9/10/18. Talkin Title. Structure of Department of Insurance. Who Handles Title? Created by: Krystle Ledvina Garcia

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1 9/10/18 NEBRASKA DEPARTMENT OF INSURANCE Talkin Title Created by: Krystle Ledvina Garcia Structure of Department of Insurance Divisions Administrative Financial Examination Property & Casualty/Life and Health Licensing Market Conduct Consumer Affairs Fraud Legal Who Handles Title? Financial Examiners complete regular examinations on domestic companies. Examinations are required every 5 years. Also, issue certificates of authorities for insurers. Property & Casualty Division reviews all rates and forms for title insurance. Licensing issues agent licenses and agency licenses. Market Conduct completes regular examinations of domestic title insurers and targeted exams on agents/agencies. Neb. Rev. Stat , 110 Consumer Affairs receives and investigates complaints from consumers that may involve insurers or agents. Fraud Division is certified law enforcement officers authorized to investigate and arrest individuals for insurance fraud. Neb. Rev. Stat to Legal Division handles administrative hearings for referrals by other divisions and answers questions from staff and public 1

2 2018 Legislation LB 743 New insurance license-public adjusters Neb. Rev. Stat to Changes to continuing education Renewal for CE courses Change from paper filing to electronic Eliminated pre-licensing LB 220 amended on to bill-changes to Insured Homeowners Protection Act, Neb. Rev. Stat to LB 486 Continuing education credit for professional associations Brought by industry Bulletins CB 140-Closing Protection Letters A brief history Early 2000s Strict Liability Compromise Closing protection letters must be issued if commitment or policy issued Fees must be filed with Department Fee does not have to be charged Fee must be retained by insurer not agent Consistent with other states Neb. Rev. Stat Bulletins (cont.) CB 141-Continuing Education Credit for Active Participation in a Professional Association Insurance producers can receive CE credit for active participation in professional insurance associations Neb. Rev. Stat (5) defines active participation: Membership organization that offers courses, lectures, seminars or other instructional programs; Is organized as an association for the express purpose of promoting the interests of insurance licensees in this state or nationally; and Is based on paid membership renewable annually or biennially for a membership fee Association must: Complete application Been in existence for at least 5 years No credit for ethics Title agents can receive 3 credits 2

3 Responsibilities of Title Agent Obtain and Maintain appropriate licensure Complete required Continuing Education hours Follow insurance code Report changes to DOI Address Change of Resident state status Any required reporting actions (Criminal and administrative) Fiduciary Duty to Client Competency and Professionalism Timely and appropriately disburse funds Fiduciary Duty to Company Remit premiums timely to Company Competency Licensing Agent and Agency licenses are issued by the DOI pursuant to Title Agent Act and Producer Licensing Act Producer is required to be licensed if producer is selling, soliciting, or negotiating insurance. Definitions for each are found in Producer Licensing Act. Neb. Rev. Stat (16), (17), and (14). Each title agency is required to have a licensed designated responsible producer that is responsible for the compliance and conduct of agency 18 USC 1033(e) requires an individual convicted of a felony involving dishonesty or breach of trust to receive permission from resident state insurance department prior to working in insurance industry. Special application needed Called a 1033 waiver Licensing (cont.) An agent that handles escrow funds is required to maintain a surety bond of $100k. Neb. Rev. Stat , 109 Closing/escrow agents are required to be licensed by one of the following entities: Department of Insurance Supreme Court State Real Estate Commission Department of Banking and Finance Federal Deposit Insurance Corporation Federal Office of Thrift Supervision Federal Farm Credit Administration National Credit Union Administration Neb. Rev. Stat. 76-2, 121 and 76-2, 122 3

4 Gifts Nebraska prohibits an agent, broker, insurer, etc. from rebating any portion of policy premium or giving a gift or anything of value as inducement or in connection with insurance Exception if listed in policy of insurance Department permits nominal gifts not conditioned upon purchase of insurance (i.e. pens, coffee cups, trinkets, etc.) Neb. Rev. Stat Nebraska prohibits title agents from giving/receiving referral fees. Neb. Rev. Stat , 111 RESPA 12 USC 2607(a) No person shall give or accept any fee, kickback, or anything of value for a referral involving a federally insured mortgage Reporting Requirements Agents must report change of legal name or address to DOI within 30 days Neb. Rev. Stat (8) May fine up to $500 and/or suspension Agents must report any administrative action taken against agent in another jurisdiction, by another governmental entity, or by a self-regulatory organization such as FINRA. Neb. Rev. Stat (1) Administrative action defined to include: arbitration/mediation award, disciplinary action, civil action, or sanction taken against or involving the agent. Neb. Rev. Stat (4) Agents must report any bankruptcy for discharge of insurance premiums or fiduciary funds. Neb. Rev. Stat (2) Agents must report criminal action within 30 days of arraignment or waiver of arraignment Must include copies of court documents Neb. Rev. Stat (3) May be disciplined after conviction Neb. Rev. Stat (1)(f) Agencies must report an individual agent s violations of the insurance code to the DOI or take corrective action. Neb. Rev. Stat (3) Consumer Complaints Consumer Affairs Investigator currently assigned to title is Barbara Peterson Consumer Affairs Division DOES NOT Tell an agent/company how to resolve a claim Promise an outcome for a consumer Offer legal advice Process Consumer files a complaint with DOI (Online, fax, mail, phone) Complaint is assigned to investigator Investigator sends correspondence (US mail and/or secure ) to agent for explanation of complaint Investigator reviews information. Follow up may be necessary Closes file or refers to Legal Division Legal Division may close file, send letter, or file administrative action 4

5 Correct Way to Handle a Complaint Provide a complete, written, dated, and signed response along with all requested information to DOI within 15 working days of letter Failure to respond within 15 working days is unfair trade practice violation. Neb. Rev. Stat (11). If additional time is needed, contact DOI prior to due date of response Provide all documentation at outset to avoid delays and additional time If agency error occurred, explain the error, corrective steps, and how to avoid error in future Results of the investigation are not public unless an administrative action is filed. All orders (including consent) are published on DOI website Be courteous to DOI investigator Keep good records/documentation Make sure address is correct and DRLP is up to date Incorrect Way to Handle Complaint Call DOI and argue about facts of case Insist DOI close case because it has been handled Fail to respond in writing because issue is resolved Threaten complainant with retaliation for making the complaint Provide incomplete, inaccurate, or false response to DOI Tips to Avoid Complaints Consumers typically complain due to poor customer service Lack of Courtesy Unfilled promises Failure to listen Unexplained delays Waiting on hold Not returning phone calls/ s Consumers complain when they do not understand the process Consumer complaints can be worsened by continued poor response to DOI Some complaints are unavoidable. A complaint does not mean agent violated law or did anything wrong. 5

6 Administrative Actions Neb. Rev. Stat (Producer Licensing Act) Actions can be taken for violations of Title Agent Act as well Action can be taken for three years following the expiration of the license provided the conduct occurred while the individual was licensed and was under investigation at the time Individuals charged with the violations are entitled to due process which includes notice and a hearing Business entity can be punished for a violation committed by an individual if the entity had knowledge or should have known and failed to take corrective action or report the violation to the Director Any violations of this Section can result in denial, suspension, or revocation of the license, or an administrative fine of $1000 per violation Administrative actions can be viewed on DOI website at: Administrative Actions (cont.) Providing incorrect, misleading, incomplete, or materially untrue information in the license application; Violating any insurance law or violating any rule, regulation, subpoena, or order of the director or of another state's insurance commissioner or director; Obtaining or attempting to obtain a license through misrepresentation or fraud; Improperly withholding, misappropriating, or converting any money or property received in the course of doing business; Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance; Having been convicted of a felony or a Class I, II, or III misdemeanor; Having admitted or been found to have committed any insurance unfair trade practice, any unfair claims settlement practice, or any fraud; Using fraudulent, coercive, or dishonest practices or demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of business in this state or elsewhere Having an insurance or public adjuster license, or the equivalent thereof, denied, suspended, placed on probation, or revoked in Nebraska or in any other state, province, district, or territory; Forging another's name to an application for insurance or to any document related to an insurance transaction; Improperly using notes or any other reference material to complete an examination for an insurance license; Knowingly accepting insurance business from an individual who is not licensed; Failing to comply with an administrative or court order imposing a child support obligation pursuant to the License Suspension Act; Failing to pay state income tax or comply with any administrative or court order directing payment of state income tax; or Failing to maintain in good standing a resident license in the public adjuster s home state. Most Common Administrative Actions Providing incorrect, false, misleading, or materially untrue information in the license application A-2077 (Cookie Robinson)-Resident Applicant failed to disclose pending felonies on license application. License revoked. A-2085 (Jeffrey Orth)-Resident Applicant failed to disclose misdemeanor convictions. Applicant disclosed the convictions to employer. Employer completed licensing application and failed to list on application. $250 fine. A-2068 (Edson Leondas)-Non-resident Applicant failed to disclose insurance license revocation in MD (non-resident). Applicant subsequently reported to DOI. $200 fine. Having been convicted of a felony or a Class I, II, III misdemeanor A-2032 (Gerald Bryce) Resident licensee convicted of violation of 18 USC 1341 for implementing a fraudulent scheme to defraud another of property/money. License expired at time of hearing but within 3 years of expiration. License revoked. A-2074 (Raymond Sanchez)-Resident licensee convicted of insurance fraud for acts committed while an insurance agent. License revoked. A-2076 (Diane Hitz)-Resident producer convicted of Motor Vehicle Homicide. License suspended for 60 days. Failing to maintain a license in good standing in the producer s home state A-2109 (Kyle Smith) Voluntarily surrendered home state license. Nebraska non-resident license revoked. 6

7 Administrative Action Examples (Cont.) Having an insurance producer license or its equivalent denied, suspended, placed on probation, or revoked in Nebraska or in any other state, province, district, or territory A-2093 (Kevin Tetti) Non-resident had license revoked in another state. License revoked in Nebraska. Failing to provide DOI with updated address within 30 days of change A-2028 (Scott Schmer) Consumer affairs sent letters to home and business address and were returned by USPS. Fined $500 and suspended until updated address provided. Failing to report a criminal action within 30 days of arraignment or waiver of arraignment A-2070 (Diana Wisnewski) Non-resident producer convicted of Conspiracy to commit wire fraud and failed to notify DOI. License revoked. A-2099 (Dick Wollman) Resident producer reported pending criminal charges on license renewal application, more than 30 days after arraignment. License revoked. Failing to report an administrative action within 30 days of final disposition A-2073 (Gina Nista) Non resident producer failed to report administrative actions filed by DOI in three states. License revoked. A-2036 (Doron Sterling) Non-resident producer failed to report denial of insurance license in another state. $500 fine. Administrative Action Examples (cont.) Using fraudulent, coercive, or dishonest practices or demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of business in this state or elsewhere A-2034 (Bruce Southwell) Resident producer used aggressive and harassing sales tactics to solicit former clients. Resident fined $4,000. Having admitted or been found to have committed an unfair insurance trade practice, any unfair claims settlement practice, or fraud A-2043 (Nathan Silva) Resident producer was rebating premium on a life insurance policy. Producer revoked. A-2115 (Bijan Richards) Resident producer submitted false applications to insurer to receive commission and bonuses. License revoked. Failing to respond to a written inquiry from the Department within 15 working days A-2094 (Thomas Title & Escrow)- Department received notice that surety bond was cancelled and requested information from agency. Agency failed to respond to two written inquiries and inquiry. $200 fine. A-2062 (Scott Antoniak)-Resident producer convicted of misdemeanors. Department requested additional information via written inquiry. Producer did not respond to inquiries. Certified mail returned to Department as unclaimed. License revoked. Other Actions Many title complaints are made regarding escrow funds. Neb. Rev. Stat , 116: Conditions for providing escrow, security, settlement, or closing services and maintaining escrow and security deposits A-1999 (NP Dodge Title Services, LLC): Buyer signed an escrow agreement at closing for sprinkler repairs of $500. Agency requested seller sign more than 30 days after closing and disbursed funds. Agency fined $1,000. A-1971 (Nebraska Default and Title Services): Complaint received over an escrow shortage of over $3k. Agency also did not have a DRLP or a licensed producer working at agency. Agency license revoked. 7

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