregate for all offenses. Unless the court orders a stay, the licensee has 20 days after receipt to pay the penalty. Any violation of the Insurance Code provisions will be considered a misdemeanor unless specifically categorized as a felony.

Home State

home state means any state, district, or territory of the US in which an insurance producer maintains his principal place of residence or business, and licensed to act as an insurance producer.

Commissions & Compensations

insurers and agents cannot pay a commission or provide compensation to a person or organization that is not licensed. No licensed person may charge additional fees or compensation not authorized for examining or evaluating an insurance policy.

Misrepresentation

it is illegal to issue, publish or circulate any illustrations or sales material that is false, misleading or deceptive as to policy benefits or terms, benefits, advantages, the payment of dividends, or the financial condition of any insurer.

Examination Term

property and casualty company at least once every 3 years, life insurer at least once every 5 years, other authorized domestic insurer every 5 years. An insurer must keep all records for 6 years.

Consumer Privacy Regulation

provide notice to individuals about its privacy policies and practices, no later than the time an insurance policy is delivered, annually thereafter. If the insured requests or authorizes a transaction in connection with servicing, processing or maintaining an insurance product, the insurer is exempt from the requirements of disclosure. An opt-out notice must be provided to allow a consumer a choice to limit disclosure of personal information.

Termination of Agent Appointment

when an insurer or HMO terminates an agent's certificate of employment, it must file a statement with the Superintendent within 30 days, explaining the cause of the termination and facts surrounding it. Must notify the producer within 15 days.

Nonresident

a nonresident insurance agent or insurance broker is an individual who is a resident of another state, who is licensed or authorized to act as an agent or broker in the state of NY.

Guaranty Assocation

are formed to protect policy owners, insureds, beneficiaries, and anyone entitled to payment under an insurance policy from the incompetence and insolvency of insurers.

Investigative Consumer Reports

are similar to consumer reports except they are done by investigators. 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 any reasonable attorney fees. An individual who willfully violates this Act will be subject to a penalty up to $2,500.

Immunity

as long as the suspected fraudulent transaction was reported in good faith, no civil liability will be placed against the person who reported it.

Temporary License Exemptions

exemptions from taking the examination for a temporary license, 1) to the surviving spouse of an agent that dies, or becomes fully disabled, 2) to a member of a business entity licensed as an insurance agent upon death, disability or termination of a designated individual, and 3) to the designee of an agent entering the military service.

Superintendent Levy

if a person has been charged with 5 separate civil penalties within 5 years, the Superintendent may levy an additional penalty of up to $50,000.

Prohibitions

in addition to any criminal activity, the Superintendent may levy a civil penalty of up to $5,000 and the amount of the claim for each violation upon any person who committed a fraudulent insurance act.

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.

Consulants

insurance consultants offer advice to the public about the benefits, advantages and disadvantages of insurance policies for a fee.

Controlled Business

is any coverage written on a producer's own life, health or property, and/or that of the producer's immediate family or business associates, 10% or less.

Public Adjuster

is any person, firm, association or corporation, who for a commission, acts on behalf of the insured in negotiating a settlement of a claim for loss or damage to property.

Rebating

rebating is defined as any inducement offered in the sale of insurance products that is not specified in the policy. Articles of merchandise are not considered rebates if they are valued at $25 or less. Both the offer and acceptance of a rebate is illegal.

Brokers

an insurance broker is any person, firm, association or corporation who solicits, negotiates, or obtains insurance in exchange for a commission. Brokers represent the insured, not the insurer.

Temporary License Term

issued for not more than 90 days, can be renewed for another 90 days, may not exceed an aggregate of 15 months. In the case of the military service, license may continue up to 60 days after the discharge from service.

Refuse to Issue a License

the Superintendent may refuse to issue any insurance agent's license if the proposed licensee is found to be not trustworthy and competent.

Consumer Right

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.

Hearings

the hearing will be held at least 10 days after notice is served. At the hearing, the aggrieved party has the opportunity to: 1) appear in person and by counsel, 2) give evidence why an order should not be made, 3) inspect all documentary evidence, and 4) obtain witnesses on the person's behalf.

Superintendent Order

the order will not be effective unless it is in writing and signed by the Superintendent. The notice will be considered delivered if it; is given to the person affected by the order, has been placed in the US mail and addressed to the person's last-known place of residence.

Producer Compensation Transparency

the regulation on Producer Compensation Transparency was promulgated to help regulate the acts and practices of insurers and their producers, as well as to protect the public by establishing minimum disclosure requirements regarding the role of insurance producers and their compensation.

Assumed Names

Every licensee must notify the Superintendent upon changing of legal name.

Producer

Insurance producer means an insurance agent, insurance broker, reinsurance intermediary, excess lines broker, or any other person required to be licensed under the laws of NYS to sell, solicit, or negotiate insurance.

Reporting of Actions

a licensee must report any administrative action taken against him in another jurisdiction or another state within 30 days of the final disposition of the matter. Failure to notify will incur a $500 fine.

Temporary

a temporary license may only be used to service existing business, not to solicit, negotiate or procure new business.

Sharing Commission

an insurer or fraternal benefit society may not pay any commission to any person or organization that is not licensed.

Fraud Prevention Plans

every insurer writing private or commercial insurance must file a fraud prevention plan for the detection, investigation and prevention of fraudulent insurance activities within 120 days.

Procedures

if the insurance fraud bureau has reason to believe that a person is engaged or is about to engage in a fraudulent act, it has 30 days to make a report on the action.

Unfair Trade Practice

it is an unfair trade practice to make any statement that an insurer's policies are guaranteed by the existence of the Insurance Guaranty Association.

Unfair and Prohibited Practices

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.

Fraud & False Statements

it is considered unlawful insurance fraud for any person engaged in the business of insurance to willfully, and with the intent to deceive, make any oral or written statement that are either false or omit material facts. Activities that affect interstate commerce and who make false material statements may be fined, and imprisoned up to 10 years.

Certificate of Authority

no person, firm, association, corporation, or joint-stock company may conduct insurance business unless authorized by a Certificate of Authority issued by the state.

Determination Timeframe

once it has been determined that a person is liable for a civil penalty, that determination may be entered 120 days later as a judgement and enforced, without court proceedings.

Sell

sell or sale means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of a licensed insurer.

Solicit

solicit, or solicitation, means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular licensed insurer.

Change of Address

the Department of Insurance must be notified within 30 days of any change of address, residence, business or email. Failure to notify will incur a $500 fine.

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.

Examination of Books & Records

the Superintendent may examine the books and records of any insurer, any pension fund, retirement system, or organization authorized in NYS.

Agent Appointment

to appoint an agent, the appointing insurer must file, in a format approved by the Superintendent, a notice of appointment within 15 days from the date the agency contract is executed or the first insurance application submitted.

Continuing Education

to renew a license any resident or nonresident agent must complete 15 hours of instruction by an approved provider of continuing education every 2 years. Excess credit hours cannot be carried over to the next period for the same class of license.

Types of Licensees

types of licenses issued in NYS, insurance agent/broker, business entity, consultant, adjuster, nonresident & temporary.

Process

to qualify for an insurance license, an applicant must 1) submit an application, 2) a resident of NYS, 3) least 18 years old, 4) no felony conditions, 5) fulfill prelicensing education requirement, 6) pay applicable fees, and 7) pass the applicable examination.

Termination Responsibilities of Producer

after producers receive the notice of termination, they 30 days to file written comments concerning the content of the notice with the Superintendent.

Fiduciary Responsibility

agents, brokers, and reinsurance intermediaries have a fiduciary relationship, a position of financial trust, for all funds they receive in the course of their business.

Adjuster Requirements

all adjusters must file and pay a surety bond of $1,000 to the Superintendent before a license is issued or renewed. 15 hours of continuing education must be completed for any license.

Revocation Timeframe

an individual, corporation, firm or association whose license has been revoked cannot obtain any license for a period of 1 year after such revocation, or if reviewed 1 year after the final judgement.

Agents

an insurance agent is a person authorized by an insurer, to solicit, negotiate, and obtain insurance, HMO, or annuity contracts. Agents represent the insurer, not the insured.

Solvency

an insurer is considered 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. Each entity transacting insurance in this state must file with the office of the Superintendent an annual statement on or before March 1st of each year showing its financial condition.

Reporting

any licensee who believes that a fraudulent insurance transaction has taken place or is about to take place has 30 days from the point of that determination to submit information regarding that transaction to the Superintendent.

Aiding Unauthorized Insurer

any person aiding an unauthorized insurer may be subject to a $500 penalty for each transaction in addition to any other penalties provided by state law.

Insurance Fraud Prevention Act

the Insurance Fraud Prevention act is intended to permit the Superintendent and the department to utilize their expertise to investigate and discover insurance frauds, halt fraudulent activities more effectively, and receive assistance from federal and state law enforcement agencies.

Suspension, Revocation, and Nonrenewal

the Superintendent may refuse to renew, revoke or suspend a license of any insurance producer for illegal activities concerning money, or for any types of fraud.

Cease and Desist Order

this means a person must stop doing whatever the Superintendent suspects is in violation of the insurance laws. A person who violated a cease and desist order is liable for penalties up to $5,000 for each violation.

Pre-Licensing Requirements

20 hours for a single line of authority agent or broker, 40 hours for Life, Accident and Health agent or broker, and 90 hours for Property/Casualty agent or broker.

License Display

the establishing agent or broker mus prominently display the license(s) of the supervising person(s) responsible for that place of business.

Renewal

Insurance agent's or broker's license must be renewed every 2 years. An agent must file an application for renewal of license at least 60 days before the license expires, or pay a late fee of $10. If a renewal is denied, the current license will expire 5 days after the agent is notified.

Business Entities

a business entity is a corporation, association, partnership, limited liability company, limited liability partnership or other legal entity.

False Advertising

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. 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.

Exemption from Licensing

an insurance producer license is not required of any officer, director or employee of an insurer or organizations employed by insurers, provided they are not directly or indirectly involved with the actual sale of an insurance contract and do not receive any commission.

Defamation of Insurer

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 company.