Each quarter the Division 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”.
The DOI rekeases the results of its enforcement actions for the fourth quarter of 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 December 31, 2013 the Enforcement Division assessed fines totaling $8,850. 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.
What the DOI fined Mass. agents for during the fourth 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.
- There were only 16 cases handled during the fourth quarter of 2013 in which a total of $8,850 in fines was assessed against various producers and insurers.
- Misrepresentation on license application: The DOI took action against four producers in the fourth quarter of 2013. Two of the cases resulted in a settlement agreement and a $500 fine each. One case ended with a Cease & Desist from Violation with no fine. The fourth case was disposed of with Cease & Desist from Violation along with a License Revocation.
- Placed or renewed policies while unlicensed: The DOI investigated five cases this month involving producers who placed policies while unlicensed. The fines levied for this offense ranged from $100 to $500.
- Placed surplus lines policies while unlicensed: This quarter the Special Investigations Unit fined one producer $1,500 for placing a surplus lines policy while unlicensed.
- Failure to renew or cancel agent appointments: This quarter three insurers were fined for failure to renew or cancel agent appointments. Two of the insurers were fines $500 each while the third was fined $750.
- Failure or Late Notice to DOI of Administrative Actions: There were two cases involving this allegation this quarter. One non-resident producer was fined $500 for his failure to notify the DOI of other administrative actions involving the producer. The second case also involved a non-resident producer who was not fined for his late notice to the DOI of any administrative actions. The DOI entered into a settlement agreement with him and issued a Cease & Desist from Violation.
- Failure to Remit, Misrepresentation: The DOI investigated one producer this quarter concerning allegations of Failure to Remit and Misrepresentation. As a result of a hearing, the DOI fined the producer $3,000 and revoked his license.
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, you or your agency can be investigated and fined for placing business under an agency contract or brokerage agreement. While most Mass. insurance agents might find this hard to believe, this is a relatively common problem that can cause a lot of difficulty for your company. Agency Checklist has heard of several agencies that are struggling with the DOI over possible fines resulting from license lapses.
