Unit 23: GA Laws, Rules, and Regulations Pertinent to Life and Accident and Sickness Insurance

Examination of other persons

The Commissioner may examine, as often as necessary, the business records and transactions of: - Any licensed insurance producer - Any person with a contractual right to control an insurer - Any person who controls the management of an insurer - Any person involved in the promotion or formation of a domestic insurer - Any person who transacts insurance business, whether the person is authorized or not - Any person who seeks to acquire a domestic insurer or an affiliate of one - Any person who seeks to acquire any person subject to the Commissioner's jurisdiction.

Mandatory grounds for suspension or revocation of certificate

The Commissioner will refuse to issue or renew and will revoke or suspend a certificate of authority if: • The insurance code requires it, or • the insurer no longer meets the requirements for the authority originally granted due to deficient assets or otherwise

Authority to write credit insurance

• A business entity, that sells, negotiates, or solicit credit insurance, may apply for a limited Credit insurance, agency license, rather than requiring individual employees to obtain licenses. • Must provide at least five hours of training in minimum basic insurance concepts and credit insurance subjects • at least two hours of continuing education must be offered to employees annually • limited credit insurance agency licenses, renew biennially on December 31 of the applicable renewal year

Insurance

• A contract which is an integral part of a plan for distributing individual losses, whereby one undertakes to indemnify another or pay a specific amount or benefits upon determinable contingencies

Rules and regulations

• All rules and regulations made by the Commissioner must be approved by the Attorney General and filed at the Commissioner's office for at least 10 days before they become effective.

Transact

• Includes: - solicitation and inducement - Preliminary negotiations - Effectuation of a contract or insurance - Transaction of matters subsequent to effectuation of the contract and arising out of it

Certificate of Authority: Requirement

• Commissioner must grant a certificate of authority (license) to an insurer before it can transact insurance business in Georgia. • it's certifies that the company has complied with the requirements of the Georgia insurance code.

Orders and notices

• Orders and notices issued by Commissioner are effective when written and signed by Commissioner or under their authority. • Every order must state its effective date and : - its intent or purpose - the grounds upon which it's based - the provision of the insurance code under which the action is to be taken, though failure to state the provision does not void the order or notice. • Notices and orders can be served by mail at recipients address or place of business. • If directed at multiple recipients, both can be served via electronic mail and posted on department's website.

Insurance fraud

• A natural person convicted of insurance fraud is guilty of a felony. It may be punished by: - Imprisonment for at least two, but no more than 10 years - A fine of up to $10,000 - Both imprisonment and a fine

Alien Insurers

• Alien insurer that enters through GA must: - establish and main its principal office in GA - maintain all records of its transactions and affairs in that office. • Removal or attempted removal of these records will subject the insurer to revocation of its certificate of authority.

Types of Licenses

• An individual appointed or employed by an insurer, who sells, solicits, or negotiates insurance is an agent. • Agent also known as individual insurance producer. • A subagent sells or negotiates insurance or annuity contracts on behalf of a licensed agent. • Must have on file with Commissioner a certificate of authority from each agent he represents. • An adjuster investigates, settles, adjusts, and reports about claims arising under insurance contracts. • Independent adjusters represent the interest of the insurer but are not employees of the insurer. • Public adjusters represent persons insured under policies covering physical property. • A counselor advises people regarding the benefits, terms, value, or advantages of any insurance contract offered by an insurer. • Actuaries or consultants advising insurers are not considered to be counselors. • Counselor cannot receive compensation from more than one source involving the same transaction.

Company name

• An insurance company will not be authorized to transact business in the state if its name is so similar to that of an insurer already authorized that it will cause uncertainty or confusion. • Commissioner can require the insurance company to modify its name to avoid such confusion. • No insurance company will be authorized to transact business if its name would mislead consumers about the nature of the insurer's organization.

Authorized and Unauthorized insurers

• Authorized (admitted): insurer has received a certificate of authority from the state of Georgia, and is licensed or authorized to conduct insurance business in the state. • Unauthorized (non admitted): insurer has not received a certificate of authority from the state of Georgia, and it's not licensed or authorized to transact insurance business in the state.

Examination reports

• Commissioner must make a written report of each examination and provide the examinee with a copy of the proposal report at least 20 days before it is filed. • Examination report may be withheld from public inspection to protect examinee from unwarranted injury.

Issuance or refusal of certificate of authority

• If Commissioner there's not enough certificate of authority within 90 days after an application is filed, it is considered approved. • Certification must specify the kinds of insurance the insurer is authorized to transact in Georgia. • An application must be accompanied by a fee which is refund it to the applicant if the application is denied.

Retaliatory taxes , licenses, fees, fines, penalties, and deposits

• If another state/foreign country imposes taxes, licenses, fees, fines, penalties, and deposit requirements on a GA insurer/producer that exceeds the amounts imposed upon their domestic insurers, Commissioner will impose the same amounts upon insurers doing business in GA

Regulation of unauthorized insurers

• It is illegal for anyone in GA to represent an insurer that is not authorized to transact insurance in GA. • These rules do not apply to: - surplus lines insurance - reinsurance - adjusters involved in settling claims under policies that were sold, issued, and delivered outside of GA; and - the professional services provided by an attorney.

Stock and Mutual Insurers

• Stock: An incorporated company with capital divided into shares and owned by shareholders. • Mutual: An incorporated insurer without capital stock or shares that is owned and governed by its policy holders.

Appointment of deputies and personnel

• Commissioner must appoint chief deputy commissioner to help carry out duties • Chief deputy performs commissioner's duties if he/she is absent or disabled • Commissioner may appoint any assistant, examiner, actuary, clerk, or employee to carry out duties of the dept. • Commissioner or any employees cannot have financial interest in an insurer, agency, or insurance transaction except as a policyholder or claimant.

Classes of insurance

• Each of the following is considered a separate class of insurance: - Life, accident, and sickness - Property, marine, and transportation - Casualty - Surety - Title - health maintenance organization

Certificate of authority refusal

• After a hearing, the commissioner can revoke, suspend, or refuse to renew the certificate of authority of an insurer that: - violate any provision of the Georgia insurance code - Violate any rule, regulation, or order of the commissioner - Is in an unsound condition or a condition that renders its insurance transactions in Georgia hazardous to the public - Regularly compels claimants to accept less than the amount due or forces them to take legal action to secure full payment - Refuses to be examined - Fails to pay any final judgment rendered against it in Georgia within 30 days - Is affiliated with, and under the same general management or ownership as another insurer that transacts direct insurance in Georgia without a certificate of authority.

Types of licenses

• Agent and subagent licenses can be issued for the following kinds of insurance: - Life - Accident and sickness - Credit life - Credit accident and sickness - Property and allied lines - Casualty and allied lines - Credit casualty - Credit property - Surety • they can only sell the kinds of insurance for which they hold a license and have a certificate of authority on file with the Commissioner. • no certificate of authority is required for: - Agents who plays 12 or fewer insurance policies through another agent in any one calendar year; and - Agents who only plays surplus lines insurance through surplus lines brokers

Agent, Subagent, Counselor, and Adjuster Licensing: Requirements

• All agents, subagents, counselors, and adjusters must be licensed by the commissioner to transact insurance business in Georgia. • These licenses can only be issued to individuals. • Commissioner can issue two or more licenses to one individual who satisfies the requirements for each license.

Appeals

• Any party to a hearing or who is affected by an order of the Commissioner may appeal the order within 30 days after: - The order has been mailed or delivered - The Commissioner's order to deny a hearing has been mailed or delivered - The commissioner has refused or failed to issue an order on a hearing - The commissioner has refused or failed to hold a hearing

Renewal

• Certificate of Authority: - must be renewed annually - expire at midnight on June 30 of the year following issuance or renewal - Applications for renewal must be submitted to the commissioner's office by March 1 - Application must include a copy of insurer's annual statement of December 31 of the preceding year - Commissioner may extend the deadline for filing the annual statement for up to 60 days.

Examination of insurers

• Commissioner (or designee) must examine the affairs, transactions, accounts, records, and assets of insurers authorized to do business in GA at least once every five years. • Must also examine any other facts relating to the insurer's business methods, management, and dealings with policyholders. • Commissioner may initiate any proceeding or action as appropriate based on the results of the examination. • Domestic insurers must be examined when applying for authority to do business in GA and at least once every five years.

Administrative fine

• Commissioner can impose an administrative fine on an insurer if it's officers, employees, agents, or representatives are found to have committed any of the following acts: - Failure to process or pay claims in a timely manner; - failure to notify policy holders of the reason claims payments have not been me when due - refusal to pay claims, without just cause - compelling insureds to accept less than the amount due to them - compelling insureds to initiate legal action to secure full payment or settlement. • Administrative fine cannot exceed: - $1,000 for each non willful violation - $5,000 for each willful violation

Licensing of foreign insurers as domestic insurers; redomestication

• Commissioner can issue licenses to insurers that are organized under laws of another state to transact business in GA if they comply with requirements of insurance code. • Their place of business can also be designated at a at a location in GA.

Judicial review

• Commissioner can postpone the effective date of an order while a matter is under judicial review. • Reviewing court may also postpone the effective date of the Commissioner's order • It can temporarily grant or extended the relief denied or withheld by the Commissioner's order.

Penalties

• Commissioner may issue a cease and desist order, prohibiting a person from continuing an act, practice, or transaction that is prohibited by the Georgia insurance code. • Commissioner can impose one of the following penalties for each violation of the Georgia insurance rules or regulations: - Probation for up to one year - Find of up to $2000 for each non-willful violation - Fine of up to $5000 for each willful violation

Fees and taxes

• Commissioner must remit all fees, taxes, dues, and penalties collected to the Office of Treasury and Fiscal Services. • Refunds and credits can be claimed by written request to the Commissioner within 7 years from the date of payment or collection of the amount claimed.

Deficiency assessments

• Commissioner will issue notice of a tax deficiency within seven years from the date on which a return is filed. • Commissioner may extend the time for filing a tax return or paying taxes due for up to 30 days. • If an extension is granted, the taxpayer must also pay interest on the amount due at the rate of 1% per month during the extension. • Corporations and individuals with bonds or securities on deposit are required to pay their annual fees by January 15. • If not, they are subjected to license suspension or revocation until they pay the fees in full.

Records maintenance

• Commissioner will keep permanent records of official transactions, filing, examinations, investigations, and proceedings of the Commissioner's office. • They're considered public records of the state and can be requested and paid for

Commissioner's powers regarding examinations

• During examinations, investigations, or hearings, the Commissioner has the authority to: - take depositions - subpoena witnesses - administer oaths - examine individuals under oath - compel the production of records, books, papers, and other documents. • If witness fails to obey a subpoena to testify, the Commissioner may seek a court order compelling person to comply • Witness who willfully testifies falsely under oath commits perjury. • Witness who refuses to comply with a subpoena without just cause is guilty of misdemeanor.

Conduct of examinations

• Every insurer or person being examined must make available for inspection the business records in the insurer's or person's possession or control that are relevant to the examination. • If accounts are inadequate or incorrectly maintained and the person or insurer failed to correct the accounts within 60 days of Commissioner's notice, the Commissioner can hire experts to revise/correct the records at the expense of the person or insurer being examined.

Examination expenses

• In most cases, examinees pay examiners' travel and living expenses related to an examination. • If an examination is initiated because of a complaint and the Commissioner determines that the complaint was not justified, the Insurance Department will pay the examination fees

Qualifications for certificate

• In order to qualify for authority to transact insurance business, an insurer must comply with requirements of the insurance code and cannot be owned in whole or in part, or financially controlled by any state or foreign government. • A certificate of authority can be issued to the following: - Inc. stock insurers - Inc. mutual insurers - Fraternal benefit societies - Hospital service nonprofit corporations - Nonprofit medical service corporations - Farmers' mutual fire insurance companies - Lloyd's associations - Reciprocal insurers

Certificate of authority suspension

• The Commissioner may, without giving advance notice or a hearing, place the insurer under administrative supervision or immediately suspended certificate of authority under the following circumstances. - The insurer is under delinquency, proceedings in any state. - The insurer's authority to do business has been revoked, suspended, or restricted in any state. - The insurer's business may be hazardous to the public or to its insureds. - The insurer exceeds the powers granted under its certificate of authority and applicable law. - The insurer's business is conducted fraudulently. - The insurer violated the insurance code. - The insurer gives its consent.

Hearings

• The Commissioner must hold a public hearing, whenever such a request is made in writing, or whenever a hearing is required by the Georgia insurance code. • At least 10 days written notice must be given to all interested parties • hearing must be held no later than 30 days after the written request is received by the Commissioner. • Commissioner must give a notice of the time and place of the hearing at least 10 days in advance. • All parties to a hearing have the right to: - Appear in person or by counsel - Be present while evidence is given - inspect documentary evidence - present evidence supporting their interests - Have subpoenas issued by the Commissioner to compel the attendance of witnesses and the production of evidence on their behalf - request a rehearing or re-argument within 30 days after the Commissioner issues an order. • Commissioner can adjourn a hearing to another time or place by announcing adjournment at hearing.

Exemptions

• The following do not need to be licensed: - salaried officers or employees of an agent or sub agent who only perform clerical or administrative services and connection with insurance transactions. - Insurance counselors who do not receive commission - Employer or its officers, directors, or employees, who administer an employee benefit package that involves insurance, as long as the individuals are not compensated by the company is showing the contracts - Employees of insurers or organizations employed by insurers who engage in the inspection, rating, or classification of risks, or in the supervision of the training of insurance agents and who are not individually engaged in the sale, solicitation, or negotiation of insurance - A person whose activities are limited to advertising without the intent to solicit assurance in Georgia through communications in printed publications, or other forms of electronic mass media - I'm not a resident person who sells commercial property and casualty insurance to an insured with risks located in more than one state - A salaried, full-time employee who advises his employer relative to the insurance interests of the employer, or its subsidiaries or business affiliates

Insurance Department

• The insurance department is divided into the following: - agent licensing - consumer services - regulatory services - life and accident and sickness insurance - property and casualty insurance - examinations • The agent licensing section: - approves formal classroom training courses - prepares and conducts all licensing examinations - issues licenses

Minimal Capital stock and Surplus Requirements

• To qualify for an original certificate of authority to transact one or more classes of insurance, an insurer must maintain a minimum of $1.5 million in capital stock or in surplus. • In addition, when first authorized, an insurer must possess surplus equal to the larger of: - $1.5 million, or - 50% of its paid-in capital or surplus

Domestic, Foreign, and Alien insurers

• domestic - the state in which the insurer was formed (home state) insurer's home state is called domicile. • foreign - an insurer is in another state or US territory • alien - An alien insurer is an insurance provider offering coverage in a country other than the company's home country.

Commissioner's powers and duties

• known as the chief officer of the Insurance Department, is responsible for carrying out and enforcing GA's insurance laws. • Also has the authority to: - appoint personnel to help the Insurance Dept carry out duties - maintain GA's official insurance records - make rules and regulations to carry out the GA insurance code - conduct hearings - examine affairs of insurers