17.2 Disciplinary Actions

Definitions

Refusal to issue or renew means the Superintendent of Insurance declines to issue an initial license or renew an existing license.

Revocation is the permanent termination of an individual's authority to hold any insurance agent license in Ohio.

Surrender for cause is the voluntary relinquishment of all authority to hold an insurance agent license in Ohio instead of being subject to a license suspension or revocation.

Suspension is the temporary termination of an individual's authority to hold any insurance agent license in Ohio for either a specified or indefinite period, subject to the terms and conditions established by the Superintendent of Insurance.

If an insurance agent's license is surrendered, revoked, suspended, canceled, or placed on inactive status at the agent's request, all insurer appointments are automatically terminated. To obtain a new license, the individual must apply as a new insurance agent and satisfy all licensing requirements, including submitting to a criminal background check.

The Superintendent of Insurance may suspend, revoke, or impose other disciplinary action against a licensee regardless of whether the individual is appointed by or authorized to represent an insurer or another insurance agent.

License Denial, Probation, Surrender, Suspension, Revocation, or Refusal to Issue or Renew

The Superintendent of Insurance may suspend, revoke, refuse to issue or renew a license, assess a civil penalty, or impose other authorized disciplinary action for any of the following:

• Failure to Pay Taxes (Class A Offense) – Failing to comply with an official invoice, notice, assessment, or order requiring payment of federal, state, or local income taxes, state or local sales taxes, or workers' compensation premiums.
• Failure to Appear for an Interview (Class A Offense) – Failing to appear for a scheduled interview with the Superintendent after receiving written notice, unless a reasonable extension has been requested and granted.
• Failure to Provide a Written Response (Class B Offense) – Failing to respond in writing to an inquiry from the Ohio Department of Insurance within 21 calendar days of receipt, unless a reasonable extension has been requested and granted by the Superintendent.

The following are Class A offenses for which the Superintendent of Insurance may take disciplinary action against an insurance agent:

• Providing incorrect, misleading, incomplete, or materially untrue information in a license or appointment application
• Violating or failing to comply with any insurance law, rule, subpoena, or order of the Superintendent or another state
• Obtaining or maintaining a license through misrepresentation or fraud
• Improperly withholding, misappropriating, or converting money or property received in the course of conducting insurance business
• Intentionally misrepresenting the terms or benefits of an actual or proposed insurance contract
• Being convicted of, or pleading guilty or no contest to, a felony, regardless of whether a judgment of conviction has been entered by the court
• Being convicted of, or pleading guilty or no contest to, a misdemeanor involving:
  • Misuse or theft of another person's money or property
  • Fraud, forgery, dishonest acts, or a breach of fiduciary duty related to the insurance business
  • Moral turpitude (immoral or unethical conduct), regardless of whether a judgment has been entered by the court
• Committing an unfair insurance trade practice or insurance fraud
• Having an insurance agent license, or its equivalent, denied, suspended, or revoked in another state, province, district, or territory
• Improperly using notes or other reference materials during an insurance licensing examination
• Forging an insurance application or any document used in an insurance transaction, or knowingly using a forged document in the conduct of insurance business
• Knowingly accepting insurance business from an individual who is not licensed to sell insurance
• Demonstrating incompetence, untrustworthiness, or financial irresponsibility
• Failing to disclose, upon accepting a premium or an order to bind coverage, that the agent has not been appointed by the insurer
• Having any professional license or Financial Industry Regulatory Authority (FINRA) registration suspended or revoked, or being barred from participation in any industry
• Being subject to a cease and desist order or permanent injunction involving the mishandling of funds, breach of fiduciary duty, or unlicensed or unregistered activities
• Causing or permitting an applicant or policyholder to designate the agent or the agent's family member as the beneficiary of, or the owner of a trust funded by, a policy or annuity sold by the agent, unless the agent or family member is the insured or applicant
• Placing or transferring insurance with an insurer other than the one selected by the applicant, without the applicant's consent, unless extenuating circumstances exist
• Failing to disclose to an applicant or policyholder the identity of the insurer and any other agent known to be involved in procuring, placing, or continuing the coverage
• If the agent is a business entity, failing to report an individual licensee's violation to the Ohio Department of Insurance when the violation was known or should have been known by one or more of the entity's partners, officers, managers, or members
• Misrepresenting the agent's qualifications, status, or relationship to another person, or using a professional designation that has not been earned or conferred by the accrediting organization
• Obtaining a premium loan in an insured's name without the insured's knowledge and written authorization
• After an appointment has been terminated, using an insurer's paper, software, or other materials in a manner that would cause a reasonable person to believe the agent is still acting on behalf of or representing the insurer
• Using an insurance license primarily to procure, solicit, or obtain insurance on the property of the agent, the agent's relatives, employer, or employees
• Knowingly aiding or abetting another person in violating Ohio insurance law
• As a nonresident agent, failing to maintain the required home-state license for the lines of authority held in Ohio
• Soliciting, procuring applications for, or placing insurance without being legally authorized to engage in those activities
• Soliciting, selling, or negotiating a product or service that provides insurance-like benefits, but is not regulated by the Superintendent of Insurance, without fully disclosing that the product or service is not insurance and is not regulated by the Superintendent
• Failing to timely issue a required refund to a policyholder or applicant:
  • Within 30 days after the policyholder, applicant, or insurer takes or requests action that results in a refund
  • Within 30 days after the insurer issues the refund check, if the agent is responsible for distributing a portion of the refund
  • Within 45 days after the refund first appears on the agent's statement of account
• If the agent is a business entity, using a life insurance license primarily to place life insurance on the lives of its officers, employees, stockholders, or their relatives
• A resident business entity failing to:
  • Remain qualified to do business in Ohio
  • Remain in good standing with the Secretary of State
  • Maintain a valid appointment for the lines of authority held in Ohio
• Transacting insurance or annuity business on behalf of an insurer that is not authorized to do business in Ohio, or on behalf of a fictitious, nonexistent, dissolved, inactive, or liquidated insurer
  • Additional Penalty: The Superintendent must impose a minimum 2-year suspension of all insurance licenses held by the individual.

The following are Class B offenses for which the Superintendent of Insurance may take disciplinary action against an insurance agent:

• Failure to report a change of address to the Superintendent
• Failure to notify the Superintendent of:
  • An administrative action taken against the agent in another jurisdiction or by another governmental agency, or
  • Any criminal prosecution other than a misdemeanor traffic offense
• Failure to timely submit an insurance application within the period specified by the insurer, or within 7 days after accepting the premium, whichever is later

Hearings

Before denying, suspending, revoking, refusing to issue a license, or imposing a penalty, the Superintendent of Insurance must provide the applicant or licensee with notice and an opportunity for a hearing. The notice, hearing officer's findings, or Superintendent's order must be served by certified mail, with a return receipt signed by any person, and sent to the applicant's or licensee's last known address. If service by certified mail is unsuccessful, the notice must be published once a week for 3 consecutive weeks in the newspaper of record in the county of the applicant's or licensee's last known address. The notice may also be personally delivered by an employee of the Ohio Department of Insurance.

If the licensee or applicant is represented by an attorney in the matter, a copy of the notice must also be served on the attorney.

Notices scheduling a hearing are sent by ordinary mail to the applicant or licensee and, if represented, to the attorney.

The Superintendent of Insurance has the authority to issue subpoenas, which are enforceable by the Court of Common Pleas. A subpoena requiring the appearance of a witness, the production of documents or evidence, or the taking of testimony must be served by:

• Certified mail with return receipt requested,
• An attorney, or
• An employee of the Ohio Department of Insurance designated by the Superintendent.

Penalties and Fines for Violations

If the Superintendent of Insurance determines that a Class A offense has occurred, the Superintendent may:

• Assess a civil penalty of up to $25,000 per violation
• Assess administrative costs, including the expenses of the investigation and hearing
• Suspend all insurance licenses for all lines of authority for a specified or indefinite period
• Permanently revoke all insurance licenses for all lines of authority
• Refuse to issue a license
• Refuse to renew a license
• Prohibit the individual from working in any capacity in the insurance business or holding a financial interest in an insurance agency, insurance company, surety bail bond business, or third-party administrator in Ohio
• Order corrective action instead of, or in addition to, other disciplinary measures. Corrective action may include the conditional suspension of civil penalties, license suspension, revocation, or refusal to issue or renew a license if the licensee complies with the terms of the order.
• Accept a surrender for cause, which prohibits the licensee from applying for any insurance license for at least 5 years. A surrender for cause may be accepted instead of a suspension or revocation and may include a corrective action order.

If the Superintendent of Insurance determines that a Class B offense has occurred, the Superintendent may:

• Assess a civil penalty of up to $25,000 per violation
• Assess administrative costs, including the expenses of the investigation and hearing
• Order corrective action instead of, or in addition to, other disciplinary measures. Corrective action may include the conditional suspension of civil penalties, license suspension, revocation, or refusal to issue or renew a license if the licensee complies with the terms of the order.
• Accept a surrender for cause, which prohibits the licensee from applying for any insurance license for at least 5 years. A surrender for cause may be accepted instead of a suspension or revocation and may include a corrective action order.

Cease and Desist Orders

If the Superintendent of Insurance determines that a licensee's conduct is causing or is about to cause harm, the Superintendent may issue a cease and desist order. The order must:

• Be sent by certified mail, return receipt requested
• Identify the specific act subject to the order
• Schedule a hearing within 15 days of the date of the order

If objections are filed, the Superintendent of Insurance must issue a final order within 15 days, either confirming or revoking the cease and desist order. The insurance agent may appeal the final order in writing.

Civil Penalties

If the Superintendent of Insurance has reasonable cause to believe a cease and desist order has been violated, the Attorney General may be requested to prosecute the violator on behalf of the State of Ohio. Upon prosecution, the court may impose:

• A civil penalty of up to $25,000 per violation
• Injunctive relief
• Restitution
• Any other appropriate relief

Criminal Penalties

The following violations and penalties apply under Ohio insurance law:

• Selling, soliciting, or negotiating insurance without a valid license is a first-degree misdemeanor.
• A licensed insurance agent may not sell, or receive compensation for selling, shares of stock in an insurance company or agency with which the agent is appointed. Violations are punishable by a fine of $25–$500, up to 6 months' imprisonment, or both.
• A person who represents or sells insurance for an unauthorized insurer without a valid surplus lines broker license is subject to a fine of $25–$500, up to 1 year of imprisonment, or both.
• A surplus lines broker who places insurance with an unauthorized insurer without satisfying due diligence requirements is subject to a fine of $25–$500, up to 1 year of imprisonment, or both.
• A person who fails to file required reports under the insurance laws or uses advertising that does not comply with Ohio law is subject to a fine of not less than $100 and not more than $500.

Right to Appeal

A licensee who is subject to disciplinary action by the Superintendent of Insurance may appeal the decision and request a hearing before the Franklin County Court of Common Pleas. The licensee must file a notice of appeal with the agency within 15 days of the agency's action.

Consent/Settlement Agreements

A person may enter into a written settlement agreement with the Superintendent of Insurance, agreeing to correct violations and comply with Ohio insurance laws in the future. Under a settlement agreement, the Superintendent may impose a single negotiated penalty that the parties determine is appropriate under the circumstances.

Disciplinary Action Considerations

When determining whether to deny a license, suspend or revoke a license, impose fines or other penalties, or issue orders, the Superintendent of Insurance may consider:

• Whether the person acted in good faith
• Whether the person made restitution for financial losses suffered by others
• The actual or potential harm caused to others
• The degree of trust placed in the person by those who may have been adversely affected
• Whether the person has been subject to prior administrative actions by the Superintendent
• The number of individuals adversely affected by the person's acts or omissions
• Whether the person voluntarily reported the violation, cooperated, and accepted responsibility, or instead concealed the misconduct
• The person's corrective efforts to prevent future violations

The Superintendent of Insurance may also consider the following when determining disciplinary action:

• If the person has been convicted of a criminal offense, the Superintendent may consider:
  • The nature of the offense
  • Whether the offense involved a breach of fiduciary duty
  • The amount of time that has passed since the conviction
  • The person's activities and conduct since the conviction