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H0585...........................................................by BUSINESS
INSURANCE - Adds to and amends existing law relating to the Department of
Insurance to set forth provisions applicable to hearings upon denial,
nonrenewal, suspension or revocation of a certificate of authority or
license; to reference violations by applicants; and to remove language
referencing notification and hearing provisions relating to the denial or
refusal to renew an applicant's license.
02/08 House intro - 1st rdg - to printing
02/09 Rpt prt - to Bus
02/14 Rpt out - rec d/p - to 2nd rdg
02/15 2nd rdg - to 3rd rdg
02/21 3rd rdg - PASSED - 69-0-1
AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer,
Bedke, Bell, Bilbao, Black, Block, Boe, Bolz, Brackett, Bradford,
Cannon, Chadderdon, Clark, Collins, Crow, Deal, Denney, Edmunson,
Ellsworth, Eskridge, Field(18), Field(23), Garrett, Hart, Harwood,
Henbest, Henderson, Jaquet, Kemp, Lake, LeFavour, Loertscher,
Martinez, Mathews, McGeachin, McKague, Miller, Mitchell, Moyle,
Nielsen, Nonini, Pasley-Stuart, Pence, Raybould, Ring, Ringo,
Roberts, Rusche, Rydalch, Sali(Sali), Sayler, Schaefer, Shepherd(2),
Shepherd(8), Shirley, Skippen, Smith(30), Smylie, Snodgrass,
Stevenson, Trail, Wills, Wood, Mr. Speaker
NAYS -- None
Absent and excused -- Smith(24)
Floor Sponsor - Collins
Title apvd - to Senate
02/22 Senate intro - 1st rdg - to Com/HuRes
03/01 Rpt out - rec d/p - to 2nd rdg
03/02 2nd rdg - to 3rd rdg
03/07 3rd rdg - PASSED - 33-0-2
AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett, Cameron,
Coiner, Compton, Corder, Darrington, Davis, Fulcher, Gannon, Geddes,
Goedde, Hill, Jorgenson, Kelly, Keough, Langhorst, Little, Lodge,
Malepeai, Marley, McGee, McKenzie, Richardson, Schroeder, Stegner,
Stennett, Sweet, Werk, Williams
NAYS -- None
Absent and excused -- Burtenshaw, Pearce
Floor Sponsor - Goedde
Title apvd - to House
03/08 To enrol
03/09 Rpt enrol - Sp signed
03/10 Pres signed
03/13 To Governor
03/14 Governor signed
Session Law Chapter 49
Effective: 07/01/06
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 585
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO THE DEPARTMENT OF INSURANCE; AMENDING CHAPTER 2, TITLE 41, IDAHO
3 CODE, BY THE ADDITION OF A NEW SECTION 41-232A, IDAHO CODE, TO SET FORTH
4 PROVISIONS APPLICABLE TO HEARINGS; AMENDING SECTION 41-308, IDAHO CODE, TO
5 REMOVE REFERENCES TO HEARINGS RELATED TO CERTIFICATES OF AUTHORITY; AND
6 AMENDING SECTION 41-1016, IDAHO CODE, TO PROVIDE A CODE REFERENCE, TO
7 REMOVE LANGUAGE REFERENCING HEARINGS, TO REFERENCE VIOLATIONS BY APPLI-
8 CANTS AND TO REMOVE LANGUAGE REFERENCING NOTIFICATION AND HEARING PROVI-
9 SIONS RELATING TO THE DENIAL OR REFUSAL TO RENEW A LICENSE FOR AN APPLI-
10 CANT.
11 Be It Enacted by the Legislature of the State of Idaho:
12 SECTION 1. That Chapter 2, Title 41, Idaho Code, be, and the same is
13 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
14 ignated as Section 41-232A, Idaho Code, and to read as follows:
15 41-232A. HEARINGS UPON THE DENIAL, NONRENEWAL, SUSPENSION OR REVOCATION
16 OF A CERTIFICATE OF AUTHORITY OR LICENSE OR IMPOSITION OF ADMINISTRATIVE PEN-
17 ALTIES. (1) In the event the director denies an applicant's application for a
18 certificate of authority or for a license, the director shall notify the
19 applicant in writing of the basis for the denial. Within twenty-one (21) days
20 of the issuance of the notice of denial, the applicant may submit to the
21 director a written request for a hearing before the director or his duly
22 appointed representative addressing the basis for the denial of the applica-
23 tion and requesting that the director reexamine the applicant's qualifications
24 for a certificate of authority or a license. An applicant's failure to request
25 a hearing in writing within twenty-one (21) days of the issuance of the notice
26 of denial shall be deemed a waiver of the opportunity for hearing.
27 (2) Except as otherwise provided in title 41 and chapter 52, title 67,
28 Idaho Code, prior to the director's nonrenewal, suspension or revocation of a
29 certificate of authority or license or imposition of any administrative pen-
30 alty, the director shall provide the insurer or licensee, and any appointing
31 insurers that have appointed the licensee as an agent, with advance written
32 notice of the nature of the violations alleged or the charges pending against
33 the insurer or licensee and affording the insurer or licensee an opportunity
34 for a hearing thereon. Within twenty-one (21) days of the issuance of the
35 notice of violations or charges, the insurer or licensee may submit to the
36 director a written request for a hearing before the director or his duly
37 appointed representative addressing the alleged violations and charges pending
38 against the insurer or licensee. An insurer's or licensee's failure to request
39 a hearing or otherwise dispute the notice in writing within twenty-one (21)
40 days of the issuance of the notice of violations or charges shall be deemed a
41 waiver of the opportunity for hearing.
42 (3) All hearings under this section shall be conducted in accordance with
43 the provisions set forth in this chapter and chapter 52, title 67, Idaho Code.
2
1 SECTION 2. That Section 41-308, Idaho Code, be, and the same is hereby
2 amended to read as follows:
3 41-308. GENERAL ELIGIBILITY FOR CERTIFICATE OF AUTHORITY. To qualify for
4 and hold authority to transact insurance in this state an insurer must be
5 otherwise in compliance with this code and with its charter powers, and must
6 be an incorporated stock insurer, or an incorporated mutual insurer, or a
7 reciprocal insurer, of the same general type as may be formed as a domestic
8 insurer under this code; except that:
9 (1) No insurer shall be authorized to transact insurance in this state
10 which does not maintain reserves as required by chapter 6 (assets and liabili-
11 ties) of this code applicable to the kind or kinds of insurance transacted by
12 such insurer, wherever transacted in the United States.
13 (2) Before granting authority to an insurer to transact insurance in this
14 state, the director shall take into consideration the length of time the
15 insurer has been transacting insurance; the net profit or loss experienced
16 over the previous five (5) years; or any other factor which for good reason he
17 believes could make the admittance of the insurer not in the best interest of
18 the insurance-buying public.
19 (3) The director shall not grant or continue authority to transact insur-
20 ance in this state as to any insurer the management of which is found by him,
21 after a hearing held thereon, to be untrustworthy, or so lacking in insurance
22 experience as to make the proposed operation hazardous to the insurance-buying
23 public; or which, after a hearing held thereon, he has good reason to believe
24 is affiliated directly or indirectly through ownership, control, reinsurance
25 transactions or other insurance or business relations, with any person or per-
26 sons whose business operations are or have been marked, to the detriment of
27 policyholders or stockholders or investors or creditors or of the public, by
28 manipulation or dissipation of assets, or manipulation of accounts, or of
29 reinsurance, or by similar injurious actions.
30 SECTION 3. That Section 41-1016, Idaho Code, be, and the same is hereby
31 amended to read as follows:
32 41-1016. ADMINISTRATIVE PENALTY -- SUSPENSION, REVOCATION, REFUSAL OF
33 LICENSE. (1) The director may impose an administrative penalty not to exceed
34 one thousand dollars ($1,000), for deposit in the general fund of the state of
35 Idaho, and may suspend for not more than twelve (12) months or may revoke or
36 refuse to issue or continue any license issued under this chapter, chapter 27,
37 title 41, Idaho Code (title insurance), chapter 11, title 41, Idaho Code
38 (adjusters), or any chapter 12, title 41, Idaho Code (surplus lines brokers),
39 license if, after not less than twenty-one (21) days' notice of the opportu-
40 nity for a hearing and of the charges against the licensee given as provided
41 in section 41-212(3), Idaho Code, to the licensee and to any appointing insur-
42 ers represented (as to a producer who is appointed as an agent), the director
43 finds that as to the licensee or applicant any one (1) or more of the follow-
44 ing causes or violations exist:
45 (a) Providing incorrect, misleading, incomplete or materially untrue
46 information in the license application;
47 (b) Violating any provision of title 41, Idaho Code, department rule,
48 subpoena or order of the director or of another state's insurance direc-
49 tor;
50 (c) Obtaining or attempting to obtain a license through misrepresentation
51 or fraud;
52 (d) Improperly withholding, misappropriating or converting any moneys or
3
1 properties received in the course of doing insurance business;
2 (e) Misrepresenting the terms of an actual or proposed insurance contract
3 or application for insurance or misrepresenting any fact material to any
4 insurance transaction or proposed transaction;
5 (f) Being convicted of or pleading guilty to any felony, or to a misde-
6 meanor which evidences bad moral character, dishonesty, a lack of integ-
7 rity and financial responsibility, or an unfitness and inability to pro-
8 vide acceptable service to the consuming public;
9 (g) Admitting or being found to have committed any insurance unfair trade
10 practice or fraud;
11 (h) Using fraudulent, coercive or dishonest practices, or demonstrating
12 incompetence, untrustworthiness or financial irresponsibility, or being a
13 source of injury and loss to the public or others, in the conduct of busi-
14 ness in this state or elsewhere;
15 (i) Having an insurance license denied, suspended or revoked in any other
16 state, province, district or territory;
17 (j) Forging another's name on an application for insurance or on any doc-
18 ument related to an insurance transaction;
19 (k) Improperly using notes or any other reference material to complete an
20 examination for an insurance license;
21 (l) Knowingly accepting insurance business from an individual who is not
22 licensed;
23 (m) Failing to comply with an administrative or court order imposing a
24 child support obligation, provided however, that nothing in this provision
25 shall be deemed to abrogate or modify chapter 14, title 7, Idaho Code; or
26 (n) Failing to pay state income tax or to comply with any administrative
27 or court order directing payment of state income tax.
28 (2) The director shall, without hearing, suspend for not more than twelve
29 (12) months, or shall revoke or refuse to continue any license issued under
30 this chapter to a nonresident where the director has received a final order of
31 suspension, revocation or refusal to continue from the insurance regulatory
32 official or court of jurisdiction of the licensee's home state. If cause under
33 this provision exists after the expiration of the twelve (12) months, succes-
34 sive suspensions may be imposed by the director without hearing.
35 (3) In the event that the director denies or refuses to renew an applica-
36 tion for a license, the director shall notify the applicant or licensee and
37 advise, in writing, the applicant or licensee of the reason for the denial or
38 nonrenewal of the applicant's or licensee's license. The applicant or licensee
39 may make written demand upon the director within twenty-one (21) days for a
40 hearing before the director to determine the reasonableness of the director's
41 action. The hearing shall be held pursuant to chapter 2, title 41, and chapter
42 52, title 67, Idaho Code.
43 (4) The license of a business entity may be suspended, revoked or refused
44 if the director finds, after hearing, that the violation of an individual
45 licensee, who is registered to or acting on behalf of the business entity, was
46 known or should have been known by one (1) or more of the owners, officers or
47 managers acting on behalf of the business entity and that the violation was
48 not reported to the director and no corrective action was taken.
49 (54) In addition to or in lieu of any applicable denial, suspension or
50 revocation of a license, a person may, after hearing, be subject to a civil
51 fine or administrative penalty pursuant to subsection (1) of this section or
52 any other applicable section.
53 (65) The director shall retain the authority to enforce the provisions of
54 and impose any penalty or remedy authorized by title 41, Idaho Code, against
55 any person who is under investigation for or charged with a violation of title
4
1 41, Idaho Code, or department rule, even if the person's license or registra-
2 tion has been surrendered, has lapsed by operation of law, or if the person
3 has never been licensed.
STATEMENT OF PURPOSE
RS 15353C2
This proposal amends existing law to delete language
referencing the rights of applicants for a certificate of
authority or a license from the Director of the Department of
Insurance to notice and hearing prior to a denial of an
application or action against a license. It also includes a new
section to consolidate language setting forth the rights to
notice and opportunity for hearings of applicants for and holders
of certificates of authority and licenses. The proposal provides
that applicants are entitled to request a hearing following any
denial of their application, but they are not entitled to any
advance notice or hearing prior to the initial decision on the
application. This legislation confirms the rights of existing
licensees to advance notice and the opportunity for hearing prior
to any action to suspend or revoke an existing license or
certificate of authority or the imposition of an administrative
penalty except as otherwise provided in the insurance code, and
chapter 52, title 67, Idaho Code, (the Administrative Procedures
Act).
FISCAL NOTE
None.
CONTACT
Name: Shad Priest
Agency: Insurance, Dept. of
Phone: 334-4214
STATEMENT OF PURPOSE/FISCAL NOTE H 585