Insurance Licensing Ch. 8
unfair discrimination
- inds of same class/hazards charged diff rates for same cov - based solely on geographic location/age of property to be insured - based on ind's marital status or gender - refusing to insure solely bc another insurer has denied... another policy on which applicant was named insured - can't ask on app either - based solely on race, gender, color, creed, natl origin, place residence, lawful occupation, ancestry - based solely on mental or physical impairment (exception: health ins)
license suspension, revocation, denial & cancellation
Direct may if licensee has committed, is committing, any of following acts/practices that violate MO ins laws/rules, inc provision of material assistance in committing following: - knowing violation of any st ins law/dept regulation - obtaining license by fraud/misrepresentation - conviction of felony or crime involving moral turpitude (act contrary to community standards of moral integrity - fraud, arson, embezzlement, murder, rape, prostitution) - demonstrating lack of trustworthiness/competence - misappropriating money belonging to insured/insurer - committing fraud in connection w/ ins transaction or aiding/abetting/allowing another to do so leading to their " - acting as ins agency thru persons not licensed as producers - acting as producer w/o license - having ins license revoked in other st - committing unfair ins or trade acts/practices = seeking license primarily to conduct controlled business (procuring coverage for self or family, emp, org they own) - legal res of another st that doesn't allow MO res to obtain nonres licenses -operating business when producer should have known such operation would result in illegal placement of unsurance w/ unauthorized mult employer self-insured health plan - forging signature on app or ins related doc - failing to compy w/ any admin or court oder directing payment of st/fed income tax - if dept denies app, may request hearing w/i 30 DAYS - if dept taken no action w/i 25 WORKING DAYS of receiving producer lic app, approved automatically; doesn't apply if convicted of felony/crime inv moral turpitude - if after receiving evidence person violated ins laws/rules, Direct may: issue cease & desist, issue curative order or other demanding compliance w/ ins laws & rules, aware reasonable costs of investigation, after hearing held for licensee viol any of st's ins laws, impose civil penalty/forfeit as prescribed by law, which must be paid w/i 10 DAYS - if partner, office, manager of business licensed as ins producer knew/shouldhave know ind violated law & didn't report or take corrective action, business license can be " - all producers must report to Direct, in writing: any admin action taken against them in any jurisdiction or by any govt agency inc copy of order, consent order or other legal docs (written notice must be made w/i 30 DAYS of final disposition of matter), any criminal prosecution for felony or crime inv moral turpitude in any jurisdiction inc copy of indictment & any other related legal dog (written notice w/i 30 DAYS of initial pretrial hearing date)
examination of records
Director may examine affairs of any person engaged in ins business @ that person's expense; includes any person claiming/advertising to be involved in ins business - Director/any authorized examiners may conduct examination as often as appropriate but must conduct financial exam of every licensed MO insurer @ least once every 5 YEARS - Director may hire any of following persons as examiners, @ insurer's expense: attorneys, appraisers, ind actuaries & CPAs & other professionals & specialists - w/ respect foreign/alien insurers, Director may accept financial exam report, as prepared by parent ins dept or other appropriate agency, in lieu of conducting financial exam; however, such report may only be accepted if person issuing report accredited by NAIC - person being examined must make all docs & records available to exam; if doc not available, must be provided w/i 10 CALENDAR DAYS - all ins policy records must be maintained during term of policy & for at least 2 YEARS after policy terminates; all claim files maintained during calendar year when closed & for at least 3 YEARS after - if person refuses to comply w/ reasonable request during exam, considered grounds for suspension, denial or non-renewal of license of ins business in MO - final exam report must be filed no later than 60 DAYS after completed; examined insurer has 30 DAYS to file any submissions/rebuttals; w/i 30 DAYS after rebuttal period, Director must either accept report or initiate legal action deemed necessary - exam reports must only contain facts that appear in books, records, docs & testimony of person being examined including such person's agents; all materials obtained treated as confidential & not subject to subpoena, cannot be made public unless specifically permitted by law; agreement to this confidentiality requirement must be made in writing b/w parties before becomes effective
fiduciary
entrusted to care for/act on behalf of another - producers have fiduciary responsibilites to both insurers & clients - must keep certain records concerningn all personal ins policies for at least 3 years after policy terminates incl: apps, dec pages, endorsements, riders, binders, written correspondence sent or received by producer, all claims docs, all receipts & docs pertaining to premium payments - insurers & producers must retain copies of their compensation agreements for 3 YEARS & make them available for Director's inspection - commission can ony be paid to producer duly licensed for appropriate line
conduct of producers
all ins laws/regs applying to transaction of ins in MO also apply when over internet - insurers/producers maintaining website must include: contact address & phone # for communication w/producers or ins cos & notice showing states in which insurers/producers auth to transact
failure to maintain complaint handling procedures
failure of any person to maintain complete record, for at least 3 years, of all written complaints received - complaint is any written communication that has as primary purpose expression of a grievance - records must include: total # complaints, each's classification by line of ins, nature of each compaint & its disposition, amount time taken to process each complaint
nonresident producer
any person not MO resident but licensed in home state may be issued this license in MO for same lines of auth appearing on license in home state under following conditions: - home state must award nonres producer licenses to MO residents on same basis - person currently licensed in good standing & has submitted appropriate app & licensing fees - Direct may verify licensing status of applicant requesting nonres producer license thru NAIC producer registry Nonres producers: must notify Direct w/i 30 DAYS of any change in legal res & are not subject to continuing ed requirements in MO if satisfy those in home state - inds issued surplus lines or limited line credit licenses in home states may be issued nonres licenses of same type in MO
levels of violations
any viol of MO ins law not classified, or doesn't call for specific penalty/forfeit, considered LEVEL 1 - penalties may be inc/dec by Direct or court under following circumstances: - inc by 1 step if violation: committed knowingly, resulted in actual financial loss to consumers - inc by 2 steps if viol committed knowingly in disregard of law - dec by 2 steps if, prior to receiving notice from dept, viol detected by violator in self-audit or internal compliance program & reported immediately to Direct - if Direct determines insurer engaged in unfair method competition/deceptive act or practice/is engaging in or has plans to engage in, may issue admin orders as auth under ins code - section also applies to any person who materially aided/is aiding such conduct - each type viol considered L2; multiple viols of same type do NOT constitute separate viols - in add, Direct may suspend/revoke violator's ins license or cert of auth, maintain civil action for relief
prohibited group enrollments
offering more than 1 group contract thru any person unless such person legally licensed
producer appointment & termination
appointment is earliest date insurer or its auth agent permitted to do any of following: give prospective producer any ins app that require submission of premium @ time completion, accept premium from prospective ins producer, accept for UW purposes app submitted by prospective ins producer, execute written or verbal employment contract w/ prospective ins producer, grand binding auth to prospective ins producer - insurers may appt ind prod or business entity prod - if business entity prod appt, all ind prod employed by business entity also considered appt by insurer - auth under appt only granted for lines for which each prod licensed - appt for ind producer terminates auto upon following events: ind's termination/resignation from licensed bus entity for which they work, term of lic bus entity by insurer, non-renewal/surrender/suspension/revocation or surrender of ind's prod lic - if ins terminates appt bc prod violated law, must provide to Direct report/summary of acts that prompted insurer to believe viol of law took place
operating fraudulently or in bad faith
conduct ins business fraudulently - fail to transact in good faith - consistently & as business practice compel claimants to accept less than amount to which they are due under policy or file lawsuits to obtain fair payment under policy
false testimony
during course of dept investigation, examination, inquiry or other proceeding, illegal to: - knowingly make false statement to Director in connection w/ any proceeding - provide false info in any ins co books/papers used in course of any examination, inquiry or dept investigation If person doesn't appear in/refuses to testify at dept proceeding or fails to obey subpoena as required by Director, Director may request court to enforce compliance; court may: - hold person in contempt - order person appear before Director - order testify about matter in question/under investigation - order production of records - grant injunctive relief - impose civil penalty up to $50,000 for each violation - grant any other necessary or appropriate relief - suspend, revoke or refuse to issue any license or certificate of authority - any person that knowingly engages in any act in violation of this section of ins code guilty of CLASS D FELONY - if offender holds license or certificate of authority, dept must revoke it
misrepresentation in insurance applications
false/fraudulent statements on app or pertaining to app for purpose of securing fee, commission, money or other benefit from any ins co, agency, agent, broker other person
director of insurance
head of MO Dept of Ins - must be MO resident & appointed by governor w/ consent of Senate - holds office concurrently w/ governor until successor appointed - unlawful for them to hold office/position w/ ins co or to have any interest in insurer other than as policyholder - ins dept employees may not hold any type of ins license
unfair financial planning practices
holding themself out as being engaged in any of following fields of specialty when only engaged in sale of ins: fin planner, investment adviser, fin consultant/counselor, providing advice relating to investments, ins, real estate or matters pertaining to taxes/trusts/estates - engaging in fin planning business w/o disclosing that slo producer & commission will be received ( in add to fin planning fee) for sale ins product - charging fees for fin planning (other than commissions) unless such fees based upon written agreement signed by client before services performed - copy of such agreement must be provided to client @ time executed & must contain specifics of: services to be provided for fee & amount all fees charged inc how they will be determined & calculated - agreement must state client not obligated to purchase any ins product - must retain copy of all such agreements for no fewer than 3 YEARS after all services completed & make them available to Direct upon request
HMO cert of auth
if HMO plans to modify any of procedures/info stated in app for cert of auth, must file notice of its plans before making any changes - modifications will be considered approved if Direct doesn't disapprove them w/i 45 DAYS of filing - must also file all contracts of reinsurance w/ Director - for prepaid dental plans insurers, each officer responsible for conducting corp's business affairs has filed & received approval from Direct for a $50,000 FIDELITY BOND - if prepaid dental plan issued cert of auth, must expire at midnight on June 30th folloing date of cert's issuance/renewal; will auto renew if plan pays $50 RENEWAL FEE & remains in compliance w/ ins code - all expire last day of June each year & will be extended automatically pending formal renewal by Direct if parties continued to comply w/ ins code & MO laws
examinations
if applicant previously licensed in another state for same lines being sought, exam waived; only applies if applicant licensed in other state @ time app or app received w/i 90 days of cancellation of license issued by other state - if already cancelled, must submit certificate from st indicating applicant's license was in good standing while in effect - Direct may verify previous license status thru NAIC producer registry - if licensed in another st & moves to MO, must apply for res producer license w/i 90 DAYS of establishing legal res; exempt from exam as is ind who applies for limited lines producer license - Direct may suspend, revoke, deny or non-renew in prod license if person uses notes or any reference material improperly when taking exam - licenses must include: licensee's name, address & ID #, issue & expiration dates, lines of authority for which issued, any other info required by Direct
disciplinary action - expungement of records
if disc. action against ins producer resulted in forfeiture or other monetary relief of $200 or less & places no other legal duty upon producer, must be removed from records after 5 YEARS from date of order's execution or Director's settlement agreement
cease & desist orders
if, based on substantial & competent evidence, Director determines any person (or business entity) engaged in unfair method of competition or unfair/deceptive act/practice, is engaging in or has plans to engage in, may: - issue cease & desist order - issue curative order requiring person to take specific action - order civil penalty or forfeiture - aware reasonable costs of investigation When determining any penalty/relief sought from violator, Direct must consider (among other) whether: - violation likely to continue/reoccur - amount of any factual financial loss & restitution made - violation was detected as part of self-audit or internal compliance program & immediately reported to Direct - violation previously detected but wasn't prevented from re-occurring Direct must provide notice of intent to initiate admin action & serve it personally or by certified mail to any person subject to dept proceedings - notice must direct person named to show good cause why cease & desist, or other relief, shouldn't be issued - hearing must be held NO FEWER than 10 DAYS after notice served - Direct may issue summary order in some situations, which is civil action that allows disposition of matter w/o legal proceedings bc facts are not in dispute; if persons affected don't request & Direct doesn't order hearing w/i 30 DAYS, summary order becomes final order; if hearing held, Direct issue final order which can vacate/modify previous order - in add to any other penalty provided by law, violation of cease & desist issued by Direct punishable by fine up to $100,000, PRISON UP TO 10 YEARS OR BOTH; must also be subject to suspension or revocation of ins license or cert of auth
stock operations & advisory board contracts
issuing, delivering or allowing agents, officers or emps to issue/deliver any of following as inducement to purch ins if they promise returns/profits of any kind: - agency stock or other capital stock - benefit certificates or shares in common law corp - securities in any special or advisory board contract
false statements & entries
knowingly providing false info in insurer's records about that insurer's financial condition or business activities or placing such false info w/ any public official or before public - includes knowingly making any false entry or omission of material fact pertaining to record of any ins transaction
surplus lines producer
licensed to place ins w/ nonadmitted insurers authorized to transact ins in state in which producer/broker licensed - in MO, producers NOT permitted to procure any surplus lines w/ non-admitted insurer if not also currently licensed as surplus licensee - to obtain, res or non-res prop & casualty ins producer must: pay initial fee $100, submit required license app, pass exam (if licensed before July 1, 1987, exempt from exam) - licenses renew biennially on ann of issue date & remain in effect until refused, revoked or suspended by Direct - failure to pay $100 renewal fee when due results in termination - person selling, soliciting or negotiating surplus lines ins on behalf of insured only required to have that license if MO is insured's home state
renewal
licenses issued for 2 years - if expires, may apply for reinstatement w/o having to pass exam w/i 12 MONTHS of date renewal fee due - when applying for reinstatement, applicant must: provide proof of compliance w/ cont ed, pay penalty of $25 per month license was expired, pay all required renewal fees
defamation
making any false/maliciously critical statement regarding financial conditon of another insurer w/ intent to injure that insurer
misrepresentation & false advertising of insurance policies
making statement in any estimate, illustration, sales presentation or comparison that: - misreps policy's benefits, advantages, conditions or terms - misreps policy's dividends or share of surplus to be received - false or misleading pertaining to dividends or shares of surplus already paid under policy - misleads/misreps financial condition of any insurer - uses name or title of any policy/policy class that is misrep - is misrep intended to induce purchase, lapse, surrender, exchange or conversion of ins policy; includes intentional misquoting of policy's premium - is misrep intended to effect pledge, assignment or loan against policy - misreps policy as being share(s) of stock
producer appointment & registry
may not act on behalf of insurer if not listed in insurer's registry of appointed producers - insurer must maintain register of all producers it appoints to sell, solicit or negotiate ins on its behalf - new appointees must be added w/i 30 DAYS; terminated must be removed w/i 30 DAYS & reasons must be provided to Direct - can't charge fees for adding/removing producers from registries - insurers must provide Direct w/ addtl info discovered later that should have been reportable had insurer known before producer's appt termination; must be treated as confidential & absolutely privileged; parties providing notice granted immunity from any cause of action for written notice provided in good faith - registries must be made available for inspection & exam by Direct during regular business hours; may be maintained electronically - Direct can use info from registries in any regulatory or legal action brought as part of duties as Direct; neither Direct nor any person permitted/required to testify in any private civil action concerning confidential docs, material, info relating to producer registry - Direct permitted to share such info w: other st, fed & international regulatory agencies, NAIC, & law enforcement authorities that agree to maintain confidentiality & privilege of docs, materials & info
rebating
other than permitted by law or expressly stated in ins contract, paying, giving or allowing any of following as inducement for person to purchase policy: - rebate of ins policy premiums - special favor or advantage in dividends/benefits of ins policy - valuable consideration (anything of value) - any stocks, bonds or securities in ins co or other corp, association or partnership inc dividends accruing on same following NOT considered rebates: paying bonuses or abating premiums from accumulated surplus - adjusting premiums for industrial policyholders who continually made payments directly to insurer thus saving collection expenses - adjusting group policy premiums based on loss/expense experience
director of insurance authority
may not make rule/regulation that conflicts w/ any MO law; has authority to: - regulate internal affairs of dept, financial institutions & professional registration - prescribe forms & procedures to be followed in dept proceedings, financial institutions & professional registration (including continuing ed guidelines) - assist w/ interpretation & enforcement of st laws relating to ins - issue producer licenses, certificates of authority & cease & desist orders - conduct hearings - supervise st's guaranty funds (1 for life & health in & 1 for prop & casualty ins) - amend or withdraw any ins rule or regulation; any change will only be effective after proper notice has been given, hearing has been held & documented change has been filed w/ Sec of St; hearings must be held at least 15 days before any proposed rule or regulation is adopted - DOESN'T CREATE LAWS - enforces, makes rules necessary to enforce
producer
must apply for license & pass written exam for lines of authority - must reapply & remit all required fees & forms before being rescheduled if fails to appear for scheduled exam - may qualify for license in 1+ lines of authority: life (inc endowments, annuities, death or dismemberment cov & disability income), accident & health/sickness ins (may inc disability income benefits), prop, casualty against legal liability (for death, injury, disability or prop damage), variable life & annuity products, personal lines prop & casualty, credit-limited line credit (inds applying for limited lines producer license exempt from exam), any other line of ins permitted under st law - each ins office must have at least 1 licensed producer - all laws applying to ins business also apply to transaction of business over internet - license renews biennially (ever 2 YEARS) on anniversary date of issue & renewal fee is ($100) - license continue in effect until refused, revoked or suspended by Direct - if expires, may be reinstated w/i 12 MONTHS of date renewal fee due; no re-exam IF: all required renewal fees paid, penalty of $25/month paid for each month it was expired & producer submits proof of compliance w/ continuing ed requirements - must notify Direct of legal name/address change w/i 30 DAYS OF CHANGE; failure to provide may result in fine up to $10/month; may be made in any acceptable manner - if unable to comply due to military service/extenuating circumstances (long-term medical disability), may request waiver of requirem & any fines imposed
certificate of authority
no insurer permitted to transact ins in MO until after granted this from Director - certifies insurer has complied w/ ins laws in this state w/ respect to conducting business of ins - includes health service corps, health maintenance orgs & prepaid dental plans - this section ins code DOESN'T apply to: surplus lines ins, reins, transactions in MO involving policy issued outside MO for risks not located in or residents of MO, attys acting in ordinary course business in adjustment of claims/losses on behalf client, transactions involving group or blanket policies (life, accident, health, annuity) where master policy issued by authorized non-domestic co, wet/ocean marine ins, life/health ins issued to non profit charitable or religious org, car rental & travel ins - renewed on annual basis on 1st of July; remain in effect until renewed or refused by Direct - insurers that transact ins business w/o propert cert of auth will be liable for any claims made against policies they issued; must defend any lawsuits filed against them but cannot file legal action pertaining to transaction of ins until after obtained cert of auth - any person who transacts ins business w/o is guilty of CLASS C FELONY; may be subject to following actions of Direct: admin orders as auth under ins code, civil action for relief as auth under ins code, referral of evidence of viol to proper prosecuting atty or atty gen
insurance producer license required
no person permitted to sell, solicit or negotiate any type ins in MO unless licensed for that line of auth; EXCEPTIONS FOR PERSONS: - so long as don't receive commissions for ins written/sold in MO, officers, directors or emps of insurer/ins producer IF: person's activities executive, admin, managerial or clerical in nature & only incidental to sales, solicitation or negotiation of ins OR person's duties UW, loss control or claims inspection, processing, adjusting, investigation or settlement OR person acts in supervisory capacity to assist ins producers by providing technical advice that doesn't include sale, solicitation or negotiation of ins - person securing & furnishing info for group ins IF not paid commissions - person engaged in admin or operation of emp benefits program IF not compensated in any manner by co issuing ins contracts - emps of insurers/orgs that inspect, rate or classify risks or engage in producer training so long as don't: engage in sale, solicitation or negotiation of ins OR accompany producer trainees during sales interviews w/ clients/prospects - person whose ad activities in MO include publications distributed both in & out of MO but doesn't solicit ins in this state IF person doesn't sell solicit or negotiate ns - nonresident who sells, solicits or negotiates commercial prop & casualty ins to insured w/ locations in multiple states IF nonresident is licensed as producer in state where nonresident maintains principal place of business & commercial prop & casualty ins policy provides ins in that state - salaried, full-time emp who gives ins advice to their employer IF doesn't sell/solicit ins or receive commission - licensed atty who provides probate or other bonds required by court on behalf of clients
Missouri Property & Casualty Insurance Guaranty Association
non-profit legal entity created by MO Prop & Casualty Ins Guaranty Association Act to provide limited protection to MO resident policyholders & claimants in event certain insurers become insolvent - all insurers w/ cert of auth are member insurers
unfair & deceptive practices
practice deemed unfair trade practice IF: committed in concious disregard of MO's Unfair Trade Practice Act OR committed w/ such frequency indicated regular business practice to engage in type of conduct - thru card #34 here - any person that engages in, plans to or materially aids another in committing any of these may be subject to admin order issued by Direct as prescribed by law or civil action filed by Direct - each ind practice that is violation under this section of ins code is L2 violation; however, each ind act NOT considered separate violation - Direct may suspend/revoke lic or cert of auth of any person that willfully violates this section of ins code
false info & advertising generally
publishing any untrue, deceptive or misleading statement about ins business or about insurer - includes statements made in ads, newspapers, magazines & other publications as well as those made over any radio or TV station
qualifications for licensure as producer
res inds must: be 18yo - not have committed any act grounds for license denial, suspension or revocation - pay required $100 license fee - pass exams for lines of auth for which they've applied business entity acting as ins producer must obtain license; must also comply with following: provide name & address of licensed agent responsible for entity & to whom commission paid - pay $100 license fee - disclose to dept all its officers, directors & partners, even if they're not licensed
continuing ed requirements
unless exempt under law, producers must complete 16 HOURS approved cont ed during each 2 YEAR renewal period - courses must address types of ins sold under licensed lines of autho, MO laws, producer duties & responsibilities, business ethics & sales suitability - at least 3 HOURS must be ethics, MO law & prod duties/responsibilities - courses/programs meeting standards for cont ed in MO include (not limited to): Amer College Courses (CLU, ChFC), Life UW Training Council (LUTC), Certified Insurance Counselor (CIC), Chartered Property & Casualty UW (CPCU), Insurance Institute of Amer (IIA), any professional financial designation approved by Dept or Director, an ins related course taught by accredited college or uni or by qualified instructor who taught ins law @ such institution, a course/program/seminar developed or sponsored by any auth insurer/recognized producer association/ins trade association or approved ins cont ed provider - producer who teaches any approved cont ed course eligible to receive same # credit hours awarded to students - excess hours accumulated during any 2 yr period may be carried over to renewal period immediately following - Direct may extend time period for completing cont ed requirements for up to 1 CALENDAR YR if provided substantial grounds (ex: serious physical illness/injury, active duty, residence outside US, licensee is 70+ yo) - producers must provide Direct written certification of approved cont ed courses - course providers must furnish to Director certification of each producer who completes course w/i 30 business days of completion - cont ed credit may be earned thru: class instruction, courses leading to prof designation IF licensee receives passing exam grade after completion, self-study courses w/ passing of proctored exam - dept may audit continuing ed records of producers & course providers @ any time - if producer fails to notify Direct of change in address w/i 30 DAYS & such failure results in inability for complaint to be served to producer, Director may revoke license immediately - will continue until service obtained
producer commissions
unlicensed persons may not be paid/receive commissions, service fees, brokerage fees or any valuable consideration for selling, soliciting or negotiating ins in MO if required to be licensed - renewal & deferred commissions may be paid to unlicensed person for sale, solicitation or negotiation of ins if person licensed @ time of transaction - under NO CIRCUMSTANCES any valuable consideration be paid to person whose license suspended/revoked
covered claim
unpaid claim, including claims for unearned premium, submitted by claimant w/i time period prescribed by law & undr policy to which MPCIGAA applies - policy under which covered claim made must have been issued by member insurer that is insolvent - claimant must be MO resident @ time loss
cease & desist orders (cont)
violations under any ch. of MO Revised Statutes that pertain to ins classified into 5 categories - penalties & forfeitures for each category of violation differ based on whether issued by Direct or court in enforcement proceeding MAX RANGES PENALTIES & FORFEITURES THAT CAN BE IMPOSED: By Director Level 1 violations: no penalty/forfeit L2: $1,000/viol up to aggregate $50,000/yr for mult viol L3: $5,000/viol up to aggregate $100,000/yr for mult L4: $10,000/viol up to agg $250,000/yr for mult L5: $50,000/viol up to agg $250,000/yr for mult Ordered by Court L1: no penalty/forfeit L2: $1,000/viol up to aggregate $50,000/yr for mult viol L3: $5,000/viol up to agg $200,000/yr for mult L4: $20,000/viol up to agg $1 mill/yr for mult L5: $1 mill/viol w/ NO LIMIT for mult