NAIC: Update on proposed template for convicted felon insurance business applicants, survey of states

The National Association of Insurance Commissioners (NAIC) Producer Licensing (D) Task Force provided a brief update Thursday on the progress of its proposed template to guide previously convicted felons, including for dishonesty or breach of trust, on how to request an insurance producer license.

Last year, the task force asked for public comments on the proposal, which seeks to deter felons from engaging in insurance business, as backed by federal law.

“Business of insurance” is defined as the “writing of insurance, adjusting claims, or the reinsuring of risks, by an insurer,” and includes officers, directors, agents, or other licensed or unlicensed employees of insurers, or who are other persons authorized to act on behalf of such persons, according to the draft template.

Federal law penalizes those in the insurance industry who willfully allow prohibited persons to engage in the business of insurance, the template states.

The template definition of “conviction” includes, but is not limited to, being found guilty by judge or jury verdict, an entered plea of guilty or nolo contendere or no contest, or having been sentenced to probation, a suspended sentence, or a fine.

“States should not consider for written consent a person who has successfully completed deferred adjudication and has not been convicted of a qualifying felony,” the template states. “States may include in the definition of ‘conviction’ a plea in abeyance, a diversion, a sealed, or an expunged conviction.”

Producer Licensing Vice Chair Richard Tozer, who represents Virginia, told the task force that a survey of all state insurance commissioners had been sent out. As of Thursday, 31 responses had been received.

“At this point, we’re not quite ready to share the results of the survey, but generally speaking, there’s a lot of differences amongst the states on these topics, as you can imagine,” Tozer said. “When we’re ready to present the results of the survey, we’ll go through that survey step-by-step and look at some of the areas where we have commonality and other areas in which we need to discuss.”

According to the task force’s May 14 meeting minutes, Tozer said the survey seeks information on the states’ definitions of conviction, the treatment of plea outcomes, and licensing implications. The draft survey questions are attached to the minutes.

At the time, Texas Task Force Representative Jodie Delgado suggested, according to the minutes, that one of the questions include the outcomes states don’t include, in addition to those that are included.

“[John] Haworth [Oregon task force representative] suggested collecting citations to state statutes and regulations,” the minutes state. “Tozer said the survey would be structured so that states could enter a specific state citation and then include a narrative box for additional information. Delgado said Texas will need to submit multiple criminal code citations. Tozer said he would work with NAIC staff to finalize the survey to provide structured response options for some questions, while other questions will include narrative responses.”

The May meeting minutes also note that, according to NAIC documents, license applicants can exclude certain misdemeanor convictions or pending misdemeanor charges, including traffic citations, driving under the influence (DUI), driving while intoxicated (DWI), driving without a license, reckless driving, or driving with a suspended or revoked license. It states that juvenile adjudications can also be excluded.

Tozer shared at the May meeting that Virginia had passed legislation, effective July 1, 2026, to remove the requirement for applicants to disclose sealed records in the insurance producer licensing application.

“He noted that this change may present a conflict with the NAIC uniform producer licensing application,” the meeting minutes state. “Tozer further explained that Virginia will inform producer applicants that they are not obligated to report sealed criminal convictions when applying for a producer license in the state. Additionally, he pointed out that when a state receives a non-resident application from an individual holding a resident license in Virginia, it is possible that the applicant has not disclosed their complete criminal history during the Virginia licensing process.”

According to the Virginia State Crime Commission, the state’s “Clean Slate Law” automatically seals:

• • “Misdemeanor convictions (petit larceny, shoplifting, trespassing, instigating trespass, trespass on posted property, distribution of marijuana, and disorderly conduct);
  • “Possession of marijuana offenses (criminal and civil);
  • “Misdemeanor non-convictions at case conclusion (acquittal and dismissal with prejudice);
  • “Felony non-convictions at case conclusion (upon verbal request by the defendant and concurrence of the Commonwealth’s Attorney) (acquittal and dismissal with prejudice);
  • “Previously concluded misdemeanor non-convictions (acquittal, nolle prosequi, and dismissal, excluding deferred dismissal); and
  • “Traffic infractions.”

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