The New York State Department of Financial Services released its latest periodic disciplinary actions report last week. Compared to some editions, this one was relatively short. A few insurers were taken to the woodshed for violating the laws pertaining to cancellation notices (balance sheets at 21st Century, AXA and MetLife are a tad lighter now than they were in April.)
The good news for agents and brokers was 1) not that many hearings and stipulations; and 2) a lot of the punishments were doled out to out-of-state producers.
- A nonresident agent from Texas stole an insured's credit card; was terminated for cause by an insurer; and ignored DFS inquiries on the matter. New York was the fifth state to revoke his license.
- A nonresident agent from Philadelphia sort of forgot to mention on her license application that she was the subject of a criminal prosecution. Three other states revoked her license, and she also sort of forgot to tell the DFS about two of them. She, too, ignored DFS inquiries.
Lesson: Don't ignore correspondence from the DFS if you want to keep your license.
A review of the agent and broker stipulations shows that, if you're really dying to fork over some of your treasure to the DFS, not telling them about actions taken against you is a fine way to do it. Producers in the Binghamton area and Brooklyn and a Long Island independent adjuster each donated $1,500 to the cause for this reason. A number of out-of-state producers paid amounts ranging from $500 to $6,000 for the same offense. A few others lost their New York licenses, in part because New Jersey had also revoked their licenses. At least one person lost a license for not responding to DFS inquiries.
That whole not answering the mail thing? SO not a good idea.
One other thing: I often get questions about licensing and whether someone has to get a license for a new entity and so forth. This report is exhibit A as to why the answer is "yes." To wit:
$10,000 fine for acting as an insurance producer without a license
$3,000 fine for using an unapproved name in conducting business as an insurance producer; also for commingling premium funds with operating and personal funds
$1,500 fine for acting as a producer with an expired license
$2,000 fine for transacting business under an unlicensed agency name
License revoked for transacting business under an unlicensed agency name and failing to respond to DFS letters
Lastly, a nonresident excess line broker from Washington state lowered our collective taxes by $7,200 for not taking care of excess line dec page and premium tax filings.
I always find it interesting to see where the department is focusing its regulatory efforts. Nothing this issue about misleading certificates of insurance, though that has popped up before. Also, in the five years since the department issued Regulation 194, which requires producers to disclose to their clients certain information about how they are compensated, I have yet to see a single instance of a producer being disciplined for violating it.
Still, if you want to impress on your colleagues the behaviors to avoid, look no further than this publication. If history is any guide, we may see one more edition before the year is out.