The New York State Department of Financial Services yesterday released its periodic report of disciplinary actions taken against insurers, agents, brokers and adjusters. I review each of these reports when they come out, for a couple of reasons:
- To see if any Big I New York members are named
- To see the types of violations for which producers are being disciplined
I often get questions from members that can be summed up as, "What will happen to me if I do X?" These reports give me examples that I can cite when I get those questions.
I'll leave out names (the report is a public document posted on the DFS website, so anyone can review it and find out identities), but here are some of the more eye-catching violations and consequences:
- "Respondents commingled insurance premium funds and personal funds. Respondents also collected an insurance premium from an insured and failed to timely remit said insurance payment to the insurer." -- $3,000 fine
- "Respondent issued a certificate of insurance for an insured when in fact no such policy existed." -- License Revoked
- "Respondents, in connection with the sale of automobile insurance policies, charged and collected different service fee amounts from numerous insureds. Respondents also in their service fee agreements stated the amount of the service fee to be charged as “up to” a dollar amount, which resulted in numerous insureds being charged different service fee amounts as stated above." -- $75,000 fine
- "Respondents, after the expiration of (its) insurance agent’s license, acted as an insurance agent in this State without a license." -- $180,000 fine
Regarding this last one, the size of the fine for this violation is unusual. In contrast, the same report cites an Illinois agency for acting as an insurance producer without a license, and the fine was $500. An attorney in Cooperstown was fined $650 for acting as an insurance producer without a license. For an agency to incur a $180,000 fine, the violation must have been pretty extreme. I wonder how many years the agency did business without a license.
More typical in the report are penalties for failing to disclose that the agency or individual producers had been targets of criminal proceedings:
- One upstate agent lost her license because she failed to disclose a misdemeanor conviction on four license applications (the original and three renewals.)
- A Long Island agent and broker lost his license for failing to disclose that he had been charged with a crime and for submitting documents to an insurer and the DFS that contained false information.
- A Manhattan agency paid a $1,500 fine for failing to report administrative actions taken against it by federal regulators.
- Two sublicensees of an agency in Queens lost their licenses after they were convicted of felonies.
- An upstate agent paid $1,000 for failing to inform the DFS within 30 days that she had been charged with a crime and for operating without a license.
Lastly, a few producers got caught essentially defrauding insurers out of charity money:
- One agent and broker submitted false receipts to a foundation in order to obtain matching charitable contributions. She also submitted false evidence of volunteer activities in order to receive a volunteer grant. She paid a $2,250 fine.
- Another lost his license for submitting false documents in order to get more than $40,000 from an insurer's gift matching program.
Here's the good news: There are thousands of New York licensed insurance producers, yet this disciplinary action report is only eight pages long. Now, is everyone who is breaking the rules getting caught? I don't think so. However, if cheating and lawbreaking were rampant in the insurance community, this report would be easily twice as long.
I know from the phone calls and emails I get that Big I New York members are very concerned about even accidentally breaking the law. The folks I hear from don't want to give the appearance that they might even possibly be doing something less than above board. Just yesterday I spoke with a member who was concerned about whether certain job titles for unlicensed employees would be a problem. Insurance producers are, as a group, pretty honest. You should feel good about that.
And if you ever are unsure about whether something is permissible or has to be reported or requires a new license, get in touch with us. We're happy to help, and none of us wants to see your name in one of these reports.
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