Georgia General Insurance Laws
Regulation of Insurers Types of Insurers:
-Domestic, Foreign, and Alien Insurers [33-3-1] -Stock and Mutual Insurers [33-14-2]
Domestic, Foreign, and Alien Insurers [33-3-1]
A domestic insurer is formed under the laws of Georgia, while a foreign insurer is formed under the laws of any state or government other than Georgia. An alien insurer is formed under the laws of a country other than the United States.
Investigations and Hearings [33-6-6, 7]
A person who is charged with engaging in an unfair method of competition or committing an unfair or deceptive act or practice is entitled to a hearing before the Commissioner. The person must be notified of the time and place of the hearing at least 15 days in advance. The notice will also specify the offenses and violations with which the person is charged.
Transaction of Insurance [33-1-2(6)]
An insurance company must have a certificate of authority to perform the following acts, which constitute the transaction of insurance: soliciting and inducing individuals to purchase insurance; engaging in preliminary negotiations for insurance; effectuating an insurance contract; and transacting matters after an insurance contract has been executed
Penalties [33-6-8, 9]
If the Commissioner finds that an agent has committed the alleged act or practice, the Commissioner can order that the agent -cease and desist from committing the act or engaging in the practice; -be fined up to $1,000 (or up to $5,000 for willful violations); or -have his or her license suspended or revoked. The Commissioner can impose the following penalties for violating a cease and desist order: -up to a $10,000 fine per violation -license suspension or revocation -any other penalty that may be appropriate
Broad Powers and Duties [33-2-1 through 33-2-33]
In carrying out his or her duties, the Commissioner has the power to -conduct hearings, examinations, and investigations; -issue licenses and certificates of authority to transact insurance; -regulate the rates and services of every insurer and set reasonable standards and practices for insurers to follow when doing business in the state; -enforce the insurance laws; -compile an annual report regarding the state of the insurance industry in Georgia; -issue rules and regulations to administer the insurance laws; and -collect fees and assess penalties against insurers and agents.
State Regulation of Insurance
Many life and health insurance products and procedures are somewhat common to all states. Many legal requirements are also similar from one state to another, either because -they are federal laws that apply nationwide, such as ERISA (the pension law that explicitly pre-empts state law) or the securities laws that apply to variable insurance products that are enforced by the Financial Industry Regulatory Authority (FINRA); or -they are based upon NAIC model laws that have been adopted by most state legislatures.
Examination of Records [33-2-10 through 33-2-13]]
The Commissioner can examine the books and records of an insurer as often as necessary but at least once every five years. The Commissioner can also examine the books and records of agents, brokers, counselors, adjusters, and other licensed persons whenever he or she deems necessary. The officers and employees of an insurer being examined must cooperate with the Commissioner during the examination and must make all books, records, and files accessible to the Commissioner and his or her examiners.
Commissioner of Insurance
The head of the state's Insurance Department is the Commissioner (sometimes also referred to as the Director). The Commissioner enforces the laws governing the insurance business in Georgia. He or she is elected by popular vote and is appointed to a four-year term.
Stock and Mutual Insurers [33-14-2]
A stock insurer is an incorporated insurer owned by stockholders. Ownership is evidenced by shares of stock, and profits are distributed as stock dividends. A mutual insurer is also an incorporated insurer but is owned by its policyholders, who hold policies as their evidence of ownership. Mutual companies do not have permanent capital stock and have a governing body elected by its policyholders.
Key Points
-The Commissioner of Insurance is the head of the Georgia Department of Insurance. -The Commissioner can examine the books and records of an insurer as often as necessary but must do so at least once every five years. (Note that at until recently the statute required the Commissioner to perform this examination at least once every three years.) -The Commissioner enforces and administers all laws pertaining to insurance in the state. -The Commissioner may conduct examinations and investigations to determine whether a person has violated the Insurance Code or has engaged in an unfair method of competition or unfair or deceptive act. -A person who is charged with engaging in an unfair method of competition or committing an unfair or deceptive act or practice is entitled to a hearing. -The Commissioner may issue a cease and desist order, revoke or suspend a license, or impose a fine if an agent has violated the Insurance Code or has engaged in unfair or deceptive acts. -A domestic insurer is formed under the laws of Georgia, while a foreign insurer is formed under the laws of any state or government other than Georgia. -An alien insurer is formed under the laws of a country other than the United States. A stock insurer is an incorporated insurer owned by stockholders. -A mutual insurer is owned by its policyholders, who hold policies as their evidence of ownership. -The Commissioner issues to qualified insurers certificates of authority, which permit them to transact insurance business in Georgia. -An insurer must file and publish its annual report each year by March 1 in order to renew its certificate of authority. -Transacting insurance includes soliciting insurance, negotiating and making contracts, and transacting matters related to the contract after a policy has been sold
Certificate of Authority
An insurer may not transact insurance in Georgia unless it has a certificate of authority, which specifies the kinds of insurance that the insurer is authorized to transact. The Commissioner issues certificates of authority to qualified insurers. An insurer that has a certificate of authority is described as an admitted or authorized insurer. A company that does not have a certificate of authority is considered a nonadmitted or unauthorized insurer. To qualify for a certificate of authority, an insurer must file an application and show the Commissioner that it is financially able to fulfill its obligations to the state and its policyholders. The Commissioner will not issue a certificate of authority to an insurance company that is owned or controlled by a state, foreign government, or political subdivision or state agency. A certificate of authority remains in force until midnight on June 30 each year. To renew its license, an insurer must take the following actions by March 1 each year: -file a copy of its annual statement for the preceding year; -publish a shortened version of its annual statement in a newspaper; and -file a copy of the published statement with the Commissioner. The Commissioner may revoke, suspend, or refuse to issue a certificate of authority or may place an insurer under administrative supervision for the following reasons: -violating the Insurance Code; -violating a rule, regulation, or order of the Commissioner; -being in an unsound condition that makes its continued operation hazardous to policyholders and the public; -compelling claimants to accept less than the amount due or to bring legal action to secure full payment for a claim; -refusing to be examined or to produce its accounts, records, and files for examination by the Commissioner; -refusing to provide additional information that the Commissioner needs to determine whether to renew an insurer's certificate of authority; -failing to pay a final judgment rendered against it in Georgia within 30 days; or -being affiliated with and under the same management or ownership as another insurer that transacts insurance in Georgia without a certificate of authority (except for surplus lines insurers or insurance holding companies).
Quiz Questions
Question 1 Which of the following is not a duty of the Georgia Insurance Commissioner? issuing orders making rules to help administer the Insurance Code -soliciting insurance contracts enforcing the insurance laws Enforcing the insurance laws, issuing orders, and making rules are all duties of the Commissioner. The Commissioner does not solicit insurance contracts. Question 2 How often must the Commissioner examine the affairs of a domestic insurer? at least once every three years only when a written request is made by an insurer's shareholders -at least once every five years at least once every year The Commissioner can examine the books and records of an insurer as often as necessary, but at least once every five years. Question 3 What is an insurance company's license to transact business called? evidence of licensure -certificate of authority corporate authorization license of good standing An insurance company's license to transact business is called a certificate of authority. The certificate specifies the kinds of insurance that the insurer is authorized to transact in the state. Question 4 Which of the following penalties may the Commissioner impose if a person violates a cease and desist order? restitution lawsuit in federal court *license suspension or revocation fine of up to $50,000 The Commissioner can suspend or revoke a license or impose a fine of up to $10,000 per violation. He or she may also impose any other penalty that may be appropriate. Question 1 On what date does an insurer's certificate of authority in Georgia expire every year? July 1 December 1 *June 30 May 30 An insurer's certificate of authority remains in force until midnight on June 30 each year. Question 2 Which of the following penalties may the Commissioner impose if, after a hearing, he or she determines that an agent has committed an unfair trade practice? termination of the agent's appointment imposition of civil damages and restitution lawsuit in federal court *termination of an agent's license If the Commissioner finds that an agent has committed an unfair trade practice, he or she can issue a cease and desist order, impose a fine, or suspend or revoke an agent's license. Question 3 For which of the following acts may the Commissioner suspend or revoke an insurer's certificate of authority? advertising its policies in other states transacting surplus lines insurance *refusing to be examined permitting agents to sell replacement policies The Commissioner may suspend or revoke a certificate of authority if an insurer refuses to be examined or to produce its accounts, records, and files for examination by the Commissioner. Question 4 Which of the following statements best describes an authorized insurer? an insurer with at least 25 appointed agents in Georgia an insurer authorized to transact insurance for other insurers in Georgia a domestic insurer authorized to transact insurance in all 50 states *an insurer with a certificate of authority to transact insurance in Georgia An authorized insurer has a certificate of authority to transact insurance in Georgia. An insurer that does not have a certificate of authority is a nonadmitted or unauthorized insurer.
