NAIC accepting comments on licensing template for producers convicted of felony, dishonesty or breach of trust

The National Association of Insurance Commissioners (NAIC) has requested comments on a producer licensing template that outlines how previously convicted felons, including for dishonesty or breach of trust, can ask for consent to have a license.

Federal law bans felons from engaging in the business of insurance, which means the writing of insurance, reinsuring and adjusting claims, unless the person receives written consent from the state insurance regulatory office with appropriate jurisdiction, according to the draft template. Federal law also penalizes those in the industry who allow a prohibited person to engage in the business of insurance, it says. 

Dishonesty is defined as directly or indirectly cheating or defrauding. It includes wrongfully taking property belonging to another in violaiton of any criminal statute. It also includes acts involving lack of integrity, lack of probity or a disposition to distort, cheat or act deceitfully or fraudlently and may include crimes which federal, state or local laws define as dishonest.

Breach of trust is defined as a wrongful act, use, misappropriation or omission with respect to any property or fund which has been committed to a person in a fiduciary, offical capacity or some other relationship based on trust, or the misuse of one’s official fiduciary or other position based on trust to engage in a wrongful act, use, misappropriation or omission.

The template states that each person seeking written consent must complete an application, with each jurisdiction establishing its process for receiving and reviewing applications. 

Each application should provide the prohibited person with the opportunity to demonstrate they are trustworthy, the template says. Factors that may be considered include, but are not limited to:

• • Nature and severity of the offenses;
  • Date of convictions;
  • Age at the time of committing the crimes;
  • Nature and extent of injury or loss caused by the acts;
  • Unpaid judgments;
  • If the crime was related to the business of insurance or the exercise of any professional or other license;
  • If other jurisdictions have granted or denied a license;
  • Letters of recommendation;
  • Employment history; and 
  • Supervision the person would have. 

NAIC will discuss the template at the Producer Licensing (D) Task Force meeting on Aug. 12 during the NAIC Summer National Meeting. 

All comments and questions should be sent to Tim Mullen, NAIC director of market regulation, at [email protected].

Images

Photo courtesy of fizkes/iStock