After you’ve worked so hard to get your insurance licenses in place, you don’t want to do (or not do) anything that may jeopardize them. That means keeping up with some basic compliance tasks and avoiding unethical behavior. Failing to follow the rules can result in administrative actions issued by the state insurance departments or other regulatory authorities.
These administrative actions have immediate consequences – such as fines – but they can also follow you for the rest of your insurance career. And, after all, an agent or agency with a bad regulatory reputation won’t thrive for long.
So, here’s a list of some of the most common compliance mistakes. Don’t do this! (Thanks to my colleague, Floyd King, for the use of his catchphrase.)
- Failing to report an address change in a timely manner
- Changing your resident state and failing to update your residency status with the DOIs in both your old and new resident states
- Failing to respond to an inquiry or request for information from the insurance department
- Transacting insurance business – including soliciting clients or advertising insurance products – without a license
- Writing business for a line of authority that doesn’t appear on your license
- Failing to meet continuing education (CE) requirements
- Failing to renew a license on time
- Writing new business or servicing existing policies on a lapsed license
- Engaging in financial improprieties
The Costs of Non-Compliance
Administrative actions happen all the time – for those who don’t know better. According to the most recent NAIC Insurance Department Resources Report (Volume 1), in 2020 alone state insurance departments imposed 41,716 fines against licensed producers for a whopping $33,303,379! Furthermore, that figure doesn’t include an additional $7,576,052 in restitution funds. DOIs also issued 1,275 license suspensions, 1,468 license revocations, 208 cease & desist orders, and 1,523 denial orders. That’s NOT something you want for yourself or your insurance agency. Instead, invest in a compliance strategy that anticipates and meets your licensing and compliance needs.
Already facing an administrative or legal action?
Don’t panic! Learn how to respond appropriately in order to avoid additional sanctions from state regulators.
Then, if you need help managing your licensing and compliance needs, contact us for a FREE initial compliance consult and more information about our business solutions.