Controlled Business – business written on producer, family members, employer or employees.
The Department of Insurance may not grant, renew or continue any license if they find that the license will primarily be used for the purpose of writing controlled business. Controlled business can only represent up to twenty five (25) percent of the commissions earned by the producer in a twelve (12) month period.
Commissions and Fiduciary Responsibilities
A producer must be licensed in the type of insurance that generated commissions to receive these commissions.
People, who are not licensed, may not accept commissions.
Commissions on renewals or other deferred compensation may be paid to an unlicensed person, if that person was licensed in that line of business at the time of the original sale.
A producer may assign their commissions to an insurance agency if that agency is properly licensed.
Violations of the rules on commissions are criminal, punishable by a fine of up to five thousand dollars ($5000.00) and up to two (2) years in prison. Violations would also suspend or revoke the producer’s license.
Producers may not accept compensation unless a valid application is made for an insurance policy.
Producers must account for all moneys and benefits paid. All moneys must be timely remitted to the insurance company. All payments and benefits must be paid to policyholder, beneficiary, or other claimant in a timely manner. Failure to do so may result in criminal charges.
Disciplinary Actions
The following are violations of licensing laws:
- Failure to comply with any prerequisite of state or federal law for the issuance or such license
- Providing incorrect information or omission of material information in the license or renewal application
- Failing to account for any premiums
- Fraudulent or dishonest practices
- Misrepresenting the terms of the actual insurance application or contract
- Committed any insurance unfair trade practice or fraud
- Bankruptcy related to insurance premiums or other funds to an insurance company or insured
- Forging a client’s name on an application
- Not paying state income taxes
- Having a license revoked in Louisiana or any other state
- Obtaining a license for writing controlled business only
- Violating any insurance laws
- Being convicted of a felony
- Not paying child support
The Department of Insurance may suspend, revoke, or refuse to issue, renew, or reinstate an insurance producer license, and may fine producer up to five hundred ($500.00) dollars for each violation. Producers may be fined up to ten thousand ($25000.00) dollars for all violations in a calendar year.
The Department of Insurance may take action against the license of a business, if it fails to adequately supervise employees or partners of the business, if violations were not reported, and corrective action was not taken.
If the Department of Insurance chooses to discipline a producer, the Department of Insurance must make a written determination of the facts.
The affected person may make a written request for a hearing within thirty days (30) of receiving the Department of Insurance’s decision.
A producer whose license has been revoked, may not reapply for one (1) year from the date of the revocation, or if judicial review was sought five (5) years from the date of the affirmation by the court. A producer’s license may be revoked for up to five (5) years.
The Department of insurance may require that a producer, whose license has been revoked or suspended, to show cause as to why their previous revocation should not be grounds for denial of a license.
If the Department of Insurance terminates or suspends a license, notice will be given to all appointing insurance companies, the National Association of Insurance Commissioners (NAIC), and any jurisdiction that has licensed the producer.
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