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15.2 General Grounds for Disciplinary Actions

Definitions​

Refusal to issue or renew is the Superintendent's determination not to process or approve an initial license application or a license renewal.

Revocation is the permanent removal of an individual's authority to hold any insurance agent license within the state.

Surrender for cause is the voluntary relinquishment of an individual's authority to hold a license in this state as an alternative to formal revocation or suspension.

Suspension is the temporary removal of an individual's authority to hold any insurance agent license in this state, for either a defined or indefinite period, under the terms and conditions set by the Superintendent.

If an agent's license is surrendered, revoked, suspended, canceled, or placed on inactive status at the agent's request, all appointments held by the agent are automatically terminated. To regain licensure, the individual must apply as a new applicant and satisfy all requirements for a new insurance agent license, including completion of a criminal records check.

The Superintendent may suspend, revoke, or impose other disciplinary actions on an individual, regardless of whether the person is currently appointed or authorized to represent an insurer or another agent.

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

The Superintendent has the authority to take disciplinary action against an insurance agent's license when specific violations occur. Such actions may include suspension, revocation, refusal to issue or renew a license, assessment of civil penalties, or other authorized sanctions. The following are key grounds for disciplinary action:

  • An agent may be subject to discipline if they fail to comply with any official directive requiring payment of financial obligations. This includes neglecting to pay federal, state, or local income taxes, state or local sales taxes, or workers' compensation premiums after receiving an invoice, notice, assessment, or order. Noncompliance with these obligations is classified as a Class A offense, indicating a serious violation.
  • An agent must comply with requests from the Superintendent to appear for questioning. Failure to attend a scheduled interview—after receiving written notice—constitutes a violation unless the agent has requested and been granted a reasonable extension of time. This type of noncompliance is also considered a Class A offense.
  • Agents are required to respond promptly to written inquiries from the Department of Insurance. A violation occurs when an agent does not submit a written response within 21 calendar days of receiving such an inquiry, unless an extension has been requested and approved by the Superintendent. This is categorized as a Class B offense, which is generally less severe than a Class A offense but still subject to disciplinary action.

Disciplinary action may be imposed on an insurance agent for committing any of the following Class A offenses:

  • Providing incorrect, misleading, incomplete, or materially untrue information in a license or appointment application.
  • Violating or failing to comply with any insurance law, administrative rule, subpoena, or order issued by the Superintendent of this or another state.
  • Obtaining or maintaining an insurance license through misrepresentation or fraudulent means.
  • Illegally withholding, misappropriating, or converting any money or property received in the course of conducting insurance business.
  • Intentionally misrepresenting the terms, conditions, or benefits of an actual or proposed insurance policy.
  • Being convicted of, or entering a plea of guilty or no contest to, a felony offense, regardless of whether a formal judgment of conviction has been entered by the court.
  • Being convicted of or pleading guilty to a misdemeanor involving:
    • The misuse or theft of another person's money or property
    • Fraud, forgery, dishonest acts, or breach of fiduciary duty related to the business of insurance
    • Acts involving moral turpitude (immoral or unethical conduct), regardless of whether a formal judgment has been entered by the court
  • Engaging in any act that violates insurance unfair trade practice laws or constitutes insurance fraud.
  • Having an insurance agent license, or its equivalent, denied, suspended, or revoked in any other state, province, district, or territory.
  • Improperly using notes or any unauthorized reference materials while completing an insurance agent licensing examination.
  • Forging an insurance application or any document used in an insurance transaction, or using a document in the conduct of insurance business when the individual knew or reasonably should have known it contained forged information.
  • Knowingly accepting insurance business from a person who is not properly licensed.
  • Demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of insurance business.
  • Failing to inform an insurance applicant or policyholder, at the time of accepting a premium or an order to bind coverage, that the agent has not been properly appointed by the insurer.
  • Having any professional license or registration with the Financial Industry Regulatory Authority (FINRA) suspended, revoked, or being barred from participation in any industry.
  • Being subject to a cease and desist order or permanent injunction arising from the mishandling of funds, breach of fiduciary duty, or engaging in unlicensed or unregistered activities.
  • Causing or permitting a policyholder or applicant to designate the agent or the agent's family member as a beneficiary, or as 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.
  • Transferring or placing insurance coverage with an insurer other than the one expressly selected by the applicant, without the applicant's consent or without valid extenuating circumstances.
  • Failing to inform a policyholder or applicant of the identity of the insurer and any other agent known to be involved in the procurement, placement, or continuation of the insurance coverage.
  • In the case of an agent operating as a business entity, failing to report a known or reasonably suspected violation by an individual licensee to the Department of Insurance when such violation was known, or should have been known, by a partner, officer, manager, or member of the entity.
  • Misrepresenting one's qualifications, professional status, or relationship to another person, or using a professional designation that has not been properly earned or conferred by the appropriate accrediting organization.
  • Obtaining a premium loan in the name of an insured without that individual's knowledge and written authorization.
  • Using an insurer's paper, software, or other materials after an appointment has been terminated in a manner that would lead a reasonable person to believe the licensee is still acting on behalf of or representing the insurer.
  • Using an insurance license primarily to procure, receive, solicit, or effect insurance for the licensee's own property or for that of relatives, employers, or employees.
  • Knowingly assisting, aiding, or abetting another individual in violating any insurance law within this state.
  • Failing to maintain an active insurance agent license in the agent's home state for the same lines of authority held in this state as a nonresident agent.
  • Soliciting, procuring applications for, or placing insurance—either directly or indirectly—without being properly authorized under applicable law.
  • Soliciting, selling, or negotiating any product or service that provides insurance-like benefits but is not regulated by the Superintendent, without clearly disclosing to the prospective purchaser that the product or service is not insurance and is not subject to regulatory oversight by the Superintendent.
  • Failing to issue a required refund to a policyholder or applicant within the applicable timeframe, including:
    • Within 30 days after the date the policyholder, applicant, or insurer initiates or requests the action that results in a refund
    • Within 30 days after the date of the insurer's refund check, when the agent is responsible for distributing a portion of the refund
    • Within 45 days after the date the refund first appears on the agent's statement of account
  • In the case of an insurance agent operating as a business entity, using a life insurance license primarily to place coverage on the lives of its officers, employees, stakeholders, or their relatives.
  • A resident business entity failing to remain qualified to conduct business in this state, failing to maintain good standing with the Secretary of State, or failing to maintain a valid appointment for the lines of authority held in this state.
  • Transacting insurance business or annuity contracts (fixed or variable) for or on behalf of an insurer that is not authorized to do business in this state, or for a fictitious, nonexistent, dissolved, inactive, or liquidated insurer.
    • In addition to any other applicable sanctions, the Superintendent will impose a minimum two-year suspension of all licenses held by the individual across all lines of insurance for such violations.

Disciplinary action may be imposed on an insurance agent for committing any of the following Class B offenses:

  • Failing to notify the Superintendent of a change in address as required.
  • Failing to inform the Superintendent of any administrative action taken against the agent in another jurisdiction or by another governmental agency, or of any criminal prosecution other than minor traffic offenses.
  • Failing to submit an insurance application within the time period required by the insurer, or within 7 days after accepting a premium, whichever occurs later.

Misconduct by Insurance Applicants and Licensees​

The Superintendent may suspend, revoke, refuse to issue or renew an insurance license, assess civil penalties, or impose other authorized sanctions when it is determined that an individual has solicited, procured, or placed additional or replacement health, sickness, or accident insurance under circumstances where the individual knew, or reasonably should have known, that the insured or prospective insured:

  • Is already covered, and will continue to be covered, by substantially similar insurance, such that the additional policy would not provide meaningful additional benefits or would offer only minimal value relative to its cost.
  • Would not be eligible to receive benefits under the new coverage due to existing health conditions, and the agent nevertheless led the insured or prospective insured to believe that coverage would apply.
  • Intends to replace existing insurance, but would not be eligible to receive benefits under the new policy until completion of a required waiting period, which the agent failed to properly disclose.

An insurance company, or the managing or principal agent of an insurance agency, may be considered to have engaged in an unfair or deceptive practice when it is determined that they knew, or reasonably should have known, of misconduct by a licensed agent or employee and have adopted or maintained any of the following practices:

  • Permitting, supporting, or failing to take corrective action in response to known improper conduct.
  • Failing to notify the Ohio Department of Insurance when there is reasonable cause to believe that a violation has occurred or is ongoing, and the relevant facts are known.
  • Failing to conduct a reasonable investigation, upon request of the Department, to determine whether such misconduct has occurred.

An insurance company may not refuse to refund a premium, distribute or return funds, or issue coverage to an insured or prospective insured, at that individual's election, when the company's agent has violated any applicable insurance law or rule.

Hearings​

Before imposing any penalty or taking action to deny, suspend, revoke, or refuse to issue a license, the Superintendent must provide the licensee or applicant with proper notice and an opportunity for a hearing.

The notice, the hearing officer's findings, or the Superintendent's final order must be served by certified mail, with a return receipt signed by any recipient, and sent to the individual's last known address.

If service by mail is unsuccessful, the notice must be published once per week for three consecutive weeks in the newspaper of record in the county of the individual's last known address.

The notice may also be delivered directly to the licensee or applicant by an authorized employee of the Department.

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

Notices concerning the scheduling of hearings will be sent to both the party and their attorney by ordinary mail.

The Superintendent has the statutory authority to issue subpoenas, which are enforceable through the court of common pleas. Subpoenas may require the appearance of witnesses, the production of documents or evidence at a hearing, or the taking of testimony.

  • Any subpoena must be properly served by one of the following methods:
    • Certified mail, with return receipt requested
    • An attorney
    • A designated employee of the Department, acting on behalf of the Superintendent

Penalties and Fines for Violations​

If the Superintendent determines that a Class A violation has occurred, a range of disciplinary actions may be imposed, including one or more of the following:

  • Imposing a civil fine of up to $25,000 per violation.
  • Requiring payment of administrative costs incurred by the Department, including expenses related to the investigation and hearing process.
  • Suspending all licenses held by the individual across all lines of insurance for a specified period or indefinitely.
  • Permanently revoking all licenses held by the individual for all lines of insurance.
  • Denying the issuance of a new license or refusing to renew an existing license.
  • Prohibiting the individual from being employed in any capacity within the insurance industry and from holding any financial interest in an insurance agency, insurer, surety bail bond business, or third-party administrator within the state.
  • Requiring corrective actions either in place of, or in addition to, other penalties. These orders may allow for the suspension of penalties (such as fines, suspension, revocation, or refusal actions) if the licensee complies with specified terms and conditions.
  • Accepting a voluntary surrender of the license for cause, which may be considered in lieu of other disciplinary actions.
  • Accepting a surrender for cause that remains in effect for a minimum of five years, during which the individual is prohibited from applying for any insurance license. This action may serve as an alternative to suspension or revocation and may include additional corrective action requirements.

If the Superintendent determines that a Class B violation has occurred, one or more of the following penalties may be imposed:

  • Imposing a civil fine of up to $25,000 per violation.
  • Requiring payment of administrative costs incurred by the Department, including expenses related to the investigation and hearing process.
  • Ordering corrective actions either in place of, or in addition to, other penalties. Such orders may allow for the suspension of civil penalties, license revocation, license suspension, or refusal to issue or renew a license, provided the licensee complies with the specified terms and conditions.
  • Accepting a voluntary surrender of the license for cause, which must remain in effect for a minimum of five years and prohibits the individual from applying for any insurance license during that period. This action may serve as an alternative to suspension or revocation and may include additional corrective action requirements.

Cease and Desist Orders​

If the Superintendent determines that a licensee's conduct is causing, or is likely to cause, harm, the Superintendent may issue a cease and desist order. The order must meet the following requirements:

  • The order must be sent by certified mail, return receipt requested.
  • The order must clearly identify the specific act or conduct subject to the order and establish a hearing date within 15 days of the issuance of the order.

Within 15 days after objections are submitted, the Superintendent will issue a final order either confirming or rescinding the cease and desist order. The agent has the right to appeal the final order in writing.

Civil Penalties​

If the Superintendent has reasonable cause to believe that an order issued under this section has been violated, the Superintendent may request the Attorney General to initiate legal action against the involved party or parties on behalf of the state. Upon prosecution, the court may impose one or more of the following remedies:

  • A civil penalty of up to $25,000 for each violation.
  • Court-ordered actions requiring the party to cease or take specific actions.
  • Compensation to affected individuals for losses resulting from the violation.
  • Any additional remedies the court determines to be just and appropriate under the circumstances.

Criminal Penalties​

Engaging in the sale, solicitation, or negotiation of insurance without the required license constitutes a first-degree misdemeanor.

Licensed agents are prohibited from selling, or receiving compensation for the sale of, shares of stock in any insurance company or agency with which they hold an appointment to sell insurance. A violation of this prohibition may result in criminal penalties, including a fine ranging from $25 to $500, imprisonment for up to six months, or both.

Any individual who sells on behalf of, or represents, an unauthorized insurer without holding a valid surplus lines broker license is subject to criminal penalties. These may include a fine ranging from $25 to $500, imprisonment for up to one year, or both.

A surplus lines broker who places insurance with an unauthorized carrier without satisfying the required due diligence standards is subject to criminal penalties, including a fine of $25 to $500, imprisonment for up to one year, or both.

Any individual who fails to submit required reports under the insurance code, or who engages in advertising without complying with applicable state laws, is subject to a fine of not less than $100 and not more than $500.

Right to Appeal​

A licensee who is subject to an agency disciplinary action has the right to appeal the decision and request a hearing before the Court of Common Pleas in Franklin County. The licensee must submit a written notice of appeal within 15 days of the agency's action.

Consent/Settlement Agreements​

An individual may enter into a written settlement agreement in which they agree to correct identified violations and comply with Ohio insurance laws going forward. Under such an agreement, the Superintendent may impose a single penalty in an amount deemed appropriate by the parties based on the circumstances.

Disciplinary Action Considerations​

When determining whether to deny a license or impose suspensions, revocations, fines, other penalties, or orders, the Superintendent may evaluate the following factors:

  • Whether the individual acted in good faith.
  • Whether the individual made restitution for financial losses incurred by others as a result of their actions.
  • The actual or potential harm caused to other individuals.
  • The level of trust placed in the individual by those who may have been adversely affected.
  • Whether the individual has been subject to previous administrative actions by the Superintendent.
  • The number of individuals adversely affected by the person's acts or omissions.
  • Whether the individual voluntarily reported the violations, cooperated with authorities, and accepted responsibility, or instead attempted to conceal the misconduct.
  • Actions taken to correct deficiencies and prevent future violations.
  • If the individual has been convicted of a criminal offense, consideration may be given to the nature of the offense, whether it involved a breach of fiduciary duty, the amount of time that has elapsed since the conviction, and the individual's conduct and activities following the conviction.

Quiz​

1. Which of the following is considered a Class A offense?

A. Failing to notify the Superintendent of a change of address

B. Providing materially untrue information on a license application

C. Submitting an application 2 days late

D. Failing to attend a voluntary meeting

Correct Answer: B

Rationale: Providing false or misleading information in a license or appointment application is a serious violation classified as a Class A offense.

2. What is a possible penalty for a Class A violation?

A. Warning letter only

B. Mandatory retraining only

C. Civil penalty up to $25,000 per violation

D. No penalty allowed

Correct Answer: C

Rationale: The Superintendent may impose a civil fine of up to $25,000 for each Class A violation, along with other disciplinary actions.

3. Which of the following is a Class B offense?

A. Misappropriating client funds

B. Committing insurance fraud

C. Failing to report a change of address

D. Forging an insurance document

Correct Answer: C

Rationale: Failing to notify the Superintendent of a change of address is classified as a Class B offense, which is less severe than Class A violations.

4. Before disciplinary action is taken, what must the Superintendent provide?

A. Immediate license revocation

B. A warning via email only

C. Notice and an opportunity for a hearing

D. Automatic suspension

Correct Answer: C

Rationale: Due process requires that the licensee be given proper notice and an opportunity for a hearing before disciplinary action is finalized.

5. What is required for a valid cease and desist order?

A. Verbal notification only

B. Certified mail and a hearing date within 15 days

C. Posting on a public website

D. Approval from another agent

Correct Answer: B

Rationale: A cease and desist order must be sent by certified mail and include a hearing date within 15 days to meet legal requirements.