The Second Quarter includes enforcement actions during the months of April, May, and June of 2018.
Each quarter, the Division of Insurance publishes a list of the enforcement actions it has taken against licensed Resident and Non-Resident Producers operating in Massachusetts.
Fines imposed during this Quarter totaled over $98,000
Similar to the Q1 of 2018, Q2 also saw another quarter with a higher than average fine amount imposed based on the small number of enforcement actions undertaken in this period. As with Q1 which saw the bulk of the fine amount stem from the Division’s action against Zenefits, this quarter saw the bulk of fines as a result of the Division’s action against The Life Insurance Company of Southwest.
As a result of the Division’s Settlement Agreement with both Zenefits and Sun Life, the total amount of fines for the first half of 2018 totals almost half a million dollars, and well surpasses all of the fines imposed during 2017.
More about the largest fine this Quarter…
As mentioned above, the fine against the Life Insurance Company of Southwest was the largest fine of the Second Quarter and saw the Division enter into a Settlement Agreement with the insurer, which will see it pay a $97,822.36 fine for its failure to “Properly Supervise an Appointed Agent.”
Since there was no hearing decision on this matter, there is no further information about the facts of this enforcement action and why it resulted in such a substantial fine.
Fines involving Hearing Officer Decisions
As for other enforcement actions, this quarter includes the matter involving the consent decree between the long-standing action involving Andrew Crowther. In December 22, 2009, the Attorney General filed a civil action in Suffolk Superior Court naming Mr. Crowther and others at the Kilgore Insurance Agency as defendants.
The Attorney General brought the suit under §4, of G.L. c. 93A, alleging that Mr. Crowther and the other defendants had for years, knowingly deceived their insurance customers as to the existence and amount of so-called “agency fees” they were charging, by rolling these fees into the policy premium and actively concealing them from their insureds. According to the Attorney General, Mr. Crowther and the other defendants had charged these hidden fees on top of the intended broker compensation included in the policy premium by the insurer, “thus forcing their clients to pay twice.”
After entering into a separate agreement with the Kilgore Insurance Agency, the Division finally entered into a consent decree in April of 2018.
For those interested in learning more about either of these actions, please refer to the May 1, 2018 article entitled, “Producer involved In Kilgore Hidden Fees Case Has License Revoked Under Consent Agreement” , the April 3, 2018 article, “DOI Special Investigations & Enforcement Actions For 2017 Including the Fourth Quarter & Kilgore Consent Agreement,” as well as Agency Checklists’ article of May 4, 2015, “Court Orders $3.5 Million Restitution From Producer And Agency For Fees Exceeding 20% Of Premiums.”
All of the enforcement actions published during the Second Quarter 2018
In addition to the cases discussed above, the following is a complete list of the Administrative Actions reported during the Second Quarter of 2018. The total amount of fines imposed this quarter was more than $98,500.
- Mass License No: 1932718
- Date: April 8, 2018
- Allegations: Failure to Report Administrative Action; Revoked in Another State Administrative Action
- Disposition: Consent Agreement
- Fine: $750
- Licensing Action: Cease & Desist
- Mass License No: 1956682
- Date: April 11, 2018
- Allegations: Felony Conviction
- Disposition: Consent Agreement
- Fine: N/A
- Licensing Action: Revocation; Cease & Desist
- Licensee Case: Andrew Crowther
- Date: May 2, 2018
- Allegations:Misrepresenting Terms of an Insurance Contract; Unfair Trade Practices;
Trustworthiness; Forging Another’s Name to an Application for Insurance - Disposition: Consent Decree
- Fine: N/A
- Licensing Action: Revocation; Cease & Desist
- Licensee Case: Life Insurance Company of
the Southwest- Allegations:Failure to Properly Supervise Appointed Agent
- Disposition: Settlement Agreement
- Fine: $97,822.36
- Licensing Action: Cease & Desist
- Mass License No: 1718805 (individual); 2001644 (business)
- Allegations:Misappropriation; Trustworthiness
- Disposition: Settlement Agreement
- Fine: N/A
- Licensing Action: Revocation (individual & business); Cease & Desist
More about the Division of Insurance and its SIU unit…
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 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.
In the ordinary course of the Division of Insurance 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 advisers; 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, the Division’s Special Investigation Unit may interview witnesses, 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, egregious cases may result in a referral to the Attorney General’s office. 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, issue a cease and desist order or compel written compliance programs. In more egregious cases, a licensee’s conduct may warrant sanctions including license revocations or suspensions along with restitution and possible fines.
To learn more about avoiding enforcement issues, you may be interested in Agency Checklists’ May 2, 2011 article “One Way to Avoid Large Fines for You & Your Agency.”
