State Laws, Rules, and Regulations
Statute
a formal written law enacted by legislature; insurance statutes can be found in the State Insurance Code
Reciprocity
a mutual interchange of rights and privileges
Stock Companies issue
nonparticipating policies. Policy owners do not share in profits or losses.
Any insurer that changes its domicile from Georgia to another state may be examined
once a year for 5 years
Agents may carry forward excess continuing education credit hours into the next licensing period as long as
the number of hours carried forward does not exceed 50% of the continuing education requirement and the same CS course is not repeated in the same renewal period.
A nonresident agent who moves from one state to another - or a resident agent who moves from this state to another will face no fee or application if
they file a change of address form, and provide certification to the new state within 30 days.
Hearing
- Aggrieved party may contest and request a hearing - Advance notice of hearing - Hearing held promptly - Aggrieved party has a chance to be heard
Violation
- An insurer or agent is suspected of committing a Violation or being involved in unfair trade practice - Commissioner is notified and may issue a statement of charges
Agents who have been licensed for at least 20 years are required to complete this many continuing education requirements
20 CE Credit Hours every 2 years, including 3 credit hours in ethics education
Standard requirement for continuing education
24 CE Credit Hours every 2 years, including 3 credit hours in ethics education
The Commissioner must be notified of any information change within
30 days of the change
The 5 Major U.S. Territories
American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the US Virgin Islands
The agent is responsible to the insurer when
Completing applications for insurance Submitting the application to the insurer for underwriting Delivering the policy to the policyowner Explaining the contract
Moral Turpitude
Conduct that is contrary to community standards of justice, honesty, or good morals
An agent's license will be placed on inactive status if
The agent does not have on file with the Commissioner a certificate of authority to represent at least one insurer licensed to do business in the state.
Apparent Authority
The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.
When must the Commissioner issue an order related to his/her decision?
Within 30 days of the hearing
Because an agent handles the funds of the insured and the insurer, he/she has
fiduciary responsibility
An applicant for a counselor's license must
file a specified bond
The Commissioner is elected to office
for a term of 4 years (in federal midterm election years)
Dividends are not
guaranteed
mutual companies issue
participating policies. Policyowners are entitled to dividends, which are a return of excess premiums, and therefore nontaxable.
Commission
payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium
Any knowledge of the agent
presumed to be knowledge of the insurer
An Insurance producer license is not required of any officer, director or employee of an insurer or organizations employed by ensurers
provided they are not directly or indirectly involved with the actual sale of an insurance contract and do not receive any commission.
Disclosure
revealed information to help someone make an intelligent and educated decision
It is illegal to engage in any insurance marketing practice
that involves unfair competition or a deceptive act.
agent's may renew their license by filing with the Commissioner
the appropriate fees and evidence that the continuing education requirements have been completed
Express Authority
the authority a principal intends to grant to an agent by means of the agent's contract. It is the authority written in the contract
If the agent is working within the conditions of his contract
the company is fully responsible
An applicant whose license has lapsed during active military service will be granted a new license if an application is made
within 5 years of the lapse, and the applicant's service was not terminated more than 1 year prior to the application
Counselor
Anyone who engages in the the business of counseling, advising, or rendering opinions as to the benefits under any insurance contract issued.
Also known a perceived authority
Apparent Authority
When must a notice of the time and place of the hearing be given
At least 15 days in advance
Implied Authority
Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal.
A domicile refers to the location where an insurer
Is incorporated, not necessarily where the insurer conducts business.
Cease and Desist Order
Issued by the Commissioner (May be issued before or after a hearing)
What are the areas of producer activities over which the Commissioner has jurisdiction?
Laws, rules, or regulations of the Insurance Code Licensing laws Producer's Fiduciary Responsibility Unfair Trade Practices
Lloyd's Associations
Operate in an insurance mechanism, in which members are liable only for their portion of risk (not an insurance company)
Nonresident License
Producer domiciled and licensed as a resident producer in another state; subject to the same limitations and supervision as a resident producer
Agents, subagents, and counselors must keep records
Regarding each contract -The amount of premium, -statement regarding the subject -each investigation or adjustment -any related fees for 5 years after transaction completion or for the term of the contract - whichever is greater.
The Commissioner has the power to
Suspend, Revoke, or Refuse to issue or Renew a producer License as well as levy a fine as established by state law
If the Commissioner cannot serve due to death, disability or resignation
The Chief Deputy Commissioner serves until the next election (with a $15,00 bond approved by the Commissioner)
Any business entity that sells or negotiates insurance must be licensed as
an agency
Home Office
insurer's headquarters, principal place of business
Each licensee must keep the Commissioner informed regarding
The licensee's business and residence address The name and address of each insurer that the licensee represents The name and address of each agency of which the licensee is proprietor, partner, office, director or employee of which the licensee represents every trade name of such an agency The names of all partners and members of any firm or associating and the corporate name of any corporation owning or operating the agency
Agent =
an individual insurance producer
inducement
an offer that attempts to influence the other party
Every licensed agent , subagent, counselor, and adjuster must maintain
a place of business that is accessible to the public
When receiving a fee, commission, or other compensation for their service, counselors cannot receive
any compensation from an outside source
Counselors provide the following ancillary services
- Risk identification, - Loss measurement, - Gathering and analysis of loss information - Verification of workers compensation experience modifiers - Setting of risk retention levels - Development of retention financing plans - Development of insurance specifications - negotiation with insurers regarding coverages, costs, and payment options - Implementation of retained and transferred risk programs - Monitoring of annual program - Insurance audit services
Requirements for a producer license
At least 18 years of age Resident of the state & present for 6months/year (or has a principal place of business within the state) - Is of good character - has passed a written examination -Unless previously licensed for the same line of authority in another state - if the app is received within 90 days of the cancellation of the application's previous license -Unless Licensed as an agent in another state who moves to this state and makes an application within 90 days of establishing legal residence - If applying for an agent's license, be appointed by an authorized insurer - If applying for a counselor's license, show evidence of 5 years of experience in insurance If applying for an agent's license, limited subagent's license, or adjuster's license, must complete classroom education
Those insurers who have not been approved to do business in the state are considered _________ or _________
Unauthorized / nonadmitted
The Commissioner must examine all domestic insurers
at least once every 5 years
In order to adopt and promulgate rules and regulations must
be approved by the Attorney General and be on file as a public record for 10 days
Surplus Lines
insurance not available from authorized insurers; placed with nonadmitted insurers who specialize in offering insurance to the high-risk market
After notice, hearing, and a cease and desist order of the Commissioner, anyone who violates the order may be subject to
A fine of up to $10,000 for each violation Suspension or revocation of such a person's license Any other appropriate relief
Who may be subject to examination by the Commissioner?
Agents, Solicitors, Brokers, Counselors, Adjusters, Managers, and Promoters
A foreign insurer is an insurance company that
Is incorporated in another state, DC, or territorial possession (such as American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands)
An alien insurance company
is incorporated outside the United States.
The process for a nonresident agent to act as the agent of an insurer
- Appointed by the insurer - File a notice of appointment w/in 15 days - Commissioner verifies appointment w/in 30 days or notifies the insurer w/in 5 days of determination - Insurer pays an appointment fee
A nonresident person may receive a nonresident producer license if:
-Currently licensed as a resident & in good standing in home state - Has submitted the proper request for licensure -Has paid the required fees -Has submitted an application for licensure to the Commissioner -Resides in a state that awards nonresident agent licenses to residents of Georgia on the same basis (Reciprocity Agreement)
Prior to transacting business in this state, Insurers must obtain
A Certificate of Authority
Misdemeanors will be punished by
A fine not to exceed $1,000 or by confinement in jail for up to 12 months, or both
Temporary License
A license to operate for six months, renewable for 3 months for a maximum for 15 months from the date of the first issuance
Insurers who meet the state's financial requirements and are approved to transact business in the state are considered _________________ or ______________ into the state as a legal insurer
Authorized / Admitted
Certificate of Authority
Authorizes a company to start conducting business and specified the kind(s) of insurance a company can transact. It is illegal for an insurance company to transact insurance without this certificate.
In GA, any of the following acts is considered transacting insurance
Solicitation and inducement Preliminary insurance negotiations Effectuation (execution) of insurance contracts Transactions of matters arising out of the effectuation of insurance contracts
If the Commissioner suspects that an insurer or its agent has committed a violation or is engaged in unfair trade practice
The Commissioner may issue a statement of charges and hold a hearing for any purpose deemed necessary (within scope of the Insurance Code)
Limited Subagent continuing education
They are required to complete 5 CE hours every biennium (2 years) with no ethics requirement
the purpose and function of the Department of Insurance and the duties and powers of the Commissioner are
To carry out and enforce the provisions of the Insurance Code
The insurance industry is regulated to
To ensure that its responsibilities to the public are upheld
Promulgate
to make public; to put into action (e.g. laws, court decrees, and similar)
Cease and Desist
to stop or discontinue
Insolvent
unable to meet financial obligations
No licensee whose application has been refused or revoked
will be entitled to file a new application for 5 years following that action
Other Penalties
- Established by state laws - Imposed based upon hearing outcome - License denial/suspension/revocation - Monetary fines
A person who willfully violated the statute proclaiming that it is illegal to transact insurance without a license for that line of authority
Will be considered guilty of a misdemeanor.
If the insured submits payment to the agent
it is the same as submitting a payment to the insurer
The term 'Counselor' often involves the terms
Value, Effect, Advantages, or Disadvantages under the contract
Violations and Penalties
Violation ==> Hearing ==> Cease and Desist Order ==> Other Penalties
Applicant's employed by the Commissioner can reinstate their license
if a written request is made within 90 days of the date of termination
Active licensees who apply for additional licenses or reinstatement of a license 6 months before the license expiration date
will not be required to submit fingerprints
The general powers, duties, and responsibilities of the Commissioner include but are not limited to:
- Set up necessary divisions or sections of the Department - Appoint assistants, examiners, actuaries, clerks, and other employees - Maintain Official records - Adopt and promulgate rules and regulations - Examine the accounts, records, and transactions of any insurance licensed person, insurer, rating organization, or any other organization authorized to transact insurance in this state - Issue a cease and desist order if any person is believed to have violated any provisions of the Code - Complete annual reports - July 1 each year, compile a supplementary report regarding property and casualty insurance - 1st week each quarter, file a report to the chairperson of the House Committee on Insurance and the chairperson of the Senate Committee on Insurance and labor.
Any individual who sells, solicits, or negotiates insurance must be licensed as
An agent, an individual appointed or employed by an insurer who sells solicits or negotiates insurance.
A domestic insurer is
An insurance company that is incorporated in the state.
The Commissioner must also pay the Office of Treasury and Fiscal Services
Any collected taxes, fees, dues, charges, and penalties
Producer/Agent licenses expire
Every 2 years, on the last day of the licensee's birth month
The agent will still be required to provide evidence of this when in inactive status
Evidence of continuing education even though they are prohibited from selling, soliciting or negotiation insurance.
nonresident agent who exclusively represents an insurer at a US military installation in a foreign country
May also be registered as a nonresident to represent an authorized life insurer with an annual registration fee of $25 expiring Dec 31st in the year after it is issued
The insurer (or principal)
The company or organization that issues a policy of insurance
Insurance companies are classified according to
location of incorporation (domicile)
Commissioner
The head of the State Department of Insurance
If the commissioner finds examined insurance records inadequate
The person will be given 60 days to correct them.
Commissions for the sale of insurance cannot be paid unless
The recipient is licensed.
Funds that have been illegally or erroneously paid
may be refunded. No refunds will be allowed unless a written request is filed with the Commissioner within 7 years of the payment.
If the Commissioner finds the request for a hearing is made in good faith and that the applicant could be aggrieved
a hearing will be held within 30 days
Although the agents act for the insurer, they are legally obligated to treat applicants and insureds
in an ethical manner
Authorized Insurer
insurer who has received a Certificate of Authority from the department of insurance to transact insurance in this state
An agent (or producer) will always be deemed to represent
the insurer, not the insured
