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Title 38 - Insurance
INSURANCE AGENTS AND AGENCIES
Persons considered agents of insurers.
A person who:
(a) solicits insurance in behalf of an insurer,
(b) takes or transmits other than for himself an application for insurance or a policy of insurance to or from an insurer,
(c) advertises or otherwise gives notice that he will receive or transmit insurance applications or policies,
(d) receives or delivers a policy of insurance of an insurer,
(e) receives, collects, or transmits any premium of insurance, or
(f) performs any other act in the making of an insurance contract for or with an insurer, other than for himself,
whether these acts are done by an employee of an insurer or at the instance or request of an insurer, must be a licensed agent of the insurer for which the act is done or the risk is taken unless provided otherwise in Section 38-43-20.
License of agent required; exceptions.
No person may act as agent for an insurer or for a fraternal benefit association unless an agent's license has been issued to him by the director or his designee, except for the following persons:
(a) an officer, employee, or secretary of a fraternal benefit association, as defined in Chapter 37 of this title, or any of its subordinate lodges or branches, who devotes substantially all of his services to activities other than the collection of premiums for fraternal insurance contracts and who receives for the solicitation of these contracts no commission or other compensation directly dependent upon the number or amount of contracts solicited or procured;
(b) a member representative of a fraternal benefit association which insures its members against death, dismemberment, and disability resulting from accident only and which pays no commission or other consideration for the collection of premiums for these contracts;
(c) a school teacher or school official who, without compensation, acts as agent for or performs any service in connection with the delivery or collection of insurance policies or premiums for accident and health insurance for children in the school system of the state where he is employed;
(d) a group insurance policyholder or employee of a group policyholder who acts as an agent or performs any service in connection with the collection of premiums or the delivery of insurance policies or certificates to the group insurance policyholder or his employees;
(e) an employee of a licensed agent who is under the agent's direct supervision or an employee of a licensed insurer, who performs solely clerical duties, and who is paid on an hourly or salary basis and not on a commission basis; or an agency office employee acting within the confines of the agent's office, under the direction and supervision of the licensed agent and within the scope of the agent's license, in the acceptance of request for insurance and payment of premiums and the performance of clerical, stenographic, and similar office duties; or
(f) an agent qualified to transact a life, health, or group insurance business may present a proposal for life, health, or group insurance to a prospective policyholder on behalf of an insurer for which the agent is not specifically licensed, and may also transmit an application for insurance to that insurer, if the insurer has previously furnished the proposal and application materials to the agent. By furnishing the proposal and application materials to the agent, the insurer is considered to have authorized the agent to act on its behalf, and the insurer is responsible for all actions of the agent as if the agent had been duly licensed for the insurer. Not more than fourteen days after the agent submits an application for insurance to the insurer, the insurer shall forward to the director or his designee its request that the agent be licensed as the insurer's agent in accordance with the requirements of this chapter.
License required of agencies and their stockholders, officers, directors, members, employees, and associates.
Every agency, whether corporation, partnership, association, or other aggregation of individuals, transacting or purporting to transact the business of an insurance agent under a corporate or trade name must be licensed by the director or his designee. The term "agent" as used in this title is considered to include an agency, unless the context requires otherwise.
Every stockholder, officer, director, member, employee, or associate of an agency, performing any act of an agent as enumerated in Section 38-43-10, shall possess a current agent's license giving authority to transact that particular business.
License confers right to appoint agents; Commissioner must be notified.
A license issued by the director or his designee pursuant to Chapter 5 of this title gives to the insurer obtaining it the right to appoint any number of agents to take risks or transact any business of insurance in the state. However, the director or his designee must be notified of the appointment before the agent takes any risk or transacts any business. The notification shall give the post office address and residence of the agent.
Applicants must be vouched for by insurers; notification when agent's contract canceled.
All applicants for an insurance agent's license must be vouched for by an official or a licensed representative of the insurer for which the applicant proposes to act, who shall certify whether the applicant has been appointed an agent to represent it and that it has duly investigated the character and record of the applicant and has satisfied itself that he is trustworthy and qualified to act as its agent and intends to hold himself out in good faith as an insurance agent. When a contract of an agent is canceled by the insurer represented, that insurer shall notify the Department of the cancellation within ten days stating the cause of the termination. The records furnished by insurers are for the use of the Department solely and not for public inspection.
Insurance business to be transacted by agents licensed in this state; exceptions.
All business done in this State by insurers doing the business of insurance as defined in this title must be transacted by their regularly authorized agents licensed in this State or through applications of the agents. Except as provided in Section 38-43-70, it is unlawful for a salaried officer, manager, or other representative of an insurer to transact for his company any of the business of a licensed agent for which the licensed agent received a commission, unless he himself is a bona fide licensed agent. No provision of this section applies to direct insurance covering the rolling stock of railroad corporations or property in transit while in possession and custody of railroad corporations or other common carriers or applies to bid bonds issued by a surety insurer in connection with any public or private contract.
Nonresidents may not be licensed except under reciprocal agreements or in communities partly out of State; licenses not required of certain nonresident officers and employees of licensed insurers.
(A) A nonresident of the state must not be licensed as an agent to do business in this State, except the director or his designee may enter into reciprocal agreements with the insurance commissioners of other states in regard to licensing of nonresident agents if in his judgment the arrangements or agreements are in the best interest of the state and if the applicant for the license meets the minimum statutory requirements of this State for the issuance of the license. However, the director or his designee may not enter into or continue a reciprocal agreement unless the other state is just as liberal as this State in licensing nonresident agents.
(B) The director or his designee may issue nonresident licenses to agents residing in a community comprised of two or more incorporated municipalities located partly within and partly without the state, or residing within twelve miles of the municipal limits of the municipalities, and permit the agents to write insurance in the state on the same basis as a resident licensed agent if the laws of the adjacent state are just as liberal in the licensing of residents of this State. All business so written is considered to have been transacted in accordance with the requirements of Section 38-43-60.
(C) A nonresident of this State who is a regular salaried officer or employee of a licensed insurer, except an insurer licensed to transact life or life and accident and health insurance, and who travels for his insurer in this State is not required to be licensed if all of the following apply:
(1) He has duties other than soliciting insurance.
(2) Policies of insurance written by him are countersigned by a licensed insurance agent who is a bona fide resident of this State.
(3) He receives no commission or other compensation directly dependent upon the amount of business obtained.
(4) His insurer-employer biennially registers with the department his name, business address, residence address, description of duties to be performed, and other information required by the director or his designee to be contained in the registration.
Fees for licenses.
(A) The following biennial fees are applicable to an agent's license:
(1) local agent: forty dollars;
(2) state, special, or general agent: one hundred dollars;
(3) agency: forty dollars. However, the fee applicable to an agent of a common carrier who sells only transportation ticket policies on accident and health insurance or baggage insurance on personal effects is twenty dollars.
(B) License fees for local, state, or special agents must be paid by the insurer for whom the agent proposes to act or by which the proposed agent is vouched for in the application for license. The department shall promulgate regulations specifying the time and manner of payment of these fees.
Medical examiners of insurers exempt from license fees.
No license fee may be charged by the State or any county, city, or town to a resident, practicing physician in this State, duly licensed to practice by the State Board of Medical Examiners, for making medical examinations for life insurers or fraternal orders.
Application for and issuance of licenses; standards for agents; examinations required; exemptions; temporary licenses.
Before being issued a license to do business as an agent in this State for an insurer, each applicant shall make written application for the license upon forms to be furnished by the department, and all information on the forms required by the director or his designee must be subscribed to by the applicant under oath. No business may be done by the applicant except following issuance of an agent's license, and the license may not be issued until the director or his designee has determined that the applicant is qualified as an insurance agent, generally, and is particularly qualified for the line of business in which the applicant proposes to engage. The department shall promulgate regulations setting forth qualifying standards of agents as to all lines of business and shall require the local agent applicant to stand a written examination. The director or his designee may waive the examination with respect to applicants who have achieved the designations of Chartered Property and Casualty Underwriter (CPCU) or Chartered Life Underwriter (CLU). The director or his designee may also, at his discretion, waive the examination and issue temporary licenses for a period not to exceed ninety days, upon demonstrated need. An agent of a common carrier who sells only trip transportation ticket policies of accident and health insurance or baggage insurance on personal effects is not required to stand a written examination. No person who is a salaried employee and acts as an agent for a bank, savings and loan association, savings bank, finance company, trust company, credit union, automobile dealer, or other company handling credit transactions operating in this State, who writes credit life, credit accident and health insurance, credit property, or any combination of these in connection with a loan or other credit transaction, is required to stand a written examination. Any bank, finance company, or other company handling credit transactions operating in this State and utilizing one or more credit life or accident and health or credit property agents in a particular geographical area who are licensed without having taken the written examination is required to have readily available at least one credit life or accident and health or credit property agent to answer customers' questions concerning credit life, credit accident and health insurance, or credit property, or any combination of these. The director or his designee, subject to item (d) of this section if he is assured of the honesty and trustworthiness of the applicant by the insurer which the applicant will represent, shall issue a nonrenewable temporary life insurance agent's license valid for ninety days without requiring the applicant to pass a written examination, as follows:
(a) A temporary life insurance agent's license to the executor or administrator of the estate of a deceased person who at the time of his death was a licensed life insurance agent.
(b) A temporary life insurance agent's license to a surviving next of kin of a deceased life insurance agent, if no administrator or executor has been appointed and qualified, but any license issued under this item must be revoked upon issuance of a license to an executor or administrator under item (a).
(c) A temporary life insurance agent's license to an applicant who has filed a written application for a license on forms furnished by the department where the applicant will actually collect the premiums on debit life and health insurance contracts during the period of the temporary license. The license shall, with respect to the applicant's solicitation and sales activities during the license period, authorize only the solicitation and sale of debit life and health insurance contracts. If the temporary license is not received from the director or his designee within fifteen days from the date the application was mailed to the department, by certified or registered mail, the insurer may assume that the temporary license will be issued in due course. For the purpose of this item (c) a debit life and health insurance contract means a contract for which the premiums are payable at monthly or more frequent intervals directly by the owner, or by a person representing the owner, to a representative of the company.
(d) If more than twenty-five percent of the temporary licensees of an insurer fail to receive a permanent license, not counting those who fail the written examination twice, in any twelve-month period it is prima facie evidence that the insurer is abusing the privilege of obtaining temporary licenses. Upon a determination by the director or his designee of abuse being made, following a public hearing, no temporary license may be issued for twenty-four months following the month of the determination of abuse on behalf of the insurer.
Education requirements for local and general agents; exceptions.
(a) No applicant may be licensed as a local or general agent unless, within two years immediately preceding the date of his licensing, he has:
(1) Successfully completed classroom courses, or the equivalent thereof, in insurance approved by the director or his designee consisting of no less than forty classroom hours, or the equivalent thereof; or
(2) Had at least one year of insurance underwriting or marketing experience as an employee of an agent, insurer, or their managers or general agents in all lines of insurance for which he is making application to be licensed.
(b) Certification of qualification of the applicant must be made by an official of the school, college, insurance company, association, or other body conducting the course of study, or by the former employer for qualification under item (2) of subsection (a) of this section. The certification must be in a format approved by the director or his designee and submitted with the sponsoring company's appointment of the agent and the agent's application for an agent's license, except where a temporary license is requested pursuant to Section 38-43-100, in which event the temporary license may be issued without such certification, if the sponsoring company furnishes certification prior to the applicant's being granted permission to take the examination. The certification of qualification of the applicant must be made within thirty days from the date of receipt of the request to provide the certification.
(c) Any course or program of instruction or seminar developed or sponsored, or developed and sponsored, by any authorized insurer, recognized agents, association, or insurance trade association or any independent program of instruction shall, subject to the approval of the director or his designee, qualify for the equivalency of the number of classroom hours assigned thereto by the director or his designee.
(d) Any correspondence course approved by the director or his designee shall qualify for the equivalency of the number of classroom hours assigned thereto by the director or his designee.
(e) This section applies to residents applying for a license to engage in the sale of insurance except those persons who have previously been licensed for a period of five years or more and those persons applying for a license limited to the following types of insurance only or a combination thereof:
(1) credit life or credit accident and health;
(2) credit property;
(3) crop hail;
(4) automobile physical damage;
(5) mortgage guaranty or mortgage redemption, or both;
(7) travel accident and baggage
(8) Federal Crop Insurance Program.
Continuing education requirements; administrator; advisory committee; exemptions from requirements.
(A) In addition to the requirements contained in Section 38-43-105, any applicant or agent licensed to sell property and casualty insurance or to sell life, accident and health insurance, or both, or qualified for this licensure, must complete biennially a minimum of twenty-four hours of continuing insurance education in order to be eligible for licensure for the following two years.
However, if an agent is licensed in both property and casualty and life, accident and health, the agent must complete at least one-third of the twenty-four required biennial continuing insurance education hours in courses related to each of these types of licenses or qualification for licensure. Notwithstanding the provisions of this subsection or any other provision of law, a maximum of twelve credit hours earned in a twelve-month period may be carried forward to the next biennial continuing insurance education period, as long as the hours carried forward are in excess of the required minimum for a particular reporting period.
(B) The forty-hour prelicensing educational requirement contained in Section 38-43-105 is sufficient to fulfill the requirements of this section for up to the first two years. Any waiver of this forty-hour requirement, as provided in Section 38-43-105(a)(2), is sufficient to meet the continuing insurance education requirements of this section.
(C) The director or his designee shall administer these continuing education requirements and shall approve courses of instruction which qualify for these purposes. In administering this program, the department, in its discretion, may promulgate regulations whereby agents provide to a continuing education administrator established within the Department of Insurance proof of compliance with continuing education requirements as a condition of license renewal or, in the alternative, contract with an outside service provider to provide recordkeeping services as the continuing education administrator. The costs of the continuing education administrator must be paid from the continuing insurance education fees paid by agents in the manner provided by this section, except that course approval responsibilities may not be designated to the continuing education administrator. The continuing education administrator shall compile and maintain, in conjunction with insurers and agents, records reflecting the continuing insurance education status of all licensed or qualified agents subject to the requirements of this section. The continuing education administrator shall furnish to the insurer, within ninety days of the agent's renewal date, as specified by regulation, a report of the continuing insurance education status of all of its agents. All licensed agents shall provide evidence of their continuing insurance education status to the continuing education administrator at least one hundred twenty days before the annual renewal date. Any continuing insurance education approved courses taken subsequent to one hundred twenty days before the renewal date must be applied to the following biennial continuing insurance education required period.
The department may promulgate regulations prescribing the overall parameters of continuing education requirements, and these regulations shall expressly authorize the director or his designee to recognize product-specific training offered by insurers, subject to those parameters and guidelines as are promulgated by the regulations. The director of the department shall appoint an advisory committee to make recommendations with respect to courses offered for approval, but the director or his designee shall retain authority with respect to course approvals, subject to those regulations as are promulgated. When the advisory committee is approved, it shall meet regularly as needed, but no less than semiannually, to review new course applications. Also, the advisory committee shall review modifications of courses previously approved and review previously promulgated regulations to make recommendations regarding any need for modifications, deletions, or new regulations. The advisory committee must be comprised of sixteen representatives. In making these appointments, the director may accept nominations for qualified individuals from the Carolina's Association of Professional Insurance Agents; the Independent Insurance Agents of South Carolina; the South Carolina Association of Automobile Insurance Agents; the South Carolina Association of Life Underwriters; the Association of South Carolina Life Insurance Companies; the Direct Writers Insurance Companies; insurers that are not members of any national insurance trade association; and any other individual, group, or trade or professional association.
Vacancies on the advisory committee must be published in newspapers of general, statewide circulation. Advisory committee members must be appointed for a term of two years each and shall serve until their successors are appointed and have qualified. Any vacancy must be filled for the unexpired term only.
(D) The license of any agent may not be renewed for any license year unless the agent has completed the mandated continuing insurance education requirements during the previous two-year accreditation period. Each insurer is responsible, annually at renewal, for furnishing to the department certification that its agents meet the continuing insurance education requirements. Insurers appointing individuals who are qualified but not currently licensed for any insurer are also required, in connection with the appointment of such an agent, to certify to the department that the agent meets the continuing insurance education requirements. Each agent is responsible for payment to the continuing education administrator of a reasonable annual fee for operation of the continuing insurance education program. These fees must be used to administer the provisions of this section.
(E) This section also applies to nonresident agents unless otherwise provided herein. However, any nonresident agent who successfully satisfies continuing insurance education requirements of his resident state and certifies this information to the continuing education administrator as specified in subsection (C) is deemed to have satisfied the requirements of this section regardless of the requirements of that other state.
(F) Insurance agents licensed solely for credit life or credit accident and health insurance, credit property insurance, crop hail insurance, automobile physical damage insurance, mortgage guaranty, or mortgage, title, travel accident and baggage, or the federal crop insurance are exempt from the provisions of this section. Insurance agents licensed solely for domestic insurance companies which have less than one million dollars in written premiums in any calendar year are exempt from the provisions of this section. Licensed special agents, or any or all of them, that the department by regulation shall specify are exempt from the provisions of this section.
(G) The department is authorized to promulgate regulations to implement the provisions of this section.
(H) A licensed agent reaching the age of fifty-five, with a minimum of twenty years of continuous licensure, is exempted from the requirements of this section as to the line or lines which are otherwise subject to the provisions of this section.
(I) All information received by the advisory committee in the course and scope of its duties must be treated as confidential and proprietary and not used or disclosed outside the requirements of the duties imposed on it by law.
Applicant's business and residence address required; notice of change of address required.
When an individual applies for an insurance agent's license he shall supply the Department his business and residence address. The agent shall notify the Department within thirty days of any change in these addresses.
Duration of license; nonpayment of fee; requirements for reinstatement.
An agent's license is for an indefinite term unless revoked, suspended, or terminated. If the biennial license fee for an agent is not paid at the time and in the manner the department provides by regulation, the license must be canceled. If the license is to be reinstated, an original application must be filed and a reinstatement fee equal to the biennial license fee unpaid must be paid in addition to the regular biennial license fee.
Licenses are not renewable if used primarily for personal coverage.
A license may not be renewed to an agent whose premium writings represented by the premiums or contracts of insurance signed, countersigned, issued, or sold by him for the general public during the preceding year do not exceed those on insurance signed, countersigned, issued, or sold by him covering his own personal coverage and the coverage of members of his immediate family, his employer, and his employees.
Revocation or suspension of, or refusal to reissue, license.
The director or his designee may revoke or suspend an agent's license after ten days' notice or refuse to reissue a license when it appears that an agent has been convicted of a crime involving moral turpitude, has violated this title or any regulation promulgated by the department, or has wilfully deceived or dealt unjustly with the citizens of this State.
For purposes of this section, "convicted" includes a plea of guilty or a plea of nolo contendere, and the record of conviction, or a copy of it, certified by the clerk of court or by the judge in whose court the conviction occurred is conclusive evidence of the conviction.
The words "deceived or dealt unjustly with the citizens of this State" include, but are not limited to, action or inaction by the agent as follows:
(1) misstating the facts in an application for insurance or aiding in the misstatement of the facts;
(2) failing to inform promptly the customer or insured of the correct premium or informing him of an incorrect premium based on the information furnished the agent by the customer or insured;
(3) failing to transmit promptly or pay all or a portion of the amount of an insurance premium when the agent or one of his employees has received payment from a customer or insured or someone on his behalf or when it has been financed by the agent;
(4) issuing his check covering all or a portion of an insurance premium which is not accepted by the bank on which it is written when it is initially submitted to the bank;
(5) failing to deliver promptly a policy, endorsement, or rider to any insured;
(6) failing to notify promptly the customer or insured if the agent has been unable to obtain the requested insurance for him;
(7) failing to maintain adequate records regarding insurance sought or obtained from or through the agent which can be examined by the director or his designee or one of his representatives for and on behalf of a citizen of this State.
When upon investigation the director or his designee finds that an agent has obtained a license by fraud or misrepresentation, he may suspend immediately the license. The director or his designee, in an order suspending a license, shall specify the period during which the suspension is to be in effect. The period may not exceed two years. No licensee whose license has been revoked or an applicant who has been refused a license by the director or his designee has the right to apply for another license within two years from the effective date of the revocation or refusal or, if judicial review before the Administrative Law Judge Division of the revocation or refusal is sought, within two years from the date of a final court order or decree affirming the revocation or suspension.
If, after notice of a hearing before the Administrative Law Judge Division or notice of an opportunity for hearing before the Administrative Law Judge Division, the director or his designee finds that one or more grounds exist for the revocation or suspension of, or the refusal to issue or reissue a license, the director or his designee, in his discretion, in lieu of revocation, suspension, or refusal, may impose upon the agent or applicant an administrative penalty as provided in Section 38-2-10 for each offense or ground.
The director or his designee may allow the agent or applicant a reasonable period, not to exceed thirty days, within which to pay to the director or his designee the amount of the penalty imposed. If the agent or applicant fails to pay the penalty in its entirety to the director or his designee at his office in Columbia within the period allowed, the license or application stands revoked, suspended, or renewal refused, as the case may be, upon expiration of the period and without any further proceedings.
Unlawfully representing unlicensed insurer.
If any person unlawfully solicits, negotiates for, collects, or transmits a premium for a contract of insurance or acts in any way in the negotiation or transaction of any insurance with an insurer not licensed to do business in this State, he is guilty of a misdemeanor.
Agents are personally liable on contracts of unauthorized insurers.
An insurance agent is personally liable on all contracts of insurance unlawfully made by or through him, directly or indirectly, for an insurer not authorized to do business in this State. A person who writes or signs any open policy, certificate, blank, or coupon of, or furnished by, an unlicensed company, agent, or broker, the effect of which is to bind any insurance in an unlicensed insurer on property in this State, is the agent of the insurer and personally liable for all licenses and taxes due on account of the transaction.
Agents are personally liable for selling policy of unlicensed insurer.
Every insurance agent who sells an insurance policy written or issued by an insurer not licensed to do business in this State is personally liable for the limits of the coverage provided for in the policy if the agent fails to comply with the provisions of this title relating to policies issued by insurers not licensed to do business in this State.
Validity of payment of premium to apparent agent; penalty for fraud.
An insurance agent who acts on behalf of another in negotiating a contract of insurance is the insurer's agent for the purpose of receiving the premium. An agent who knowingly procures the payment of a premium of insurance or the obligation for the payment of a premium of insurance by fraudulent representation is guilty of a misdemeanor and, upon conviction, must be fined in the discretion of the court or imprisoned not more than three years, or both.
Splitting commissions with unlicensed persons.
(a) A licensed agent representing an insurer may not pay, directly or indirectly, any commission, brokerage, or other valuable consideration on account of any policy of insurance on any risk in this State to any nonresident or resident not duly licensed to act as agent or broker for the type of insurance involved.
(b) Notwithstanding the provisions of subsection (a), agents licensed under this title may write insurance at the request of other licensed agents or licensed brokers or licensed nonresident brokers and allow the licensed agents or licensed brokers or licensed nonresident brokers not exceeding one-half of the commissions which they receive on the business written.
(c) The limitations contained in subsection (b) with respect to the amount of commission which may be allowed other licensed agents or licensed brokers or licensed nonresident brokers do not apply where the insurance written is life insurance or accident and health insurance.
(d) This section does not prohibit the payment of a fee to a trade or professional association exempt from income tax under Section 501(c) of the Internal Revenue Code.
(e) Nothing in this section should be construed to prohibit any licensed insurance agent from rebating any portion of his commission collected on automobile insurance premiums to the insured upon that automobile insurance policy.
Selling stock in insurer.
It is unlawful for a licensed insurance agent to sell any stock in an insurer while engaged in selling insurance policies for the insurer or for thirty days from the time at which he last represented the insurer as an insurance agent.
Stock salesmen may not sell insurance.
It is unlawful for a licensed stock salesman to sell any policy for an insurer while engaged in selling stock for the insurer or for thirty days from the time at which he last represented the insurer in the sale of its stock.
Suspension or revocation of licenses for violating Section 38-43-210 or 38-43-220.
Any person violating Section 38-43-210 or 38-43-220 may, in the discretion of the director or his designee or the Securities Commissioner, as the case may be, be suspended as a licensed insurance agent or licensed stockbroker for the period of time he considers proper, or either the director, his designee, or the Securities Commissioner may revoke the license immediately if he considers the violation merits this action.
Other offenses by agents.
(A) It is unlawful for an agent, collector, or other person to:
(1) undertake or pretend to represent an insurer licensed to do business in this State, or to collect or do business for the insurer without the authority of the insurer;
(2) secure cash advances by false statements; or
(3) fail to turn over or satisfactorily account for all collections of the insurer when required.
(B) A person who violates the provisions of this section is guilty of a misdemeanor and, upon conviction, must be fined in the discretion of the court or imprisoned not more than two years.
Fraudulent insurance application.
Any licensed insurance agent who, with the intent to injure, defraud, or deceive any insurance company or applicant for insurance:
(1) presents or causes to be presented to any insurance company an application for insurance, knowing that the application contains any false or misleading information or omissions concerning any fact or thing material to the underwriting of the insurance for which the application is submitted, or
(2) assists, abets, solicits, or conspires with another to prepare or make an application for insurance, knowing that the application contains any false or misleading information or omissions concerning any fact or thing material to the underwriting of the insurance for which the applicant is submitted, is guilty of a felony and, upon conviction, must be punished by imprisonment for not more than five years or a fine not to exceed five thousand dollars, or both.
Agents to keep records of business done, furnish to director for inspection.
All agents shall make and keep a full and correct record of the business done by them, showing the number, date, term, amount insured, premiums and the person to whom issued of every policy or certificate of renewal. The information from these records must be furnished to the director or his designee on demand and the original books or records are open to the inspection of the director or his designee on demand. These records must be kept for a minimum of five years.
Signing certain blank policies.
Except as provided in this section, no agent may sign any blank contract or policy of insurance. Trip, travel, or transportation ticket policies of insurance covering accidental personal or property injury, loss, or damage may be countersigned in blank, or facsimile impression or stamp, for issuance only through coin-operated machines, subject to regulations prescribed by the department. Any agent guilty of violating this section must, upon conviction, be fined for each offense not more than two hundred dollars.
ADVANCING OF PREMIUMS BY AGENTS
Service charge; unpaid balance and service charge are lien on unearned premiums.
When, pursuant to the written or oral request of an insured or applicant for insurance, an insurance agent or agency advances all or any part of the premium for an insurance policy to the insurer in behalf of the insured or applicant for insurance, the agent or agency is entitled to recover from the insured or applicant for insurance, in addition to the amount advanced, a service charge equal to the greater of one and one-half percent or one dollar and fifty cents a month on any unpaid balance. The agent or agency has a lien equal to the amount of the unpaid balance and service charges upon any unearned premium on the policy held by the insurer and subject to refund by the insurer under the policy.
Advances must be confined to premiums; additional charges prohibited.
Advances made by an agent, agency, or producer of record in behalf of an insured or applicant for insurance and any lien arising therefrom under this article must be confined to premiums for policies desired by the insured or applicant for insurance and no charges other than those set forth in this article may be made by any agent, agency, or producer of record in connection with, or related to, the advance of premiums. The agent, agency, or producer may not require, as a condition to the advancing of the premiums, that the insured purchase any other policy, commodity, product, or service.
Extension of credit constitutes advancement of premiums.
Extension to the insured or applicant for insurance of his credit with an insurer by an agent, agency, or producer of record constitutes the advancing of premiums within the meaning of this article and the premiums are considered to have been advanced as of the effective date of the policy or binder of insurance notwithstanding that the agent, agency, or producer remitted to the insurer at a different time or remitted to the insurer net of commission.
Cancellation of policy and refund of unearned premiums for failure to pay installment.
In the event that the insured or applicant for insurance fails to pay one or more installments within five days after the due date under any memorandum of the transaction delivered to him by the agent, agency, or producer, the agent, agency, or producer may call upon the insurer to cancel the policy and refund any unearned premiums on a pro rata basis to the agent, agency, or producer in discharge of the lien provided under Section 38-43-410. The insurer, upon paying any refund of unearned premiums accompanied by a statement detailing the computation, a copy of which is mailed to the insured at the address shown in the policy, has no further liability to the insured with respect to the return of unearned premiums.
In the event of any other refund of unearned premium resulting from termination of the policy, reduction in the premium, or otherwise, the refund of premium must be made to the agent, agency, or producer in recognition of his, or its, lien, and payment of the refund to the agent, agency, or producer by the insurer accompanied by a statement detailing the computation, a copy of which is mailed by the insurer to the insured at the address shown in the policy, except as to errors in the computation, discharges the insurer's obligation to the insured with respect to the refund.
Failure of an agent, agency, or producer to declare a default or move to perfect his or its lien because of the insured's failure to pay when due one or more installments of his obligation for premium advanced does not constitute a waiver on the part of the agent, agency, producer, or insurer nor is the agent, agency, or producer estopped or precluded from asserting and perfecting the lien with respect to any subsequent default nor is the insurer estopped or precluded from recognizing and discharging the lien with respect to the subsequent default.
Excess of return premium over unpaid balance and charges held in trust.
Any excess of return premium paid by the insurer to an agent, agency, or producer in discharge of the lien provided by this article over the amount of unpaid balance and accrued service charges must be held by the agent, agency, or producer of record in his or its fiduciary capacity and the excess must be paid to the insured within a reasonable time and in no event later than thirty days after receipt by the agent, agency, or producer of the return premium refunded by the insurer.
Conflict of interest prohibited.
Insurance agencies owned, beneficially owned, or controlled, in whole or part, directly or indirectly, by an insurer, the management of an insurer, or related interests are not entitled to the provisions of this article. An insurer is not chargeable with knowledge that an insurance agency is owned, beneficially owned, or controlled by an insurer, the management of an insurer, or related interests unless it has actual knowledge of the fact.
Agreements not subject to Section 38-55-50; agent presumed to be acting in own right.
Agreements or arrangements for the advancing of insurance premiums by an insurance agent, agency, or producer of record under this article are not subject to Section 38-55-50, relating to the incorporation of collateral agreements effecting the insurance into the policies or contracts of insurance so affected.
An agent or agency which, pursuant to this article, advances premiums in behalf of an insured or applicant for insurance to an insurer for which the agent or agency is licensed is conclusively presumed to be acting in his or its own right and for the protection of his or its own financial interests with respect to the lien provided in this article. No request by the agent or agency to the insurer to cancel a policy, nor the assertion or perfection of the lien by the agent or agency, is considered to create a conflict in interest nor is any act of an agent, agency, or producer of record in causing cancellation of a policy because of the default of the insured in his obligation or in asserting or perfecting the lien void or voidable because of a claimed conflict in interest.