The DOI assessed fines totaling $5450 this quarter
On a quarterly basis, the Division of Insurance publishes a list of the enforcement actions it has taken against licensed producers. The total fines assessed often vary depending upon the circumstances and actions taken against an individual producer.
In the report for this quarter, the DOI Special Investigations Unit were involved in 10 different cases which resulted in the Enforcement Division assessing fines totaling $5450. This is as compared to the first two quarters of 2015 in which the DOI levied a total of $3,250 in fines for the first quarter and $8,600 in the second quarter.[pullquote]The DOI Special Investigations Unit was involved with 10 investigations this quarter[/pullquote]
The largest single fine assessed this quarter was for $3000. This amount was assessed against a Resident Producer for Termination for Cause.
In this case, a former producer selling life insurance, was found to have been terminated by a life insurer in 2013 for having placed multiple telephone calls with the company in 2012 and 2013 in which the producer impersonated various owners of annuity contracts and as an appointed agent of the insurer.
As a result of the Resident Producer’s actions, the Division of Insurance found that the producer had violated M.G.L. c. 175, §162R(a) (7) and (8) as well as M.G.L. c. 176D, §2. As a violation of each of these statutes includes a penalty or fine of not more than $1000 each, the matter was settled with the Resident Producer agreeing to pay a fine of $3,000 in addition to waiving the right to a hearing.
What the DOI fined Mass. agents for during this quarter
The following is a summary of the other fines assessed during this quarter. Overall, the Division conducted investigations and enforcement actions against 6 Non-Resident Producers and 4 Resident Producers. A short summary of the results of those enforcement actions is as follows:
- There was one case involving the allegation of misrepresentation on a license application, in which a Resident Producer falsely answered Question 1 on his license application which asks whether the applicant has ever been convicted of a crime. In this case, the applicant had at least two convictions on his record. The case was settled with a $500 fine.
- There were two cases this quarter involving Termination for Cause, including the one discussed above which resulted in a $3000 fine. The second was settled with a Resident Producer agreeing to a Cease and Desist and no fine.
- There were four cases involving Producers who placed/renewed of policies while unlicensed. One case resulted in a Cease and Desist Violation with no fine. Two cases levied fines against each of the Producers for $200 and $250 respectively. The last case involved a Non-Resident Producer that the DOI says engaged in more than 75 violations of M.G.L. c. 175, § 175 by acting as an insurance producer without being licensed. Each violation of the statute carries a fine of not more than $100. A violation of M.G.L. c. 175, §175 is also a violation of M.G.L. c. 175, §162R(a)(2), however, which carries a penalty of a fine of no more than $1,000 and/or license suspension, probation or revocation. As a result, the Non-Resident Producer agreed to settle this case by paying a fine of $1,500.
- Two cases this quarter involved allegations of a Non-Resident Producer being unlicensed in their home state, along with trustworthiness. Both cases were settled by the DOI with a Cease & Desist Violation without any additional fines or penalties.
- The last case involved an allegation of failure to report Administrative Actions. The settlement entered into between the Division and the Non-Resident Producer included a Settlement Agreement along with a permanent license revocation and a Cease & Desist from Violations
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 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 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 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 more egregious cases, a licensee’s conduct may warrant the sanctioning of that producer’s license including revocation or suspension along with restitution.
To learn more about avoiding enforcement issues, you may be interested in Agency Checklists’ article “One Way to Avoid Large Fines for You & Your Agency.”
