PRINTER'S NO. 1148
No. 962 Session of 2001
INTRODUCED BY HOLL, WAGNER, MUSTO, TARTAGLIONE, COSTA, M. WHITE,
WENGER, SCHWARTZ, THOMPSON, MOWERY, BOSCOLA AND LEMMOND,
JUNE 11, 2001
REFERRED TO BANKING AND INSURANCE, JUNE 11, 2001
AN ACT
1 Amending the act of May 17, 1921 (P.L.789, No.285), entitled, as
2 amended, "An act relating to insurance; establishing an
3 insurance department; and amending, revising, and
4 consolidating the law relating to the licensing,
5 qualification, regulation, examination, suspension, and
6 dissolution of insurance companies, Lloyds associations,
7 reciprocal and inter-insurance exchanges, and certain
8 societies and orders, the examination and regulation of fire
9 insurance rating bureaus, and the licensing and regulation of
10 insurance agents and brokers; the service of legal process
11 upon foreign insurance companies, associations or exchanges;
12 providing penalties, and repealing existing laws," providing
13 for licensing and regulation of insurance producers, managers
14 and exclusive general agents; conferring powers and imposing
15 duties on the Insurance Commissioner and Insurance
16 Department; and imposing penalties.
17 The General Assembly of the Commonwealth of Pennsylvania
18 hereby enacts as follows:
19 Section 1. Article VI of the act of May 17, 1921 (P.L.789,
20 No.285), known as The Insurance Department Act of 1921, is
21 repealed.
22 Section 2. The act is amended by adding an article to read:
23 ARTICLE VI
24 INSURANCE PRODUCERS
1 SUBARTICLE A
2 LICENSING
3 DIVISION 1
4 LICENSING OF INSURANCE PRODUCERS
5 Section 601. Definitions.
6 The following words and phrases when used in this article
7 shall have the meanings given to them in this section unless the
8 context clearly indicates otherwise:
9 "Administrative hearing office." The Administrative Hearing
10 Office of the Insurance Department.
11 "Applicant." A resident of this Commonwealth who has passed
12 or is exempt from taking the insurance producer licensing
13 examination required by section 604.
14 "Appointment." A written agreement between an insurance
15 producer and an insurance entity under which the insurance
16 producer may sell, solicit, negotiate, make or procure contracts
17 of insurance issued by the insurance entity for compensation.
18 "Business entity." A person which is not an individual.
19 "Candidate." An individual who has satisfactorily completed
20 or is exempt from the preexamination educational requirements of
21 section 604.
22 "Commissioner." The Insurance Commissioner of the
23 Commonwealth.
24 "Customer information." Individual identifying insurance-
25 related information regarding a person which has been derived
26 from a record of a financial institution related to its lending
27 activities. The information shall be limited to information
28 concerning the terms and conditions of insurance coverage,
29 insurance expirations, insurance claims or insurance history of
30 an individual. The term does not include customer names,
20010S0962B1148 - 2 -
1 addresses or telephone numbers.
2 "Department." The Insurance Department of the Commonwealth.
3 "Designated licensee." An individual who is licensed by the
4 Insurance Department as an insurance producer and who is
5 designated by a business entity to be responsible for the
6 business entity's compliance with the insurance laws and
7 regulations of this Commonwealth.
8 "Exclusive general agent." A licensee which has been granted
9 sole authority to act directly or indirectly as an insurance
10 producer for a domestic insurer with respect to a specific
11 portion of the insurer's business or within a specific territory
12 and which has the authority to bind coverage on behalf of the
13 insurer and directly or indirectly produces and underwrites in
14 any one year an amount of gross direct written premium equal to
15 or more than 25% of the surplus as regards policyholders as
16 reported in the last annual statement of the insurer.
17 "Financial institution." A Federal or State-chartered bank,
18 bank and trust company, savings bank, savings and loan
19 association, trust company or credit union.
20 "Home state." The District of Columbia and a state or
21 territory of the United States in which an insurance producer
22 maintains the producer's principal place of residence and is
23 licensed to act as an insurance producer. The term includes
24 other territories not of the United States as determined by the
25 commissioner.
26 "Insurance entity." A person doing business involving the
27 insuring of risks. The term includes insurers.
28 "Insurance producer." A person that sells, solicits,
29 negotiates, makes or procures contracts of insurance.
30 "Insurer." An insurance company, association, exchange,
20010S0962B1148 - 3 -
1 health maintenance organization, preferred provider
2 organization, professional health services plan corporation,
3 fraternal benefits society, beneficial association, Lloyd's
4 insurer or health plan corporation.
5 "Licensee." A person licensed by the department as an
6 insurance producer in accordance with Division 1 of Subarticle
7 A.
8 "Line of authority." The licensed ability to sell, solicit
9 or negotiate a particular class or kind of insurance.
10 "Manager." A person which negotiates and binds ceding
11 reinsurance contracts on behalf of a domestic insurer or manages
12 all or part of the insurance business of an insurer and does not
13 act as an agent for such insurer.
14 "NAIC." The National Association of Insurance Commissioners.
15 "Negotiate." To confer directly with or to offer advice
16 directly to a purchaser or prospective purchaser of a contract
17 of insurance concerning the substantive benefits, terms or
18 conditions of the contract.
19 "Nonresident insurance producer." An insurance producer that
20 has a principal place of residence outside this Commonwealth.
21 "Sell." To exchange a contract of insurance by any means,
22 for money or its equivalent, on behalf of an insurance company.
23 "Solicit." To attempt to sell insurance or ask or urge a
24 person to apply for a particular kind of insurance from a
25 particular company.
26 "Uniform application." The current version of the NAIC
27 Uniform Application for resident and nonresident producer
28 licensing.
29 "Uniform business entity application." The current version
30 of the NAIC Uniform Business Entity Application for resident and
20010S0962B1148 - 4 -
1 nonresident business entities.
2 Section 602. Powers and duties of department.
3 (a) Responsibilities.--The commissioner shall do all of the
4 following:
5 (1) Administer this division.
6 (2) License persons as insurance producers in accordance
7 with this division.
8 (3) Develop guidelines for preexamination courses of
9 study, insurance producer licensing examinations and
10 continuing education programs required by this division.
11 (4) Approve and administer preexamination courses of
12 study, insurance producer licensing examinations and
13 continuing education programs required by this division. A
14 preexamination education program approved by the department
15 shall include no less than two credit hours on ethics and two
16 credit hours related to the regulatory function and framework
17 of the department.
18 (b) Authorizations.--The commissioner may do all of the
19 following:
20 (1) Require any information reasonably necessary to
21 verify the application information or the worthiness of a
22 person applying for a license including criminal history
23 reports, fingerprints, credit reports or other documentation
24 from the National Crime Information Center (NCIC) and other
25 law enforcement agencies, Federal and State regulatory
26 agencies and the NAIC.
27 (2) Participate with the NAIC in a centralized insurance
28 producer license registry.
29 Section 603. License required.
30 (a) General rule.--Except as provided in subsection (b), a
20010S0962B1148 - 5 -
1 person shall not sell, solicit or negotiate a contract of
2 insurance in this Commonwealth unless the person is licensed as
3 an insurance producer for the line of authority under which the
4 contract is issued.
5 (b) Exceptions.--The following persons shall not be required
6 to be licensed as an insurance producer:
7 (1) An insurer.
8 (2) An employee of an insurer or a rating organization
9 employed by an insurer:
10 (i) who is not engaged in the sale, solicitation or
11 negotiation of insurance contracts; and
12 (ii) who:
13 (A) inspects, rates or classifies risks; or
14 (B) supervises the training of insurance
15 producers.
16 (3) An officer, director or employee of an insurer or of
17 an insurance producer if the officer, director or employee
18 does not receive a commission on policies written or sold to
19 insure risks residing, located or to be performed in this
20 Commonwealth and:
21 (i) the officer, director or employee's activities
22 are executive, administrative, managerial, clerical or a
23 combination of these and do not include the sale,
24 solicitation or negotiation of insurance;
25 (ii) the officer, director or employee's function
26 relates to underwriting, loss control, inspection or the
27 processing, adjusting, investigating or settling of a
28 claim on a contract of insurance; or
29 (iii) the officer, director or employee is acting in
30 the capacity of a special agent or agency supervisor
20010S0962B1148 - 6 -
1 assisting insurance producers where the person's
2 activities are limited to providing technical advice and
3 assistance to licensed insurance producers and do not
4 include the sale, solicitation or negotiation of
5 insurance.
6 (4) A person that does any of the following:
7 (i) Secures and furnishes written information for
8 the purpose of group life insurance, group property and
9 casualty insurance, group annuities, group or blanket
10 accident and health insurance.
11 (ii) Performs administrative services related to the
12 enrollment of individuals under employer group plans.
13 (iii) Issues certificates under plans or otherwise
14 assists in administering plans.
15 (iv) Performs administrative services related to
16 mass marketed property and casualty insurance if no
17 commission is paid to the person for the services.
18 (5) An employer or the trustees of an employee trust
19 plan and their officers, directors and employees if:
20 (i) the employer, trustees, officers, directors or
21 employees are engaged in the administration or operation
22 of an employee benefits program;
23 (ii) the employee benefits program includes
24 insurance issued by an insurer for the benefit of the
25 employer's employees or the employees of its subsidiaries
26 or affiliates; and
27 (iii) the employer, trustees, officers, directors or
28 employees are not compensated, directly or indirectly, by
29 the insurer issuing the policy of insurance.
30 (6) A person engaged in the advertising of insurance in
20010S0962B1148 - 7 -
1 this Commonwealth if:
2 (i) the person does not sell, solicit or negotiate
3 insurance for risks residing, located or to be performed
4 in this Commonwealth; and
5 (ii) the advertising is distributed to persons
6 residing both within and outside this Commonwealth
7 through the use of printed publications or other forms of
8 electronic mass media.
9 (7) A person who satisfies all of the following:
10 (i) Is not a resident of this Commonwealth.
11 (ii) Sells, solicits or negotiates a contract of
12 insurance for commercial property and casualty risks to
13 an insured with risks located in more than one state,
14 other than workers' compensation insurance or commercial
15 auto insurance.
16 (iii) Is licensed as an insurance producer to sell,
17 solicit or negotiate that line of authority in the state
18 where the insured maintains its principal place of
19 business.
20 (iv) The contract of insurance insures risks located
21 in the state where the insured maintains its principal
22 place of business.
23 (8) A salaried full-time employee who:
24 (i) counsels or advises the employee's employer on
25 the employer's insurance issues; and
26 (ii) does not sell or solicit insurance or receive a
27 commission.
28 Section 604. License prerequisites.
29 (a) General rule.--Prior to applying to the department for
30 an insurance producer license, an individual shall do both of
20010S0962B1148 - 8 -
1 the following:
2 (1) Satisfactorily complete the preexamination education
3 requirements of subsection (b).
4 (2) Pass an insurance producer licensing examination
5 required by subsection (c) for the lines of authority for
6 which a candidate desires a license.
7 (b) Preexamination education requirements.--Prior to making
8 an application for the insurance producer licensing examination,
9 an individual who desires to be licensed as an insurance
10 producer shall complete a minimum of 24 credit hours of approved
11 preexamination courses. Upon satisfactory completion of an
12 approved preexamination course of study, the individual shall be
13 issued a certificate.
14 (c) Insurance producer licensing examination.--Except as
15 provided in subsection (d), upon satisfactory completion of an
16 approved preexamination course of study a candidate may apply to
17 take an insurance producer licensing examination. A candidate
18 shall remit a completed application for examination indicating
19 the lines of authority for which the candidate desires
20 licensing, a copy of the candidate's approved preexamination
21 study certificate and the nonrefundable examination fee
22 established by the department prior to taking an insurance
23 producer licensing examination. If a licensee is seeking to add
24 lines of authority to the licensee's existing license, the
25 licensee shall remit a completed application for examination
26 indicating the additional lines of authority for which the
27 licensee desires licensing and the nonrefundable examination fee
28 established by the department prior to taking an insurance
29 producer licensing examination. An individual who fails an
30 insurance producer licensing examination twice in any 30-day
20010S0962B1148 - 9 -
1 period shall be prohibited from applying to retake the
2 examination for 60 days from the date of the most recent
3 examination.
4 (d) Exceptions.--
5 (1) The requirements of subsections (a)(2) and (c) shall
6 not be required if:
7 (i) the individual's line of authority will be
8 restricted to domestic mutual fire insurance and the
9 individual's appointment will be with an insurer writing
10 only coverage other than insurance upon automobiles as
11 authorized by section 202(b)(1) through (3) of the act of
12 May 17, 1921 (P.L.682, No.284), known as The Insurance
13 Company Law of 1921; or
14 (ii) the individual's line of authority will be
15 restricted fraternal.
16 (2) The requirements of subsections (a)(1) and (b) shall
17 not be required if the individual is licensed as an insurance
18 producer in another state.
19 (3) The requirements of subsections (a), (b) and (c)
20 shall not be required if the person:
21 (i) is a business entity;
22 (ii) possesses the professional designation of
23 Chartered Life Underwriter (CLU) and is applying for Life
24 or Accident and Health line of authority;
25 (iii) possesses the professional designation of
26 Chartered Property and Casualty Underwriter (CPCU) and is
27 applying for Property, Casualty or Accident and Health
28 line of authority;
29 (iv) possesses the professional designation of
30 Certified Insurance Counselor (CIC) and is applying for
20010S0962B1148 - 10 -
1 Life, Accident and Health, or Property and Casualty line
2 of authority;
3 (v) possesses any other professional designation for
4 which the requirements are waived by the commissioner; or
5 (vi) is licensed in another state as an insurance
6 producer for the lines of authority for which the person
7 desires to be licensed under section 610.
8 Section 605. Application for resident insurance producer
9 license.
10 (a) Resident individual application.--An applicant may apply
11 to the department for a resident individual insurance producer
12 license. An applicant shall remit to the department a completed
13 uniform application indicating the lines of authority for which
14 the applicant desires licensing, documentation verifying that
15 the applicant passed or is exempt from the insurance producer
16 licensing examination on the lines of authority for which the
17 applicant desires a license and the license fee required by
18 subsection (e).
19 (b) Resident business entity application.--Upon designating
20 an individual licensed under section 606(a) to be responsible
21 for the business entity's compliance with the insurance laws and
22 regulations of this Commonwealth, a business entity may apply to
23 the department for a resident business entity insurance producer
24 license for the lines of authority indicated on the designated
25 licensee's license. The designated licensee of the business
26 entity shall remit to the department a completed uniform
27 business entity application indicating the lines of authority
28 for which the business entity desires licensing, a copy of the
29 designated licensee's license and the license fee required by
30 subsection (e).
20010S0962B1148 - 11 -
1 (c) Transfer of individual out-of-State license.--After
2 establishing residency, an individual who is licensed as an
3 insurance producer in another state may apply to the department
4 to transfer the license and become licensed in this Commonwealth
5 as a resident individual insurance producer for the same lines
6 of authority as the individual was licensed in the other state.
7 Within 90 days of establishing residency in this Commonwealth,
8 the individual shall remit to the department a completed uniform
9 application indicating the lines of authority for which the
10 individual desires licensing and for which the individual is
11 licensed in the other state, a copy of the individual's current
12 home state license or a certificate of good standing from the
13 insurance commissioner of the individual's home state and the
14 license fee required by subsection (e).
15 (d) Transfer of business entity out-of-State license.--Upon
16 registering with the Department of State and designating an
17 individual licensed under section 606(a) to be responsible for
18 the business entity's compliance with the insurance laws and
19 regulations of this Commonwealth, a business entity which is
20 licensed in another state may apply to the department for a
21 resident business entity insurance producer license for the
22 lines of authority indicated on the designated licensee's
23 license. The designated licensee of the business entity shall
24 remit to the department a completed uniform business entity
25 application indicating the lines of authority for which the
26 business entity desires licensing, a copy of the designated
27 licensee's license and the license fee required by subsection
28 (e).
29 (e) License fee.--A nonrefundable $55 fee shall accompany an
30 application for a resident insurance producer license until
20010S0962B1148 - 12 -
1 modified by the department by regulation.
2 Section 606. Licensing.
3 (a) Applicants.--The department shall review each
4 application and may conduct an investigation of each applicant
5 who applies for a license in accordance with section 605(a). The
6 department shall issue a resident individual insurance producer
7 license to the applicant when the department is satisfied that
8 all of the following criteria have been met:
9 (1) The applicant has reached 18 years of age.
10 (2) The applicant has not committed any act which is
11 prohibited under section 612 or Subarticle B.
12 (3) The applicant has satisfied any preexamination
13 education requirements of section 604.
14 (4) The applicant has passed the insurance producer
15 licensing examination required by section 604 for the lines
16 of authority for which the applicant has applied for
17 licensing.
18 (5) The applicant has paid all applicable fees
19 established pursuant to this act.
20 (6) The applicant possesses the general fitness,
21 competence and reliability sufficient to satisfy the
22 department that the applicant is worthy of licensure.
23 (7) Such other criteria as the department may establish.
24 (b) Business entity.--The department shall review each
25 application and may conduct an investigation of each business
26 entity seeking licensure and its designated licensee which
27 applies for a license in accordance with section 605(b) and (d).
28 The department shall issue a resident business entity insurance
29 producer license to the business entity when the department is
30 satisfied that all of the following criteria have been met:
20010S0962B1148 - 13 -
1 (1) The business entity has a designated licensee.
2 (2) The business entity's designated licensee is a
3 resident licensee in good standing with the department.
4 (3) The business entity is applying for licensure in the
5 lines of authority indicated on the designated licensee's
6 license.
7 (4) The business entity and the designated licensee have
8 not committed any act which is prohibited under section 612
9 or Subarticle B.
10 (5) The business entity is not owned, operated or
11 managed by persons lacking the general fitness, competence
12 and reliability sufficient to satisfy the department that the
13 business entity is worthy of licensure.
14 (6) The business entity has paid all applicable fees
15 established pursuant to this act.
16 (7) Such other criteria as the department may establish.
17 (c) Transfer of out-of-State license.--The department shall
18 review each application and may conduct an investigation of each
19 individual who applies for a license in accordance with section
20 605(c). The department shall issue a resident individual
21 insurance producer license to the individual when the department
22 is satisfied that all of the following criteria have been met:
23 (1) The individual holds a current insurance producer
24 license in another state or made application to the
25 department within 90 days of the cancellation of the
26 individual's license in the other state.
27 (2) The individual is applying for licensure in the same
28 lines of authority the individual was licensed in the other
29 state.
30 (3) The applicant has not committed any act which is
20010S0962B1148 - 14 -
1 prohibited under section 612 or Subarticle B.
2 (4) The applicant has paid all applicable fees
3 established pursuant to this act.
4 (5) The individual:
5 (i) possesses a certificate of good standing from
6 the insurance commissioner of the individual's home
7 state;
8 (ii) was in good standing in the other state at the
9 time of cancellation; or
10 (iii) is recorded as being licensed for the lines of
11 authority and is in good standing in the other state's
12 insurance producer records or records maintained by the
13 NAIC.
14 (6) Such other criteria as the department may establish.
15 Section 607. Issuance and term of license.
16 An insurance producer license issued by the department under
17 this article shall be all of the following:
18 (1) Issued only in the name of the applicant or business
19 entity. If a licensee is doing business under a name other
20 than the name appearing on the licensee's license, the
21 licensee is required to notify the commissioner in writing
22 prior to using the assumed name.
23 (2) Issued in paper or electronic form.
24 (3) Nontransferable.
25 (4) Issued in one or more of the following lines of
26 authority:
27 (i) Life. Insurance coverage on human lives,
28 including benefits of endowment and annuities, and may
29 include benefits in the event of death or dismemberment
30 by accident and benefits for disability income.
20010S0962B1148 - 15 -
1 (ii) Accident and health or sickness. Insurance
2 coverage for sickness, bodily injury or accidental death
3 and may include benefits for disability income.
4 (iii) Property. Insurance coverage for the direct
5 or consequential loss or damage to property of every
6 kind.
7 (iv) Casualty. Insurance coverage against legal
8 liability, including that for death, injury or disability
9 or damage to real or personal property.
10 (v) Variable life and variable annuity products.
11 Insurance coverage provided under variable life insurance
12 contracts and variable annuities.
13 (vi) Personal lines. Property and casualty
14 insurance coverage sold to individuals and families
15 primarily for noncommercial purposes.
16 (vii) Credit. Limited line credit insurance.
17 (viii) Limited line. Any other line of insurance as
18 determined by the commissioner.
19 (5) Issued for a period not to exceed two years.
20 Section 608. License renewals.
21 (a) General rule.--A licensee may request renewal of the
22 licensee's license. The licensee shall remit to the department a
23 completed renewal form, the fee required by subsection (f)(1)
24 and verification that the licensee has completed the continuing
25 education required by subsection (b). Except as provided in
26 section 613, upon receipt and review, the department shall renew
27 the license of the licensee.
28 (b) Continuing education.--A licensee shall successfully
29 complete 24 credit hours of approved continuing education for
30 each two-year license period as a condition for license renewal.
20010S0962B1148 - 16 -
1 A licensee may carry forward excess continuing education credit
2 hours up to a maximum of 24 credit hours from one licensing
3 period to the next licensing period.
4 (c) Continuing education exemptions.--The following
5 licensees shall be exempt from the requirements of subsection
6 (b):
7 (1) A licensee who was licensed as an agent or broker
8 for a line of authority prior to January 1, 1971, and who has
9 been continuously licensed as an agent, broker or producer
10 for the line of authority since that time.
11 (2) A licensee which is a corporation, limited liability
12 corporation, a partnership, a limited partnership, limited
13 liability partnership or other approved business entity.
14 (3) A licensee that has a line of authority limited to
15 limited line.
16 (4) A licensee that has a line of authority limited to
17 title insurance.
18 (5) A licensee that has a line of authority limited to
19 restricted fraternal.
20 (6) A licensee that has a line of authority limited to
21 limited line credit life if the insurer provided a course of
22 instruction to each individual whose duties will include
23 selling, soliciting or negotiating the insurance.
24 (7) A nonresident licensee that has satisfied the
25 continuing education requirements of the licensee's home
26 state if that state recognizes the satisfaction of its
27 continuing education requirements by a resident licensee
28 satisfying the requirements of subsection (b). If the
29 nonresident licensee fails to satisfy the home state's
30 continuing education requirements, the licensee shall be
20010S0962B1148 - 17 -
1 subject to continuing education requirements of subsection
2 (b).
3 (8) A licensee that obtained a license without
4 examination under section 609(c) of the act of December 14,
5 1992 (P.L.835, No.134), known as the Fraternal Benefit
6 Societies Code, and whose appointments are limited to
7 fraternal benefit societies.
8 (9) Such other licensees approved by the commissioner.
9 (d) Lapses.--A licensee who allows his or her license to
10 lapse by failing to renew the license, pay the fee required by
11 subsection (f)(1) or complete the continuing education required
12 by subsection (b) may, within one year of the license renewal
13 date, request the department to reinstate the license. Upon
14 submitting a renewal form, the fee required by subsection (f)(2)
15 and verification that the licensee has completed all continuing
16 education required by subsection (b) for the previously licensed
17 and lapsed periods, the department shall reinstate the license.
18 (e) Extenuating circumstances.--A licensee who is unable to
19 timely comply with the requirements of subsection (a) as a
20 result of military service or other extenuating circumstance may
21 request the department to waive the requirements of subsection
22 (d). The request shall include sufficient detail and supporting
23 documentation to determine the necessity of the waiver. If the
24 department determines that there is good cause for the
25 noncompliance with subsection (a), the department shall grant
26 the waiver and permit the licensee to proceed under subsection
27 (a).
28 (f) Renewal fees.--The following nonrefundable fees shall
29 accompany an application for renewal of a resident insurance
30 producer license unless modified by the department by
20010S0962B1148 - 18 -
1 regulation:
2 (1) Renewal fee - $55.
3 (2) Lapsed license renewal fee - $165.
4 Section 609. Temporary licensing.
5 If the department determines that the issuance of a temporary
6 insurance producer license is in the public interest, the
7 department may issue a temporary insurance producer license to
8 the following persons:
9 (1) The surviving spouse or court-appointed personal
10 representative of a resident individual licensee who dies or
11 becomes mentally or physically disabled. The temporary
12 license shall be used by the spouse or representative to
13 operate the insurance business owned by the licensee until:
14 (i) the business is sold or transferred;
15 (ii) the licensee recovers and returns to the
16 business; or
17 (iii) new personnel is trained and licensed to
18 operate the licensee's business.
19 (2) An owner, partner or employee of a business entity
20 licensee upon the death or disability of the designated
21 licensee. The temporary license shall be used by the owner,
22 partner or employee to operate the business entity until:
23 (i) the business is sold or transferred; or
24 (ii) new personnel is trained, licensed and
25 designated as the designated licensee.
26 (3) The designee of an individual licensee who enters
27 active service in the armed forces of the United States.
28 (4) Any other person in a circumstance where the
29 commissioner deems that the public interest will best be
30 served by the issuance of a temporary license.
20010S0962B1148 - 19 -
1 The temporary license shall be for a period not to exceed 180
2 days and is not transferable. The department may impose
3 requirements upon a temporary licensee, including requiring a
4 sponsor and limiting the lines of authority of a temporary
5 licensee, as deemed necessary to protect insureds and the
6 public. The department may immediately and without notice revoke
7 a temporary license if the interests of insureds or the public
8 are endangered.
9 Section 610. Nonresident licensing.
10 (a) Nonresident licensed individuals.--An individual who is
11 currently licensed in another state as an insurance producer may
12 apply to the department for a nonresident individual insurance
13 producer license for the same lines of authority as the
14 individual is licensed in the other state. The individual shall
15 remit to the department a completed uniform application or an
16 update of the individual's home state application indicating the
17 lines of authority for which the individual desires a license
18 and for which the individual is licensed in the other state, a
19 copy of the individual's current out-of-State license and the
20 license fee required by subsection (d). If the individual
21 desires a nonresident insurance producer license for a line of
22 authority for which the individual is not licensed in the other
23 state, the individual shall comply with the requirements of
24 section 604 prior to making application to the department.
25 Upon receipt and review of the application, the copy of the
26 license and the fee, the department shall issue a nonresident
27 individual insurance producer license to the individual for the
28 lines of authority requested if the individual is licensed for
29 the lines of authority in the other state or has satisfied the
30 requirements of section 604 and if the department determines
20010S0962B1148 - 20 -
1 that the individual is a licensee in good standing in the
2 individual's home state. In making its determination, the
3 department may verify the individual's licensing status through
4 the Producer Database maintained by the NAIC, its affiliates or
5 subsidiaries. The department may deny the application if the
6 individual's home state does not award nonresident insurance
7 producer licenses to resident licensees of this Commonwealth on
8 the same basis.
9 (b) Nonresident licensed business entity.--Upon designating
10 an individual licensed under subsection (a) or section 606(a) to
11 be responsible for the business entity's compliance with the
12 insurance laws and regulations of this Commonwealth, a business
13 entity which is currently licensed in another state as an
14 insurance producer may apply to the department for a nonresident
15 business entity insurance producer license for the same lines of
16 authority as the business entity is licensed in the other state.
17 The designated licensee of the business entity shall remit to
18 the department a completed uniform business entity application
19 or an update of the business entity's home state application
20 indicating the lines of authority for which the business entity
21 desires licensing and for which the business entity is licensed
22 in the other state, a copy of the business entity's current out-
23 of-State license and the license fee required by subsection (d).
24 Upon receipt and review of the application, the copy of the
25 license and the fee, the department shall issue a nonresident
26 business entity insurance producer license to the business
27 entity for the lines of authority requested if the business
28 entity is licensed in the lines of authority in the other state
29 and if the department determines that the business entity and
30 the designated licensee are licensees in good standing. In
20010S0962B1148 - 21 -
1 making its determination, the department may verify licensing
2 status through the Producer Database maintained by the NAIC, its
3 affiliates or subsidiaries. The department may deny the
4 application if the business entity's home state does not award
5 nonresident insurance producer licenses to resident licensees of
6 this Commonwealth on the same basis.
7 (c) Nonresident unlicensed individuals.--An individual who
8 is a resident of another state and who is currently not licensed
9 as an insurance producer may apply to the department for a
10 nonresident individual insurance producer license. The
11 individual shall remit to the department a completed uniform
12 application indicating the lines of authority for which the
13 individual desires licensing, documentation verifying that the
14 individual passed the insurance producer licensing examination
15 for the lines of authority for which the individual desires a
16 license and the license fee required by subsection (d).
17 Upon receipt of the application and the fee, the department
18 shall review the application and may conduct an investigation of
19 the individual. The department shall issue a nonresident
20 individual insurance producer license to the individual when it
21 is satisfied that all of the following criteria have been met:
22 (1) The individual has reached 18 years of age.
23 (2) The individual has not committed any act which is
24 prohibited under section 612 or Subarticle B.
25 (3) The individual has satisfied any preexamination
26 education requirements of section 604.
27 (4) The individual has passed the insurance producer
28 licensing examination required by section 604 for the lines
29 of authority for which the individual has applied for
30 licensing.
20010S0962B1148 - 22 -
1 (5) The individual has paid all applicable fees
2 established pursuant to this article.
3 (6) The individual possesses the general fitness,
4 competence and reliability sufficient to satisfy the
5 department that the individual is worthy of licensure.
6 (7) Such other criteria as the department may establish.
7 (d) Nonresident license fee.--A nonrefundable fee in the
8 amount of $110 shall accompany an application for a nonresident
9 insurance producer license unless the fee is modified by the
10 department by regulation.
11 Section 611. Required notification by a licensee.
12 A licensee that moves from one state to another state shall
13 file a change of address and provide certification from the
14 licensee's new resident state within 30 days of the filing of
15 the change of home residence.
16 Section 612. License violations.
17 (a) Violations.--A licensee shall not do any of the
18 following:
19 (1) Provide incorrect, misleading, incomplete or false
20 information to the department in a license application.
21 (2) Violate the insurance laws or regulations of this
22 Commonwealth or a subpoena or order of the commissioner or of
23 another state's insurance commissioner.
24 (3) Obtain or attempt to obtain a license through
25 misrepresentation or fraud.
26 (4) Improperly withhold, misappropriate or convert money
27 or property received in the course of doing business.
28 (5) Intentionally misrepresent the terms of an actual or
29 proposed insurance contract or application for insurance.
30 (6) Admit to or been found to have committed any unfair
20010S0962B1148 - 23 -
1 insurance practice or fraud.
2 (7) Use fraudulent, coercive or dishonest practices or
3 demonstrate incompetence, untrustworthiness or financial
4 irresponsibility in the conduct of doing business in this
5 Commonwealth or elsewhere.
6 (8) Have an insurance producer license or other
7 financial services license, or its equivalent, denied,
8 suspended or revoked by a governmental entity.
9 (9) Forge another person's name on an application for an
10 insurance or financial service document or on any document
11 related to an insurance or financial service transaction.
12 (10) Cheat on an examination for an insurance producer
13 license.
14 (11) Knowingly accept insurance business which was sold,
15 solicited or negotiated by a person who is not licensed.
16 (12) Fail to comply with an administrative or court
17 order imposing a child support obligation.
18 (13) Fail to pay State income tax or comply with any
19 administrative or court order directing the payment of State
20 income tax.
21 (14) Commit a felony or its equivalent.
22 (15) Commit a misdemeanor that involves the misuse or
23 theft of money or property belonging to another person.
24 (16) Commit a violation of Subarticle B.
25 (17) Commit fraud, forgery, dishonest acts or an act
26 involving a breach of fiduciary duty.
27 (18) Fail to provide a written response to the
28 department within 30 days of receipt of any written inquiry
29 from the department.
30 (19) Transfer or place a contract of insurance with an
20010S0962B1148 - 24 -
1 insurer other than the insurer expressly chosen by the
2 applicant for insurance or the insured without the consent of
3 the insured.
4 (20) Remit to the department a payment for a fee which
5 is not negotiable or a method of payment which is returned by
6 a financial institution as not negotiable.
7 (21) Fail to notify the department of a change of
8 address within 30 days.
9 (22) Demonstrate a lack of general fitness, competence
10 and reliability sufficient to satisfy the department that the
11 licensee is worthy of continued licensure.
12 (b) Notice of violations.--If the department finds a
13 violation of this division or the regulations under this
14 division, it shall give written notice to the person specifying
15 the violation or violations found. The person shall, within 15
16 days of receipt of the written notice, correct the violation or
17 violations.
18 (c) Administrative fines.--If the department determines that
19 a licensee has failed to comply with the provisions of this
20 division or the regulations promulgated under this division, it
21 may assess an administrative fine of no more than $100 per day
22 per violation. In setting the fine, the department shall
23 consider the severity of the violation and whether there is a
24 pattern of violations.
25 Section 613. Reasons for suspension, denial, nonrenewal or
26 revocation of a license.
27 The department may suspend, deny, refuse to renew or revoke
28 an insurance producer license of a person who commits a
29 violation under section 612(a).
30 Section 614. Appeals.
20010S0962B1148 - 25 -
1 The person aggrieved by a decision of the department that has
2 a direct interest in the decision may appeal the decision of the
3 department to the administrative hearings office. The appeal
4 shall be conducted in accordance with 2 Pa.C.S. Ch. 5 Subch. A
5 (relating to practice and procedure of Commonwealth agencies).
6 Section 615. Effect of departmental order.
7 A decision of the department from which no timely appeal is
8 taken to the administrative hearings office or an order of the
9 commissioner from which no timely appeal is taken to a court of
10 competent jurisdiction shall be a final order and shall be
11 enforceable by a court of competent jurisdiction.
12 Section 616. Injunctions.
13 (a) Violations.--If a person, regardless of whether the
14 person is a licensee, has violated any of the provisions of this
15 division or the regulations promulgated under this division, the
16 commissioner may maintain an action for an injunction or other
17 process restraining or prohibiting the person from engaging in
18 the activity.
19 (b) Unlicensed insurance producer.--If a license is required
20 by this division, the commissioner may maintain an action in a
21 court of competent jurisdiction for an injunction or other
22 process restraining or prohibiting a person from selling,
23 soliciting or negotiating insurance without a license.
24 Section 617. Reciprocity.
25 (a) Waiver.--The department may waive the requirements for a
26 person applying for a nonresident insurance producer license in
27 this Commonwealth that possesses a valid insurance producer
28 license from the person's home state if the person's home state
29 awards nonresident insurance producer licenses to residents of
30 this Commonwealth on the same basis.
20010S0962B1148 - 26 -
1 (b) Limited line.--Notwithstanding any other provision of
2 this division, after application to the department in accordance
3 with section 610, a person licensed as a limited line credit
4 insurance or other type of limited lines producer in the
5 person's home state shall receive a nonresident limited lines
6 producer license in accordance with subsection (a), granting the
7 same scope of authority as granted under the license issued by
8 the producer's home state.
9 Section 618. Regulations.
10 The department may promulgate regulations necessary for the
11 administration of this division.
12 DIVISION 2
13 LICENSING OF MANAGERS AND EXCLUSIVE
14 GENERAL AGENTS
15 Section 631. License required.
16 (a) General rule.--Except as provided in subsection (b), no
17 person shall engage in any activities requiring a manager or
18 exclusive general agent license without being licensed as a
19 manager or exclusive general agent by the department.
20 (b) Exceptions.--The following persons shall not be required
21 to be licensed as a manager or exclusive general agent:
22 (1) A licensee whose authority is limited primarily to
23 the production of insurance business with limited
24 underwriting authority.
25 (2) A manager or exclusive general agent operating under
26 a management contract or exclusive general agency agreement
27 entered into prior to December 22, 1965.
28 (3) A person subject to regulation as a managing general
29 agent under Article VIII.
30 (c) Penalty.--A person that violates subsection (a) commits
20010S0962B1148 - 27 -
1 a misdemeanor of the third degree, and, upon conviction, shall
2 be sentenced to pay a fine not exceeding $1,000 for each day of
3 operation without a license.
4 Section 632. Application and licensure.
5 (a) Application.--A person may apply to the department for a
6 manager or exclusive general agent license. The person shall
7 submit to the department a completed application, the fee
8 required by subsection (c) and any other information required by
9 the department.
10 (b) Licensure.--The department shall review the application
11 and may conduct an investigation of the person. The department
12 shall issue a license to the person when the department is
13 satisfied that all of the following criteria have been met:
14 (1) The person possesses a good business reputation.
15 (2) The person possesses the fitness, competence and
16 reliability sufficient to satisfy the department that the
17 individual is worthy of licensure as a manager or exclusive
18 general agent.
19 (3) The person has paid all applicable fees established
20 pursuant to this article.
21 (4) Such other criteria as the department may establish.
22 (c) License fee.--A nonrefundable $100 fee shall accompany
23 an application for a manager or exclusive general agent license
24 unless modified by the department by regulation.
25 (d) Term.--A license issued in accordance with this section
26 shall be for a period of not more than one year.
27 Section 633. Insurers to certify names of managers or exclusive
28 general agents.
29 (a) General rule.--Every domestic insurer operating under a
30 management contract or an exclusive general agency agreement
20010S0962B1148 - 28 -
1 shall certify to the department the name of the manager or
2 exclusive general agent within ten days from the effective date
3 of the contract or agreement and within ten days after the
4 renewal of the license of the manager or exclusive general
5 agent.
6 (b) Penalty.--An insurer that fails to file the
7 certification required by subsection (a) commits a misdemeanor
8 of the third degree and, upon conviction, shall be sentenced to
9 pay a fine not exceeding $1,000 for each day of noncompliance.
10 Section 634. Enforcement by department.
11 (a) Notice.--Upon evidence of conduct which would disqualify
12 a licensed manager or exclusive general agent from initial
13 issuance of a license, the department shall notify the manager
14 or exclusive general agent, specifying the nature of the alleged
15 conduct and fixing a time and place, at least ten days
16 thereafter, when a hearing on the matter shall be held.
17 (b) Hearing.--The department shall conduct the hearing fixed
18 in subsection (a) in accordance with 2 Pa.C.S. Ch. 5 Subch. A
19 (relating to practice and procedure of Commonwealth agencies).
20 (c) Penalties.--After the hearing or upon failure of the
21 manager or exclusive general agent to appear at the hearing, the
22 commissioner may impose any combination of the following actions
23 deemed appropriate:
24 (1) Suspension or revocation of the license, if any, of
25 the person.
26 (2) An order to cease and desist.
27 (3) Any other conditions as the commissioner deems
28 appropriate.
29 Section 635. Injunctions.
30 The department may initiate or maintain an action for an
20010S0962B1148 - 29 -
1 injunction or other process against any person to restrain and
2 prevent the person from engaging in any activity which is in
3 violation of this division.
4 Section 636. Appeals.
5 The person aggrieved by a decision of the commissioner that
6 has a direct interest in the decision may appeal the decision of
7 the commissioner in accordance with 2 Pa.C.S. Ch. 7 Subch. A
8 (relating to judicial review of Commonwealth agency action).
9 Section 637. Regulations.
10 The department may promulgate regulations necessary for the
11 administration of this division.
12 SUBARTICLE B
13 REGULATION OF INSURANCE PRODUCERS
14 DIVISION 1
15 PROHIBITED ACTIVITIES
16 Section 641. Unlicensed activity.
17 (a) Prohibition.--No person shall act as or perform the
18 duties of a licensee without being licensed in this Commonwealth
19 in accordance with Subarticle A.
20 (b) Penalty.--A person that violates subsection (a) commits
21 a felony of the third degree.
22 Section 642. Theft by insurance producers.
23 (a) Prohibition.--No insurance producer shall negotiate a
24 contract of insurance for an insurer and embezzle or convert to
25 his own use or, with intent to use or embezzle, take, secrete,
26 or otherwise dispose of, or withhold, appropriate, lend, invest
27 or otherwise use or apply money or substitutes for money
28 received by him as an insurance producer, contrary to the
29 instructions or without the consent of the insurer.
30 (b) Penalty.--A person that violates subsection (a) commits
20010S0962B1148 - 30 -
1 a theft punishable in accordance with 18 Pa.C.S. Ch. 39
2 (relating to theft and related offenses).
3 Section 643. Advertising as insurance producer of unauthorized
4 entity.
5 (a) Prohibition.--No person shall represent or advertise
6 himself to be licensee of a foreign or alien insurance entity
7 which has not complied with the laws of this Commonwealth.
8 (b) Penalty.--A person that violates subsection (a) commits
9 a misdemeanor of the third degree.
10 Section 644. Soliciting for nonexistent entity.
11 (a) Prohibition.--No person shall, directly or indirectly,
12 offer to sell, solicit, negotiate, make, procure or obtain
13 contracts, certificates, agreements, binders or applications for
14 insurance, surety or indemnity in this Commonwealth for or on
15 behalf of a spurious, fictitious, nonexistent, dissolved,
16 inactive, liquidated, liquidating or bankrupt insurance entity.
17 (b) Penalty.--A person that violates subsection (a) commits
18 a misdemeanor of the third degree.
19 Section 645. Rebates prohibited.
20 (a) Prohibition.--No insurance producer shall, directly or
21 indirectly, offer, promise, allow, give, set off or pay a rebate
22 of, or part of, a premium payable on the contract of insurance
23 or on the insurance producer's commission, earnings, profits,
24 dividends or other benefit founded, arising, accruing or to
25 accrue thereon, or any special advantage in date of policy or
26 age of issue, or any paid employment or contract for services of
27 any kind, or any other valuable consideration or inducement, to
28 or for insurance on a risk in this Commonwealth which is not
29 specified in the contract of insurance.
30 (b) Penalty.--A person that violates subsection (a) commits
20010S0962B1148 - 31 -
1 a misdemeanor of the third degree.
2 Section 646. Inducements prohibited.
3 (a) Prohibition.--No insurance producer shall, directly or
4 indirectly, offer, promise, give, option, sell or purchase any
5 stocks, bonds, securities or property, or any dividends or
6 profits accruing or to accrue thereon, or other thing of value
7 whatsoever, as an inducement to purchase a contract of
8 insurance. Nothing in this section shall be construed to prevent
9 the taking of a bona fide obligation, with legal interest, in
10 payment of any premium.
11 (b) Penalty.--A person that violates subsection (a) commits
12 a misdemeanor of the third degree.
13 Section 647. Misrepresentation of terms of policy and future
14 dividends by insurance producers.
15 (a) Prohibition.--No insurance producer shall, directly or
16 indirectly:
17 (1) Issue, circulate, or use, or cause or permit to be
18 issued, circulated or used a written or oral statement or
19 circular misrepresenting the terms of a contract of insurance
20 issued or to be issued by the insurer.
21 (2) Make an estimate with intent to deceive of the
22 future dividends payable under the contract of insurance.
23 (b) Penalty.--A person that violates subsection (a) commits
24 a misdemeanor of the third degree.
25 Section 648. Misrepresentations to an insured of another
26 company.
27 (a) Prohibition.--No licensee shall, directly or indirectly,
28 misrepresent or make an incomplete comparison of contracts of
29 insurance for the purpose of inducing an insured of another
30 insurer to lapse, forfeit or surrender his contract of insurance
20010S0962B1148 - 32 -
1 and to take out a contract of insurance insuring against similar
2 risks with the licensee or solicitor's insurer.
3 (b) Penalty.--A person that violates subsection (a) commits
4 a misdemeanor of the third degree.
5 Section 649. The sale of insurance by financial institutions.
6 No financial institution shall apply to be licensed or to be
7 admitted as an insurer except to underwrite title insurance.
8 Section 650. Application fee.
9 No insurance producer shall charge a fee for the completion
10 of an application for a contract of insurance.
11 Section 651. Regulation of insurance producers by financial
12 institutions.
13 No financial institution may impose any unreasonable
14 requirement on a insurance producer not associated with that
15 financial institution.
16 Section 652. Conditional financial transactions.
17 No financial institution or its directors, officers,
18 employees, agents or insurance producers may require the
19 purchase of insurance from the financial institution or its
20 affiliates or from a designated insurer or insurance producer as
21 a condition of a loan or deposit transaction. A financial
22 institution or its directors, officers, employees, agents or
23 insurance producers may not reject a required contract of
24 insurance solely because the contract was sold by a person that
25 is not associated with the financial institution.
26 Section 653. Customer privacy.
27 Except as provided in section 678, no financial institution
28 shall use or share customer information with a third party for
29 the purpose of selling or soliciting the purchase of a contract
30 of insurance or an annuity.
20010S0962B1148 - 33 -
1 DIVISION 2
2 REGULATED ACTIVITIES
3 Section 671. Appointments.
4 (a) Appointment required.--Except as provided in subsection
5 (b), a licensee may not contract insurance for or attempt to
6 place a contract of insurance with an insurer unless the
7 licensee has been appointed by the insurer.
8 (b) Procedure.--An insurer may appoint a licensee by filing
9 with the department a notice of appointment and remitting the
10 fee required by subsection (e) within 15 days of the date the
11 contract between the insurer and licensee is executed or within
12 15 days of the date the insurer receives the first application
13 for insurance from the licensee. The notice shall state for
14 which companies within the insurer's holding company system or
15 group the appointment is requested. Upon receipt of the notice,
16 the department shall verify if the licensee is eligible for
17 appointment. If the licensee is determined to be ineligible for
18 appointment, the department shall notify the insurer of the
19 determination.
20 (c) Term.--Unless terminated in accordance with section 680,
21 an appointment shall be for a period of two years.
22 (d) Renewal of appointments.--An appointment may be renewed
23 upon payment of the renewal appointment fee required by
24 subsection (f) and verification by the department that the
25 licensee is eligible for appointment.
26 (e) Appointment fee.--A nonrefundable $25 fee per company
27 appointment requested shall accompany a notification for
28 appointment until modified by the department by regulation. A
29 discount of 20% per each appointment shall be allowed for the
30 use of electronic media approved by the department to file a
20010S0962B1148 - 34 -
1 notification of appointment.
2 (f) Renewal appointment fee.--A nonrefundable $25 fee per
3 company appointment requested shall accompany a notification for
4 appointment until modified by the department by regulation. A
5 discount of 20% per each appointment shall be allowed for the
6 use of electronic media approved by the department to file a
7 notification of appointment.
8 (g) Reporting.--An insurer shall, upon request, certify to
9 the department the names of all licensees appointed by the
10 insurer.
11 Section 672. Payment of commissions.
12 (a) Limitation.--An insurance entity may pay a commission,
13 brokerage fee, service fee or other compensation to a licensee
14 appointed in accordance with section 671 for selling, soliciting
15 or negotiating a contract of insurance. A licensee may pay a
16 commission, brokerage fee, service fee or other compensation to
17 a licensee for selling, soliciting or negotiating a contract of
18 insurance. Except as provided in subsection (b), an insurance
19 entity or licensee may not pay a commission, brokerage fee,
20 service fee or other compensation to a person that is not a
21 licensee for activities related to the sale, solicitation or
22 negotiation of a contract of insurance.
23 (b) Exception.--An insurance entity or licensee may pay:
24 (1) a renewal or other deferred commission to a person
25 that is not a licensee for selling, soliciting or negotiating
26 a contract of insurance if the person was a licensee at the
27 time of the sale, solicitation or negotiation; or
28 (2) a fee to a person that is not a licensee for
29 referring persons to a licensee if all of the following
30 apply:
20010S0962B1148 - 35 -
1 (i) The fee is a one-time, nominal, fixed dollar
2 amount for each referral.
3 (ii) The payment of the fee is not contingent upon
4 the results of the referral.
5 (iii) The referral does not include a discussion of
6 specific terms or conditions of a contract of insurance.
7 An insurance entity or licensee shall not pay a commission or
8 fee to a person under this subsection if the person is a
9 licensee under suspension or a former licensee whose insurance
10 producer license was revoked.
11 Section 673. Receipt of commissions.
12 (a) Limitation.--A licensee may accept a commission,
13 brokerage fee, service fee or other compensation from an
14 insurance entity or licensee for selling, soliciting or
15 negotiating a contract of insurance. Except as provided in
16 subsection (b), a person may not accept a commission, brokerage
17 fee, service fee or other compensation from an insurance entity
18 or licensee if the person is not a licensee and the compensation
19 is for activities related to the sale, solicitation or
20 negotiation of a contract of insurance.
21 (b) Exception.--A person may accept:
22 (1) a renewal or other deferred commission for selling,
23 soliciting or negotiating a contract of insurance if the
24 person was a licensee at the time of the sale, solicitation
25 or negotiation; or
26 (2) a fee for referring persons to a licensee if all of
27 the following apply:
28 (i) The fee is a one-time, nominal, fixed dollar
29 amount for each referral.
30 (ii) The payment of the fee is not contingent upon
20010S0962B1148 - 36 -
1 the results of the referral.
2 (iii) The referral does not include a discussion of
3 specific terms or conditions of a contract of insurance.
4 A person may not accept a commission or fee under this
5 subsection if the person is a licensee under suspension or a
6 former licensee whose insurance producer license was revoked.
7 Section 674. Imposition of additional fees.
8 A licensee may charge a fee in addition to a commission to a
9 person for the sale, solicitation or negotiation of a contract
10 of insurance for commercial business. The fee charged by the
11 licensee shall be disclosed in writing to the person and is
12 subject to review by the department.
13 Section 675. Credit life, credit accident and health and credit
14 unemployment insurance.
15 (a) Sales restrictions.--A licensee shall sell, solicit and
16 negotiate a contract of insurance in accordance with the act of
17 September 2, 1961 (P.L.1232, No.540), known as the Model Act for
18 the Regulation of Credit Life Insurance and Credit Accident and
19 Health Insurance, for all of the following:
20 (1) Credit life insurance.
21 (2) Credit accident and health insurance.
22 (3) Credit unemployment insurance.
23 If the insurance is sold in connection with loans or other
24 credit transactions, the provisions of the Model Act for the
25 Regulation of Credit Life Insurance and Credit Accident and
26 Health Insurance relating to credit life and credit accident and
27 health insurance are applicable to credit unemployment
28 insurance.
29 (b) Additional restrictions.--In addition to the
30 requirements of subsection (a), the sale, solicitation or
20010S0962B1148 - 37 -
1 negotiation of credit unemployment insurance shall be subject to
2 all of the following:
3 (1) The total amount of benefits payable by credit
4 unemployment insurance in the event of unemployment shall not
5 exceed the aggregate of the periodic scheduled unpaid
6 installments of the indebtedness.
7 (2) The amount of each monthly payment shall not exceed
8 the original indebtedness divided by the number of
9 installments.
10 (3) The loss ratio for the insurance shall be set and
11 regulated by the commissioner in the same manner as the loss
12 ratio is set and regulated for credit life and credit
13 accident and health insurance.
14 (4) Involuntary unemployment insurance sold in
15 connection with open-end credit shall provide monthly
16 benefits at least equal to the insured's minimum monthly
17 payment calculated at the time of unemployment, subject to a
18 maximum monthly indemnity contained in the certificate of
19 insurance.
20 (5) Benefits are payable, at a minimum, upon the debtor
21 meeting the eligibility requirements for unemployment
22 compensation.
23 (6) The period during which benefits are payable in the
24 event of the insured's involuntary unemployment shall
25 continue at least until the earliest of the following:
26 (i) The insured's return to full-time work.
27 (ii) Satisfaction of the loan or other credit
28 transaction.
29 (iii) In the case of open-end credit, payment of 12
30 consecutive monthly installments.
20010S0962B1148 - 38 -
1 (7) The insurance shall not be required as a condition
2 of the extension of credit.
3 (8) If a creditor offers the insurance to any of its
4 debtors, it must offer it under the same terms and conditions
5 to all of its like debtors and under the same terms and
6 conditions as all of its offices or locations in this
7 Commonwealth.
8 Section 676. Required purchases of insurance.
9 (a) Disclosures.--If a financial institution requires a
10 person to obtain insurance in connection with a loan and the
11 insurance is available through the financial institution, a
12 licensee employed by or affiliated with the financial
13 institution shall inform the person at or prior to the time of
14 application that the purchase of the insurance from the
15 financial institution is not a condition of the loan and will
16 not affect current or future credit decisions. The licensee may
17 inform the person that insurance is available from the financial
18 institution.
19 (b) Acknowledgment.--If the person purchases the insurance
20 through the financial institution, the licensee shall obtain a
21 written statement or acknowledgment from the person prior to the
22 purchase of the insurance stating that the person has been
23 advised that the purchase of the insurance from the financial
24 institution is not a condition of receiving the loan.
25 Section 677. Sales on or from the premises of a financial
26 institution.
27 (a) Disclosures.--A licensee employed by or affiliated with
28 a financial institution that solicits the sale of annuities or
29 life insurance, except credit life insurance, on or from the
30 physical premises of the financial institution shall provide a
20010S0962B1148 - 39 -
1 person applying for a contract of insurance a written disclosure
2 at or prior to the time of application for the insurance or
3 annuity. The disclosure shall include a notice of all of the
4 following:
5 (1) The insurance or annuity is not a deposit.
6 (2) The insurance or annuity is not insured by the
7 Federal Deposit Insurance Corporation or any other agency or
8 instrumentality of the Federal Government.
9 (3) The insurance or annuity is not guaranteed by the
10 financial institution or an affiliated insured depository
11 institution.
12 (4) The insurance or annuity is subject to investment
13 risk, including potential loss of principal, when
14 appropriate.
15 (b) Setting and circumstance.--Sales of annuities or
16 insurance, except credit insurance, by a financial institution
17 or by a licensee employed by or affiliated with the financial
18 institution shall take place in a location which is distinct
19 from the area where deposits are taken and loan applications are
20 discussed and accepted. Signs or other means shall be used to
21 distinguish the insurance or annuities sales area from the
22 deposit taking and lending areas. The commissioner shall exempt
23 a financial institution from the requirements of this section if
24 the number of staff or size of the facility prevents compliance.
25 (c) Exceptions.--Compliance by a financial institution with
26 the disclosure and the setting and circumstances requirements
27 set forth in the "Interagency Statement on Retail Sales of
28 Nondeposit Investment Products" issued February 15, 1994, by the
29 Board of Governors of the Federal Reserve System, the Federal
30 Deposit Insurance Corporation, the Office of the Comptroller of
20010S0962B1148 - 40 -
1 the Currency and the Office of Thrift Supervision shall satisfy
2 the requirements of this section.
3 Section 678. Use of customer information.
4 (a) Notice.--Upon providing notice to a person in accordance
5 with this section, a financial institution may use or share
6 customer information in the sale or solicitation of contracts of
7 insurance or annuities.
8 (b) Procedure.--The financial institution shall send by
9 first class mail the following notice to the person set forth in
10 standard or larger type:
11 USE OF INSURANCE INFORMATION
12 RELATING TO YOUR LOAN
13 As a current loan customer, we may have insurance
14 coverage information that was obtained as part of your
15 loan process. Under Pennsylvania law, you have the right
16 to direct that we not use or share this information in
17 the marketing of insurance or annuities. To exercise this
18 right, you must sign and return this form within 30 days.
19 If you do not sign and return this form to us, we may use
20 or share this information in the marketing of insurance
21 or annuities.
22 .........................................
23 (Signature)
24 The notice shall be addressed to the individual person and shall
25 include a postage prepaid response mechanism.
26 (c) Solicitation permitted.--The notice prescribed in
27 subsection (b) may be included with a solicitation for the
28 purchase of a contract of insurance or annuities.
29 (d) Second notice.--If the person has not responded to the
30 notice prescribed in subsection (b) within 30 days, the
20010S0962B1148 - 41 -
1 financial institution shall send a second notice. The second
2 notice shall meet the requirements set forth in subsection (b).
3 (e) Exception.--Notwithstanding subsections (b) and (d), for
4 the purpose of complying with subsection (a), a financial
5 institution may directly obtain written consent for the use of
6 customer information from a current or prospective debtor. The
7 following notice, set forth in standard or larger type, shall be
8 used for this purpose:
9 USE OF INSURANCE INFORMATION
10 RELATING TO YOUR LOAN
11 The borrower hereby consents to the use or sharing of any
12 insurance coverage information obtained as part of the
13 loan process in the marketing of insurance or annuities.
14 .........................................
15 (Signature)
16 Section 679. Licensee reporting of misconduct.
17 (a) Misconduct reporting.--A licensee shall report to the
18 department any administrative action taken against the licensee
19 in another jurisdiction or by another governmental agency in
20 this Commonwealth within 30 days of the final disposition of the
21 matter. This report shall include a copy of the order, consent
22 order or other relevant legal documents.
23 (b) Criminal conduct reporting.--Within 30 days of being
24 charged with criminal conduct, a licensee shall report the
25 charges to the department. The licensee shall provide the
26 department with all of the following within 30 days of their
27 availability to the licensee:
28 (1) A copy of the criminal complaint, information or
29 indictment.
30 (2) A copy of the order resulting from a pretrial
20010S0962B1148 - 42 -
1 hearing, if any.
2 (3) A report of the final disposition of the charges.
3 Section 680. Termination of appointments.
4 (a) Termination.--An insurer which terminates an
5 appointment, employment, contract or insurance business
6 relationship with a licensee shall notify the department within
7 30 days following the effective date of the termination. If the
8 reason for the termination was a violation of this article or if
9 the insurer had knowledge that the licensee was found to have
10 engaged in any activity prohibited by division 1 by a court,
11 government body or self-regulatory organization, the insurer
12 shall inform the department in the notification. Upon the
13 written request of the department, the insurer shall provide
14 additional information, documents, records or other data
15 pertaining to the termination or activity of the producer.
16 (b) Ongoing notification requirement.--The insurer shall
17 promptly notify the department if, upon further review or
18 investigation, the insurer discovers additional information that
19 would have been reportable to the commissioner in accordance
20 with subsection (a) had the insurer known of the existence of
21 the information.
22 (c) Copy of notification to be provided to licensee.--
23 (1) Within 15 days of making a notification required by
24 subsection (a) or (b), an insurer shall mail a copy of the
25 notification to the licensee's last known home address by
26 certified mail, return receipt requested, postage prepaid or
27 by overnight delivery using a nationally recognized carrier.
28 (2) Within 30 days of receiving notification pursuant to
29 paragraph (1), a licensee may file written comments
30 concerning the substance of the notification with the
20010S0962B1148 - 43 -
1 department. The licensee shall simultaneously mail a copy of
2 the comments to the insurer by certified mail, return receipt
3 requested, postage prepaid or by overnight delivery using a
4 nationally recognized carrier.
5 (d) Reports.--An insurer or licensee that fails to report as
6 required under the provisions of this section or that is found
7 to have falsely reported with malice by a court of competent
8 jurisdiction may, after notice and hearing, have its license or
9 certificate of authority suspended or revoked and may have civil
10 penalties imposed against the insurer or licensee in an amount
11 not to exceed $5,000 for each incident.
12 (e) Confidentiality.--
13 (1) Any documents, materials or other information in the
14 control or possession of the department which is furnished by
15 an insurer, licensee or which is obtained by the department
16 in an investigation pursuant to this section shall be
17 confidential by law and privileged, shall not be subject to
18 the act of June 21, 1957, (P.L.390, No.212), referred to as
19 the Right-to-Know Law, shall not be subject to subpoena, and
20 shall not be subject to discovery or admissible in evidence
21 in any private civil action. However, the department is
22 authorized to use the documents, materials or other
23 information in the furtherance of any regulatory or legal
24 action brought as a part of the department's duties.
25 (2) Neither the department nor any person who received
26 documents, materials or other information while acting under
27 the authority of the department shall be permitted or
28 required to testify in any private civil action concerning
29 any confidential documents, materials, or information subject
30 to paragraph (1).
20010S0962B1148 - 44 -
1 (3) In order to assist in the performance of the
2 department's duties under this article, the department:
3 (i) may share documents, materials or other
4 information, including the confidential and privileged
5 documents, materials or information subject to paragraph
6 (1), with other Federal, State and international
7 regulatory agencies, with the NAIC, its affiliates or
8 subsidiaries, and with Federal, State and international
9 law enforcement authorities, if the recipient agrees to
10 maintain the confidentiality and privileged status of the
11 document, material or other information; and
12 (ii) may receive documents, materials or
13 information, including otherwise confidential and
14 privileged documents, materials or information, from the
15 NAIC, its affiliates or subsidiaries and from regulatory
16 and law enforcement officials of other foreign or
17 domestic jurisdictions, and shall maintain as
18 confidential or privileged any document, material or
19 information received with notice or the understanding
20 that it is confidential or privileged under the laws of
21 the jurisdiction that is the source of the document,
22 material or information.
23 (4) No waiver of any applicable privilege or claim of
24 confidentiality in the documents, materials or information
25 shall occur as a result of disclosure to the department under
26 this section or as a result of sharing as authorized in
27 paragraph (3).
28 (5) Nothing in this article shall prohibit the
29 department from releasing final, adjudicated actions
30 including for cause terminations that are open to public
20010S0962B1148 - 45 -
1 inspection pursuant to the Right-to-Know Law to a data base
2 or other clearinghouse service maintained by the NAIC, its
3 affiliates or subsidiaries.
4 (f) Preemption.--Nothing in this section shall supercede any
5 provision of the act of September 22, 1978, (P.L.763, No.143),
6 entitled "An act establishing certain procedures relating to the
7 termination of insurance agency contracts or accounts and
8 providing penalties."
9 DIVISION 3
10 ENFORCEMENT
11 Section 691. Enforcement by department.
12 (a) Notice.--Upon evidence of a violation of this
13 subarticle, the department shall notify the person allegedly in
14 violation. The notice shall specify the nature of the alleged
15 violation and fix a time and place, at least ten days
16 thereafter, when a hearing on the matter shall be held.
17 (b) Hearing.--The department shall conduct the hearing on
18 the violation in accordance with 2 Pa.C.S. Ch. 5 Subch. A
19 (relating to practice and procedure of Commonwealth agencies).
20 (c) Evidence.--No person shall be excused from testifying or
21 from producing any books, papers, contracts, agreements or
22 documents at any hearing held by the commissioner on the ground
23 that the testimony or evidence may tend to incriminate that
24 person.
25 (d) Penalties.--After the hearing or upon failure of the
26 person to appear at the hearing, the commissioner may, in
27 addition to any penalty which may be imposed by a court, impose
28 any combination of the following deemed appropriate:
29 (1) Suspension or revocation of the license, if any, of
30 the person.
20010S0962B1148 - 46 -
1 (2) A civil penalty not to exceed $10,000 for each
2 action in violation of this subarticle.
3 (3) An order to cease and desist.
4 (4) Any other conditions as the commissioner deems
5 appropriate.
6 Section 692. Injunctions.
7 (a) Injunctions.--The commissioner may maintain an action
8 for an injunction or other process against any person to
9 restrain and prevent the person from engaging in any activity
10 violating this subarticle.
11 (b) Additional injunctions.--An injunction may be brought to
12 restrain or prevent unlicensed activity as a reinsurance
13 intermediary in violation of Article VII or as a managing
14 general agent under Article VIII.
15 Section 693. Appeals.
16 The person aggrieved by a decision of the commissioner that
17 has a direct interest in the decision may appeal the decision of
18 the commissioner in accordance with 2 Pa.C.S. Ch. 7 Subch. A
19 (relating to judicial review of Commonwealth agency action).
20 DIVISION 4
21 MISCELLANEOUS
22 Section 695. Personal liability of an insurance producer for
23 unauthorized entity.
24 An insurance producer shall be personally liable on all
25 contracts of insurance or suretyship unlawfully made by or
26 through the producer, directly or indirectly, for or on behalf
27 of any insurance entity which is not authorized to do business
28 in this Commonwealth.
29 Section 696. Fiduciary capacity of an insurance producer.
30 An insurance producer shall be responsible in a fiduciary
20010S0962B1148 - 47 -
1 capacity for all funds received or collected as an insurance
2 producer and shall not, without the express consent of the
3 insurance entity on whose behalf the funds were received, mingle
4 the funds with the producer's own funds or with funds held by
5 the insurance producer in any other capacity. Nothing in this
6 article shall be deemed to require an insurance producer to
7 maintain a separate bank deposit for the funds of each insurance
8 entity, if and as long as the funds of each insurance entity are
9 reasonably ascertainable from the books of account and records
10 of the insurance producer.
11 Section 697. Surplus lines insurance producers.
12 Notwithstanding the provisions of this or any other act, a
13 person licensed as a surplus lines producer in the person's home
14 state may receive a nonresident surplus lines insurance producer
15 license without the need to maintain a resident office in this
16 Commonwealth or to post a bond as a condition of licensure.
17 Nothing in this section otherwise amends or supercedes any
18 provision of Article XVI of the act of May 17, 1921 (P.L.682,
19 No.284), known as The Insurance Company Law of 1921.
20 Section 698. Federal preemption.
21 Notwithstanding any law or regulation of this Commonwealth to
22 the contrary, in the event of Federal preemption of any of the
23 provisions of this act or any other law of this Commonwealth
24 regarding the sale of insurance or annuities by federally
25 chartered financial institutions, State-chartered financial
26 institutions shall not be subject to those provisions or laws
27 which were the subject of the Federal preemption.
28 Section 699. Regulations.
29 The department may promulgate regulations necessary for the
30 administration of this subarticle.
20010S0962B1148 - 48 -
1 SUBARTICLE C
2 CONFLICTING PROVISONS
3 Section 699.1. Scope.
4 The provisions of this article shall supercede any other
5 conflicting provisions of this act.
6 Section 3. Existing references to persons licensed in
7 accordance with Article VI of the act prior to the effective
8 date of this amendatory act are deemed to be references to
9 persons licensed in accordance with this act and shall remain in
10 effect until replaced, revised or amended.
11 Section 4. Existing regulations applicable to the licensing
12 of agents and brokers not clearly inconsistent with the
13 provisions of this act shall remain in effect until replaced,
14 revised or amended.
15 Section 5. The act of May 17, 1921 (P.L 682, No. 284), known
16 as The Insurance Company Law of 1921, is repealed insofar as it
17 is inconsistent with this act.
18 Section 6. This act shall take effect as follows:
19 (1) This section shall take effect immediately.
20 (2) The remainder of this act shall take effect upon
21 publication of final form regulation in the Pennsylvania
22 Bulletin to implement this act or November 12, 2002,
23 whichever is sooner.
F4L40MSP/20010S0962B1148 - 49 -