1. Lines of authority
1.1. Life
1.2. Variable Life and Variable Annuity
1.3. Accident and Health
1.4. Property
1.5. Casualty
1.6. Personal Lines
1.7. Etc
2. State Regulations
2.1. Insurance Director
2.1.1. Appointed by the Governor
2.1.2. Enforces Insurance Code and protect public from unfair trade practices
2.1.2.1. Issued if suspicion of violation/ unfair trade practice:
2.1.2.2. Statement of Charges
2.1.2.3. Notice of Hearing
2.1.2.3.1. Hearing between 20-30 days after notice
2.1.2.3.2. contain statement of the grounds for code violations
2.1.2.4. Cease and Desist Order
2.1.2.4.1. If violated: fined up to $1k/violation
2.1.3. Supervises operations of the Department of Insurance
2.1.4. Examines all authorized insurers, at insurers expense
2.1.4.1. Purpose: Insurers remain solvent and compliant with state laws/regulations
2.1.4.2. Director has access at all hours to all records of company
2.1.4.3. Market Conduct & Nonfinancial Examinations
2.1.4.3.1. Report of Examination
2.1.4.3.2. Violation:
2.1.4.4. Regulatory Examinations
2.1.4.4.1. Subjects: persons applying/ holding producer license (limited line, temporary), or any business entity
2.1.4.4.2. Report:
2.1.4.4.3. Violation:
2.2. Producer Regulation
2.2.1. Must be licensed in line of authority that producer transacts
2.2.1.1. Violation:
2.2.1.1.1. Class A misdemeanor
2.2.1.1.2. Misappropriating funds + Violation? Class 4 Felony
2.2.1.2. Exemptions to Producer license
2.2.1.2.1. Persons not involved in actual sale of insurance contract/ do not receive any commission
2.2.2. Fiduciary Responsibilities
2.2.2.1. Producer collects premiums in 90 days
2.2.2.1.1. monthly 1.5% late charge fee added to open AR to induce pmt of premium
2.2.2.2. responsible for any return premium
2.2.2.3. Premium Fund Trust Account
2.2.2.3.1. All licensees must maintain PFTA
2.2.2.3.2. certify premiums are in pfta at each license renewal date
2.2.2.3.3. If PFTA balance< amount deposited= licensee reponsible for misappropriation
2.2.2.3.4. Records of all premiums deposited/withdrawn is maintained by licensees
2.2.2.3.5. return premiums must be credited w/in 15 days after receipt from insurer
2.2.2.4. Knowingly misappropriates funds/ illegally withholds $150 or less
2.2.2.4.1. Class A misdemeanor for the first offense
2.2.2.4.2. Class 4 felony for subsequent offenses
2.2.2.5. Amounts over $150
2.2.2.5.1. class 3 felony
2.2.3. comissions/ compensation
2.2.3.1. Written Disclosure to consumer stating amount / extent of compensation
2.2.3.2. Signature of consumer if Fee> 10% of premium
2.2.3.3. if policy cancellation w/in 90 days of inception date, refund of all fees
2.2.4. Controlled Business
2.2.4.1. Written on licensee and their property
2.2.4.2. Licensee's spouse/ property
2.2.4.3. Licensee's employers/ own business' life, property
2.2.4.4. License not granted/ extended:
2.2.4.4.1. If total controlled business premiums> total other insurance premiums collected during:
2.2.5. Disclosure Regulation
2.2.5.1. Policy identifies name of producer/ rep/ firm and signature of who wrote application
3. License Requirements
3.1. Types of Licenses
3.1.1. Resident
3.1.2. Non Resident
3.1.2.1. Hold valid resident license in home state
3.1.2.2. Submits original application/ pays fees to director
3.1.2.3. Reciprocity
3.1.3. Limited Lines Producer
3.1.3.1. Designated by insurance company prior to submitting application to director
3.1.3.2. Can represent 1+ company/ HMO
3.1.3.3. Baggage, trip cancellation, limited travel health and accident, Industrial life/health, Farm Mutual, Legal expense insurance, Credit life/health, Enrollment of recipients of public aid/ Medicare, Coverage written by local mutual district
3.1.3.4. Perpetual Limited Lines Producer License
3.1.4. Business Entities
3.1.4.1. obtain license from Uniform Business Entity Application
3.1.4.2. Fees: $150 every 2 years
3.1.4.3. Designates a licensed producer responsible for compliance
3.1.5. Temporary license
3.1.5.1. 90 days
3.1.5.2. 180 days/ option to renew for addt 180 days without exam
3.1.5.3. Restrictions:
3.1.5.3.1. only one temp license per lifetime
3.1.5.3.2. refuse if co has 50% noncompletion rate
3.1.5.3.3. expires if business ends
3.2. Licensing Process
3.2.1. Minimum age 18
3.2.2. Not committed any violations that is grounds for license denial
3.2.3. Submit application and fees
3.2.4. Minimum pre-licensing education requirements and exam per line of authority
3.2.4.1. 20 hours pre-licensing education course, 7.5 in class
3.2.4.2. Motor Vehicle: 12.5 hours, 5 hours in class
3.2.5. Be of good character
3.3. Maintenance and Duration
3.3.1. Must be renewed every 2 years
3.3.1.1. Waiver of renewal
3.3.2. Continuing education
3.3.2.1. 24 hours of CE, including 3 hours of ethics
3.3.2.2. "Self study course"
3.3.2.2.1. Course combines classroom, seminar, self study methods, unless class/seminar is >2/3 of total hours
3.3.2.3. Automatic Termination of license if uncompleted
3.3.3. Bond Requirements
3.3.3.1. When producer doesn't have a producer contract with an insurer but does business with
3.3.3.2. Licensee= revoked if no bond
3.3.3.3. Surety Bond in favor of the people of Illinois
3.3.3.3.1. Continuous form
3.3.3.3.2. Amt. of $2,500 or 5% premiums brokered last year (whichever greater)
3.3.3.3.3. Max amt $50k total aggregate liability
3.3.3.4. Authorized by Surety company payable to any party injured under bond terms
3.3.3.4.1. 30 day advance written notice to the principle for cancellation
3.3.3.5. Injured parties have right to surety and bond #
3.3.3.5.1. producer must provide info w/in 3 working days of request
3.3.4. Fees
3.3.4.1. $50 fee
3.3.4.1.1. Application fee
3.3.4.1.2. Issue Temporary License
3.3.4.1.3. Certification fee for each education course
3.3.4.2. $20 Annual Fee for Renewing certification of each course
3.3.4.3. Maintenance Fees every 2 years:
3.3.4.3.1. Resident: $180
3.3.4.3.2. Nonresident: $250
3.3.4.3.3. Business Entity: $150
3.3.4.3.4. Self service storage facility limited line: $50
3.3.5. Reinstatement:
3.3.5.1. if renewed within 12 months after renewal fee was due
3.3.5.2. Penalty fee: $360 (2x renewal fee)
3.3.6. Change of address
3.3.6.1. Licensees must inform director w/in 30 days
3.3.7. Felony convictions
3.3.7.1. Producer informs director w/in 30 days of judgement
3.3.7.2. Producer provides copy of judgement, probation order, and other relevant documents
3.4. Disciplinary Actions
3.4.1. License Suspension, Revocation, Denial, Refusal to Renew
3.4.1.1. Director notifys licensee/applicant in writing
3.4.1.2. 30 days from notice mail date to demand hearing contesting director
3.4.1.3. Hearing held b/t 20-30 days after mailing of notice of hearing
3.4.1.4. License of Business Entity revoked if violation was known and not reported/ no corrective action
3.4.1.5. 3 years from revoked date/ application denial to apply for another license
3.4.1.6. Permissible Actions:
3.4.1.6.1. misleading/ material misstatements in application
3.4.1.6.2. violating director rules and order/ participating in fraud
3.4.1.6.3. Accepting business from individual w/o license
3.4.1.6.4. convicted of felony/ not paying taxes
3.4.1.6.5. having license revoked, suspended, denied in any other state
3.4.1.6.6. Not following court order for child support obligation
3.4.1.6.7. Failing to make payment to Illinois Student Assistance Commission for delinquent/ defaulted student loans
3.4.2. Cease and Desist Order
3.4.3. Monetary Fines
3.4.3.1. Civil Penalty of $10,000 for each cause for denial, suspension, or revocation (Max 100k)
3.4.3.1.1. In addition to or instead of judgement
3.4.3.1.2. Business Entity or Individual pays after hearing
4. Marketing Practices
4.1. 1. Misrepresentation
4.1.1. use of illustration, oral statements, or sales material= misleading/ deceptive of policy benefits, terms, dividends
4.1.1.1. Violation of Misrepresentation Provision:
4.1.1.1.1. Guilty of Business offense
4.1.1.1.2. Penalty: $200-10k
4.2. 2. Rebating
4.2.1. inducement offered to insured during sale not specified in policy (includes offer/ acceptance)
4.2.1.1. rebates of premiums payable
4.2.1.2. special favors/services
4.2.1.3. advantages in dividends or other benefits
4.2.1.4. stocks, bonds, securities, and their divs/gains
4.2.2. Violation: Class B Misdemeanor, does not receive commission for sale
4.3. 3. Defamation
4.3.1. oral/written statement intended to injure person engaged in insurance business
4.3.1.1. violation: business offense
4.3.1.2. penalty: $200-10k
4.4. 4. Unfair Claims Practices
4.4.1. 30 calendar days to pay claims
4.4.2. if unsolved for 45 days from report date, reasonable written explanation for delay is provided to insured
4.5. 5.Other Unfair Practices
4.5.1. Discrimination includes:
4.5.1.1. solely on blindness/ partial
4.5.1.2. status in militaary
4.5.1.3. solely bc victim of abuse
4.5.1.4. charging different premium or rates for disabilities (unless actuarial principles)
4.5.1.5. future travel plans
4.5.2. Felony to make false entries w/ intent to injure own company/ examiner
4.5.3. doesn't prohibit insurer from incentivizing insureds to use particular hospital/person
4.6. 6. Advertisements
4.6.1. illegal to present info regarding financial standing , unless verified by director, shows total capital paid, value of assets, liabilites, or surplus
4.7. Code specifications
4.7.1. indicate to insured on pmt draft that pmt is final unless limit is paid
4.7.2. require (oral/written) that insured completes proof of loss in less time than policy
4.7.3. require insured to give notice of loss w/in specified period to relieve obligations
4.7.4. request/require insured to submit polygraph examination