Simple Tips to Avoid Disciplinary Actions

Licensed insurance producers in New York often subject themselves to unnecessary disciplinary action by the State of New York Department of Financial Services (“DFS”). Of course there are serious issues with misappropriating premium funds and other untrustworthy or egregious conduct, but the tips below address more routine and procedural issues, which, if complied with, can help keep licensees out of avoidable regulatory inquiry or action.

• If you want to change the name of the licensed entity, apply for DFS approval before ordering new letterhead and transacting business in the unlicensed name.

• If you relocate your resident or business address, promptly notify the DFS in writing.

• Register your satellite offices.

• Never delegate the completion of your renewal or other application for the DFS to anyone else – your assistant may not know about your recent DWI arrest.

• Keep a hard copy of any applications, renewals, and correspondence with the DFS for your records.

• Promptly report fines or any other disciplinary action taken by another states insurance department.

• Promptly report fines or other disciplinary action or even license denials from other New York State agencies.

• Promptly report any arrests and convictions.

• Be transparent and forthcoming: don’t just wait for the questions to be asked on your renewal or other applications.

• Before you run an advertisement, make sure it complies with insurance laws and regulations.

• Never assume “it’s okay” because your competitors do it.

• Periodically check that all producers under your employ or to whom you pay commissions are licensed and in good standing with the DFS. • Make sure your sublicensee is trustworthy and competent and actively present and involved in the business. • Determine whether any employees have a criminal conviction involving dishonesty or breach of trust and whether permission from the DFS is necessary for such individual to engage in the business of insurance.

• If you charge service fees, obtained signed 2119 agreements and keep your records for at least 3 years.

• Timely cooperate with DFS inquiries and/or requests for information. If you keep the above tips in mind, you may avoid some routine disciplinary actions, particularly the numerous fines and/or revocations that start with “Respondent failed to disclose“…When in doubt, visit the DFS website and review Office of General Counsel Opinions and Circular Letters or seek the advice of counsel. As a general rule, think in terms of transparency and full disclosure and if and when you get a letter from the DFS, don’t assume that because you may have 15 days to respond, it is okay to bury it on your desk until a second letter arrives…