Objectives:
? List requirements of obtaining and maintaining a Louisiana Insurance License
? Recognize Louisiana laws governing the business of insurance
? Name important Federal laws that apply to insurance producers and insurers
? Recognize statutory ti
Key Terms:
Producer
Certificate of Authority
Controlled Business
Cease & Desist
Rebates
Investigative Consumer Report
Reciprocal
Non-Resident
This topic is 24% of the 150 questions on the P&C Exam
In the Louisiana Insurance Code, all persons or business entities referred to as an agent, broker, solicitor, or surplus lines broker that sell, solicit, or negotiate insurance are required to be licensed as an ____________________
insurance producer
Individual Producer
a person licensed to quote insurance policies, market, and sell insurance products, and consult other with regard to insurance.
-- Most people in Louisiana are accustomed to calling these persons insurance agents, but the official term insurance producers
Individual Insurance Producer Requirements: (5)
1. Be at least 18 year of age
2. Reside in or work mainly from an office located in State
3. Complete Pre-licensing education required to prepare for state exam*
4. Paid their fees and submitted an application (Form 1546A)
5. Successfully pass their requi
Examples of Legal Business Entities
Corporation, partnership, limited liability company (LLC), etc.
Business Entity Producer
A legal business entity may also be a producer and conduce insurance business in the state
a. must have producer's license in business name
b. business must first have a licensed individual producer
c. have several other pieces of documentation required t
License Expiration P&C
Every 2 years odd numbered years (2013, 2015) by the last day of your birth month
License Expiration LH&A
Every 2 years even numbered years (2014, 2016) by the last day of your birth month
License Term and Renewal
every licensee must...
- complete certain number of hours in continuing education
- maintain satisfactory conduct
- send in renewal app and fees every renewal term
*Your license is only issued once and you must renew it every term to keep it active
The final approval to renew your license rests with the ______________, as he decides to renew or not to renew.
Commissioner
License Renewal
renew by sending in application and fee to La. Dept of Insurance by the last day of their own birth month
License Renewal Fee
$50
The ____________ has a standard set of exemptions for licensing requirements that most state follow. Generally, if someone solicits insurance, they do need a license.
Producer Licensing Model Act
Change of Address
If a producer changes their mailing, work, or home address, the Department must be notified within 10 days or face a $50 fine
((notify on an official "Change of Address" form available on the Louisiana Department of Insurance website))
Non-Resident
Individuals not living in Louisiana and those without an office in Louisiana may get a license to sell insurance in Louisiana.
States that have ____________, meaning that the laws in both states are similar, will grant a non-resident license to an applicant as long as that individual's resident license is in good standing with their home state.
reciprocal laws and privileges
To apply for a Non-Resident license, an individual must:
completes a Uniform Application approved by the National Association of Insurance Commissioners (NAIC), the organization in charge of insurance laws for all states, and pay their fees.
A producer moving from one state to another has ______ after establishing legal residence to become a resident licensee. They will generally be exempt from having to take a new course or exam if they were in good standing in their home state with an insur
90 days
Assumed Names
* If it is a trade name for a business, you must also register the name with the ______________ before using it
A Producer must notify the Department in writing BEFORE using a name other than their legal name, or the name that appears on their license. Fine $250, up to $5000.
*Secretary of State
Temporary License
Are valid only for 180 days and may be granted in the following three circumstances:
1. Death
2. Disability
3. Active Military Service
7 examples of situations of Transferring between States
(provided by Louisiana department of Insurance)
a) A person moving to Louisiana who does not hold a license in another state - must take pre-licensing education and required examination.
b) A producer who is licensed as a nonresident in Louisiana moving from one state to another state (i.e.: Arizona to
The Department of Insurance and the Commissioner can revoke, non-renew, suspend, or refuse to issue any producer's license, as well as charge fines for these violations: (20)
a) Failure to comply with state or federal laws to get a license
b) Giving false information on any license or renewal application
c) Not accounting for or sending in premium money or commingling funds
d) Committing fraud or practicing dishonesty with reg
For any of the violations, the Department may fine _____ for each violation or ________ for all violations committed in one calendar year.
With a Cease and Desist order, suspension or revocation, the fine may be ______ for each or a maximum of ______ for
FOR ANY: $500 each or $10,000 for the year
WITH C&D, SUS, REV: 1,000 each or 100,000 for the year
KNEW ILLEGAL: 25,000 each or 25,000 for 6 months
Reapplication
If a producers license is revoked, he can reapply if producer:
1. accepted the revocation without asking for review or appeal of the decision and apply after one (1) year.
2. appealed the decision and revocation was upheld, may apply for a license after f
Appointments
An insurer must appoint a producer to sell their products before the producer can start selling them. The insurer files notice with them Commissioner within 15 days of the contract made with producer. The Commissioner lets the insurer know the appointment
Renewal of Appointment
Is due on or before March 1st of every year. Each Company is sent an invoice. Renewal fee is $20.00 per appointment. Lists received after March 1st will be charged a late fee of $10.00.
Termination of Appointment
An insurer can terminate an appointment and has 30 days from the termination date to notify the department. If due to fraud, the time reduces to 15 days. Producer has right to send comments about it to Department within 30 days of receiving the terminatio
Reporting of Actions
If any court, judge, jurisdiction or governmental agency in Louisiana or anywhere takes any administrative action against a producer, that producer must report this final disposition of ruling to the Commissioner within 30 days of the disposition.
-- All
Continuing Education (CE)
Producers must submit the correct amount of required hours to the Department every renewal period according the license they hold.
L,H, & A (CE)
{Life, Health, & Accident - Continuing Education}
You must submit 24 hours every renewal period of 2 years (even years). Three of the hours must be on ethics.
P & C (CE)
{Property & Casualty - Continuing Education}
You must submit 24 hours every renewal period of 2 years (odd years). Three of the hours must be in flood insurance and (as of 2011) three hours on ethics.
Rollover excess hours for CE
Up to 10 hours of excess P&C topics and up to 10 hours of excess LHA topics can be rolled over to the next renewal period.
-- The CE requirement does not apply to specialty or limited licenses such as industrial fire, credit life, credit health, credit pr
The Insurance Department // Commissioner may give CE credit to someone: (2)
-- completing a graduate level designation such as a Chartered Life Underwriter (CLU), Chartered Property and Casualty Underwriter (CPCU), or Certified Insurance Counselor (CIC).
-- or may grant 4 CE credits to any producer that is an active member of a s
Disciplinary Actions
The Commissioner has the authority to take against anyone in the insurance business if they found in violation of the Louisiana Insurance Code.
Hearings
When someone accuses the producer of violating the Insurance Code a hearing must be held within 30 days of the demand. It can be postponed if both parties agree, but once the demand is on record, the hearing must happen in more than 60 days of the origina
The number of days for notice of the time and place of the hearing
10 days
The number of days the Commissioner has to finalize a decision and determine his orders for the producers and all
30 days
The number of days for anyone wanting to appeal The Commissioner decision from then to demand a review hearing.
30 days
Cease and Desist
This is the legal term for the order to STOP. It is an official legal document that will required an individual to stop doing something.
Duties and powers of the Commissioner (4)
a) Issuing or revoking licenses and certificates of authority
b) Hire employees and examiners and examine the records of any insurer or producer
c) Subpoena witnesses and conduct hearings for alleged violations of the Insurance Code
d) Giving out cease an
- The Louisiana Department of Insurance Commissioner is ____________ and he is responsible for enforcing the law as it pertains to the insurance business in this state. His primary goal is to protect the public and he is elected and holds office for a ter
James Donelon
Certificate of Authority
An insurer must first get this from the Commissioner to sell insurance products in this state. This makes the insurer an admitted company and proves that the Department of Insurance finds the company financially sound and structured well enough to meet th
Insolvency
If an insurer finds themselves financial difficulty, the Department of Insurance will take control of the company financial management. If they believe the company can be put back in sound financial shape, they will try rehabilitation. If not, they will b
Advertising
The state regulates the marketing of insurance policies. Material cannot be misleading and cannot have illustrations that are considered deceptive.
_______________ is considered an act performed frequently enough to be considered a policy or practice of the company, not just an isolated act of an employee
14 examples are given:
Unfair claims settlement practices
(1) Issuing policies with misrepresented facts or coverage provisions
(2) Not acting promptly when presented with claims
(3) Denying claim payments without a practical investigation of the facts given
(4) Denying claims
Controlled Business
If a producer only get into the insurance business in Louisiana to sell only to themselves, their family and/or employer.
-- This is ILLEGAL. The Commissioner determines controlled business by looking at a producer's book of business for a 12 month period
Shared Commissions
No license, No commission! Paying and accepting a commission when you have no insurance license is illegal. Persons found breaking this law are fined between $1000 and $5000 and/or receive a maximum of 2 years in jail.
Payment to unlicensed entities
Any unlicensed business entity paying or accepting illegal commissions will be fined between $2000.00 and $50,000.00 and/or receive a maximum of 3 years in jail. Any violator involved with a license will have it suspended or revoked.
9 Types of Unfair Trades Practices
1. misrepresentation
2. false advertising
3. twisting
4. churning
5. defamation
6. boycott, coercion, or intimidation
7. false financial statements
8. unfair discrimination
9. rebates
Misrepresentation
Distributing misleading or false information and orally deceiving the public with regard to a policy's terms and benefits is illegal.
False Advertising
Any advertising, print, multimedia, internet or otherwise cannot deceive the public in anyway and misrepresenting terms, benefits, advantages, dividends, financial strength, or misrepresenting the intent of a policy, loans or assignments, or saying an ins
Twisting
When a producer influences a consumer to replace a present policy with a different one. This only acceptable if the producer gave the consumer better coverage or a better deal.
Churning
(related to twisting) Using misrepresentation to replace a competitor's policy with one from a company represented by the producer to get the larger first-year commission, even if it is not in the best interest of the consumer.
Defamation
oral or written statements trying to injure a person or entity is prohibited, especially when it is critical of the financial status of a person or insurer.
Boycott, coercion or intimidation
illegal acts intended to stop fair trade or monopolize insurance business are prohibited.
False Financial Statements
Intentionally deceiving the public or a regulator as to the financial standing of an insurer to prohibited.
Unfair Discrimination
Changing rates based on martial status, race, color, national origin, creed or ancestry within the same mortality class is illegal.
Rebates
Offering and accepting any incentives for buying a policy, including money, unauthorized discounts or money back, special favors or personal services, are all illegal acts.
Examination of Records
The Commissioner can examine anyone in the business of insurance in the state at anytime. The Department will review insurance companies for financial stability at least once every 5 years. An investigation may be prompted on an individual producer if 3 c
Insurance Fraud
The Department can conduct background checks on all applying to sell insurance in the state and may deny licenses or certificates of authority for felony convictions. If any violations are found, the information may be forwarded to the Department of Justi
Fraud
the intent to deceive by providing materially false information to someone in a business transaction.
Insurance fraud is committed when: (5)
a) Preparing false information in insurance applications, rating a policy, claim payment or benefit information requests, applications for certificates of authority
b) Knowingly selling policies and products for a bankrupt insurance company
c) Hiding asse
Privacy of Consumer Financial Informaion
Regulation states that no information can be accessed by insurers without the person's consent and prevents insurers releasing this information to anyone without consent from the insured.
- Clients have the right to review a record of any disclosure made
Fair Credit Reporting Act (FCRA)
This federal law was enacted in 1971 and is administered by the Federal Trade Commission. It makes clear that consumers have the right to know what information is being circulated about them and that the information is accurate and relevant for purposes t
2 types of reports under the Fair Credit Reporting Act (FCRA)
Consumer Reports
Investigative Consumer Reports
Consumer Reports
Equifax, Experian, Dun & Bradstreet, and agencies like these provide information regarding credit, character, and habits of a consumer.
Investigative Consumer Reports
Information for these reports may come directly from interviews with friends, neighbors and affiliates of the consumers and cannot be made without consent with 3 days of the request. When a consumer wants information in this report, is must be sent to the
There is a criminal penalty of ______ that may be imposed for not complying with the FCRA and those accessing information from these reports under false pretenses may face fines and/or jail time.
-- If insurance is declined because of information in any r
$50,000
-- copy of the report && their rights must be described to them.
(( Each consumer has the right to know the name and address of the agency, what was in the report and they have the right to know who received a copy of this report during the past y
Fraud and false statement
Any person intentionally making fraudulent or false statements in insurance transactions involving interstate commerce are subject to federal level fines and/or imprisonment for breaking this very specific federal law.
The Violent Crime Control and Law Enforcement Act of 1994
States that anyone that has committed a felony must receive written authority from a regulatory official, Commissioner, Deputy Commissioner, etc., before working in insurance that affects interstate commerce - called a 1033 waiver. This act makes it illeg
McCarran-Ferguson Act
Said that federal government had the right to regulate insurance only to the extent it is not regulated by state law. In effect, the insurance industry is exempt from most federal anti-trust laws.
Gramm-Leach-Bliley Act (GLBA)
Officially titled the Financial Services Modernization Act of 1999, removed the barriers between commercial banking, investment backing and insurance. Financial holding companies can combine any financial related activities. They still have to answer to r