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May 23
NYS DFS Disciplinary Actions: Be Careful When Charging Fees & Running Ads; Renew Your License


The latest insurance disciplinary action report from the New York State Department of Financial Services is out. Most of it is not particularly noteworthy. There were 27 actions taken against agents and/or brokers, and 17 were for failure to report or disclose various run-ins with the law or regulatory authorities. Only 9 actions were taken against New York resident agents and/or brokers, and 3 of them were in the failure to report/disclose category. The six other actions against New York resident producers were:

  • $1,000 fine for running two Facebook ads that referred to insurers without including the name of the city where they are headquartered.
  • $2,000 fine for putting false premium payment information on four applications for condominium insurance policies.
  • $45,000 fine for acting as an insurance producer without a license for seven and a half months in 2023. The maximum fine is $500 per offense, so this person must have written 90 new policies without a license.
  • $3,000 against a captive agent for forming an unapproved new agency and shifting business to it to qualify for a larger performance bonus.
  • $10,500 fine for collecting service fees from insureds without obtaining their written consent; sitting on an insured's premium payment too long without sending it to the carrier; and for submitting false information to the department.
  • $9,500 fine for acting as an insurance producer without a license for six weeks in 2023 and doing business under an unapproved agency name.

Non-residents got far stiffer penalties:

  • There were two license revocations. One was for lying to an insured, enrolling an insured in a medical plan without her consent; ignoring department investigatory letters; and failing to report disciplinary actions taken by two other states. The other was for not reporting a guilty plea in criminal court.
  • A Massachusetts agency/adjusting firm and two of its sublicensees were fined $1.5 million for operating for three and a half years without broker or independent adjuster licenses, permitting unlicensed individuals to act as adjusters and brokers, and compensating someone for acting as an adjuster without a license.
  • A Utah brokerage paid $85,990 for failing to make filings on time to the Excess Line Association of New York over a five-year period.
  • Finally, a Texas independent adjusting firm was fined $800,000 for acting without a license and paying three unlicensed individuals who acted as adjusters.

I think the actions that are most relevant to Big I New York members are the ones regarding the Facebook posts, the charging of service fees, and acting without licenses.

  • We regularly get questions about service fees, so before you charge them, visit the Service Fees page in the Answer Center of our website.
  • It's also not unusual for members to simply forget to renew their licenses. Remember that your license = your livelihood. If it expires, the law forbids you from selling new policies, so please don't forget to take care of it.
  • Lastly, it is still the law in New York that a producer's advertisement that mentions an insurer must provide the insurer's full name and the name of the city, town, or village in which it has its principal office. I think that law is antiquated, but while it is in effect the DFS may enforce it. Take care with your ads, including social media posts and websites.

I will now reveal my age by quoting an old favorite TV show, Hill Street Blues: “Let's be careful out there."


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