2006 Legislation
Print Friendly

HOUSE BILL NO. 585 – Insurance, license denied, hearings

HOUSE BILL NO. 585

View Bill Status

View Bill Text

View Statement of Purpose / Fiscal Impact



Text to be added within a bill has been marked with Bold and
Underline. Text to be removed has been marked with
Strikethrough and Italic. How these codes are actually displayed will
vary based on the browser software you are using.

This sentence is marked with bold and underline to show added text.

This sentence is marked with strikethrough and italic, indicating
text to be removed.

Bill Status



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

Bill Text


                                                                        
                                                                        
  ]]]]              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 / Fiscal Impact


                      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