Each quarter the Division of Insurance publishes a list enforcement actions taken against licensees
While the primary mission of the Division of Insurance is “…to monitor the solvency of its licensees in order to promote a healthy, responsive and willing marketplace for consumers who purchase insurance products” a major part of accomplishing that mission involves insurance enforcement. The DOI engages in a variety of administrative actions throughout the year in order to ensure that the insurance industry and its representatives maintain a just and healthy marketplace.
That said, during the course of regulating the Massachusetts insurance industry, the Division’s Special Investigation Unit will pursue allegations of misconduct against any persons licensed by the DOI including insurance producers, insurance advisors, public adjusters, reinsurance intermediaries, viatical loan brokers and providers, viatical settlement brokers and providers, insurance companies, health maintenance organizations and self-insurance groups. As part of its investigation into a case, the Enforcement Division may interview witness, question licensees, demand and review documentary evidence supporting allegations of unfair methods of competition or unfair trade practices or any other violation of the insurance law.
If a specific investigation warrants further action, an investigation may result in a referral to the Attorney General’s office in egregious cases or in less serious cases the Division independently may negotiate settlements or request the commissioner or his deputies to initiate an administrative proceeding before a hearing officer, agree to assist in cease and desist order and a written compliance programs. In cases where licensees conduct warranted the license sanctioned could include revocation or suspension along with restitution. See Agency Checklists’ article “One Way to Avoid Large Fines for You & Your Agency”.
A look at the DOI’s enforcement actions for 2013
The Division of Insurance publishes a list of the enforcement actions it has taken on a quarterly basis. The total fines assess vary widely depending upon the quarters they report. In the most recent report for the quarter ending September 30, 2013 the Enforcement Division assessed fines totaling $11,750.00. This was a relatively low amount since over the course of the last two years total fines have, in a given quarter, totaled almost $150,000.00. The graph below shows the quarterly assessment of fines for the last three years to September 30, 2013.
What the DOI has fined Mass. agents for the third quarter of 2013
The fines assessed range for a number of grounds including misrepresentation on a license application, placing or renewing policies while unlicensed, failure to report administrative actions in other states affecting a license and trustworthiness and a violation of privacy regulations.
- Misrepresentation on license application: The DOI took action against four agents on this issue in the third quarter. All of the cases settled with fines ranging from $250 – $4,000
- Misrepresentation in the sale of insurance: There was one case involving this issue which resulted in a settlement agreement and a $5,000 fine
- Placed or renewed policies while unlicensed: The DOI investigated two cases involving this issue. Both cases settled with one producer paying no fine and another paying a $4,000 fine.
- Trustworthiness; Violation of Privacy Regulation: The DOI investigated one producer for this issue entering into a settlement agreement with them with no fine.
Agency Checklists would advise all producers to carefully check their license expiration date as the Division of Insurance no longer sends out renewal applications. If you let your license lapse, your agency and any company where you are placing business under an agency contract or brokerage agreement can be fined. This is a relatively common problem can cause a lot of difficulty. Agency Checklist has heard of several agencies that are struggling with the DOI over possible fines resulting from license lapses.