Bill Analysis

Legislative Service Commission

LSC Analysis of House Bill

Am. H.B. 300

128th General Assembly

(As Passed by the House)

 

Reps.     Dyer and Hottinger, Heard, Combs, Luckie, Murray, B. Williams, Okey, Fende, Brown, Batchelder, Boyd, Carney, Chandler, DeBose, Dodd, Domenick, Evans, Garland, Hackett, Harris, Harwood, Letson, Mecklenborg, Sayre, Snitchler, Stewart, Yates

BILL SUMMARY

·         Makes changes to insurance agent and surety bail bond agent licensure requirements, including examination requirements, filing a change of address, application requirements, criminal records checks, and continuing education.

·         Requires biennial renewal for insurance agents and makes changes to the license renewal requirements for surety bail bond agents.

·         Revises and expands the reasons for which the Superintendent of Insurance may suspend, revoke, or refuse to issue or renew a license of an agent or impose other specified sanctions.

·         Adds to the list of certain persons and classes of persons that are prohibited from acting as surety bail bond agents or employees of a surety bail bond agent or business (1) prisoners incarcerated in any jail, prison, or any other place used for the incarceration of persons, (2) any person employed at an attorney's office, and (3) judges.

·         Prohibits posting anything without using a bail instrument representing an insurer, to have a defendant released on bail on all types of set court bail with certain exceptions.

·         Makes changes, with regard to surety bail bond agents, to current law's requirements for appointments by insurers and for registering with a court.

·         Repeals regulation of appointments of solicitors by agents.

·         Allows the Superintendent to adopt rules regarding the renewal, extension, reactivation, and reinstatement of certain licenses and to establish certain fees.

·         Requires certain fees to be deposited in the Department of Insurance Operating Fund.

·         Moves the due date for the foreign insurers tax to on or before the 31st day of March.

·         Allows the Superintendent to delay the implementation and enforcement of the provisions and repeals of the bill, with certain expectations.

TABLE OF CONTENTS

Resident agent license examination. 3

Licensure requirements. 3

Resident insurance agent license. 3

Nonresident insurance agent license. 4

Surplus line broker license. 5

Variable life-variable annuity line of authority. 5

Surety bail bond agents. 5

Application fees. 6

License renewal 7

General 7

Surety bail bond agents. 8

License renewal fee. 9

Change of address. 9

Criminal records checks. 10

Continuing education. 12

General requirements. 12

Surety bail bond agents. 13

Prohibitions. 13

Generally prohibited acts. 13

Prohibitions for surety bail bond agents. 16

Appointments by insurers. 17

Registering with a court 17

Appointment of solicitors by agent 18

Rules adopted by the Superintendent 19

Fees. 19

Foreign insurers tax. 20

Effective date. 20

Other 21

 

CONTENT AND OPERATION

Resident agent license examination

Under current law, a resident of Ohio who applies for an insurance agent license with any of the following lines of authority must take a written examination prior to licensure:  life, accident and health, property, casualty, variable life and variable annuity products, personal lines, title, surety bail bonds, and any other line of authority designated by the Superintendent of Insurance.  The bill removes the requirement that applicants for a variable life and variable annuity products line of authority take the written examination (R.C. 3905.04(B)(1) and 3905.06(B)).  Additionally, the bill requires that an individual pass the written examination before applying for licensure and requires the individual to pay only an examination fee, rather than an application fee, before admission to the examination (R.C. 3905.04(A)). 

Unless an individual is applying for a title insurance line of authority or any other line of authority exempted by the Superintendent, under current law, an individual is not permitted to take the examination until the individual has either earned a bachelor's or associate's degree in insurance from an accredited institution or completed 20 hours of study in a program of insurance education approved by the Superintendent for each line of authority for which the individual has applied.  The bill adds a third option:  an individual may take the exam if the individual has earned a professional designation approved by the Superintendent.  (R.C. 3905.04(C).)

Current law does not require an individual who applies for a resident insurance agent license in Ohio within 90 days after establishing a principal place of residence or principal place of business in Ohio to complete a program of insurance education or to pass a written examination if either of the following are true:  (1) the individual is currently licensed in another state and is in good standing for the line or lines of authority requested, or (2) the individual was previously licensed in another state, the individual's application for a resident insurance agent license in Ohio is received within 90 days after the cancellation of the individual's previous license, and, at the time of license cancellation, the individual was in good standing for the line or lines of authority requested.  The bill adds that the individual also must have paid all applicable fees required under the law regulating insurance agents in Ohio.  (R.C. 3905.041.)

Licensure requirements

Resident insurance agent license

Continuing law requires the Superintendent to issue a resident license to an individual applicant who meets certain requirements, including being at least 18 years old and not having committed any act that is a ground for the denial, suspension, or revocation of the license.  The bill adds the following requirements:

(1)  The applicant has submitted a completed application and paid all applicable fees.

(2)  Any applicant applying for variable life-variable annuity line of authority is registered with the financial industry regulatory authority (FINRA) as a registered representative after having passed at least one of the following examinations administered by the FINRA:  the series 6 examination, the series 7 examination, the series 63 examination, the series 66 examination, or any other FINRA examination approved by the Superintendent.

(3)  If required, the applicant has consented to a criminal records check and the results of the applicant's criminal records check are determined to be satisfactory by the Superintendent.

(4)  The applicant is a United States citizen or has provided proof of having legal authorization to work in the United States.  (R.C. 3905.06(A)(1).)

Continuing law requires the Superintendent to issue a resident license to a business entity applicant that meets certain requirements, including being either domiciled in Ohio or maintaining its principal place of business in Ohio and designating a licensed insurance agent who will be responsible for the applicant's compliance with the insurance laws of Ohio.  The bill adds the requirement that the applicant has submitted a completed application, any applicable fees, and any other documents requested by the Superintendent.  (R.C. 3905.06(A)(2).)

Nonresident insurance agent license

Under continuing law, the Superintendent must issue a nonresident agent license to an applicant that is a nonresident person if the Superintendent finds that the applicant meets certain requirements, including that the applicant has submitted or has had transmitted to the Superintendent the application for licensure that the applicant submitted to the applicant's home state or a completed applicable uniform application.  The bill removes a requirement that the applicant must submit a request for licensure prescribed by the Superintendent in addition to the above application for licensure and adds the following requirements:

(1)  That the applicant has paid all required fees;

(2)  That the applicant is licensed in the applicant's home state for the lines of authority requested in Ohio;

(3)  If the applicant is a business entity, that the applicant has designated an insurance agent licensed as an agent in Ohio to be responsible for the applicant's compliance with the insurance laws of Ohio.

(4)  That the applicant has submitted any other documents requested by the Superintendent.  (R.C. 3905.07(A).)

Surplus line broker license

Under current law, to be eligible for a surplus line broker's license, a person must have both a property license and a casualty license.  The bill specifies that this requirement is for resident surplus line broker's licenses.  To be eligible for a nonresident surplus line broker's license, under the bill, a person must hold an active surplus line broker license in the person's home state.  However, a nonresident surplus line broker must obtain a nonresident license with a property and casualty line of authority in Ohio if the broker is or will be personally performing the specified due diligence requirements that require surplus line brokers to ensure that the insurance product is not available from an authorized insurer.  (R.C. 3905.30 and 3905.33, not in the bill.)

Before receiving a surplus line broker license, under current law, the person named in the license must execute and deliver to the Superintendent of Insurance a bond in the sum of $25,000, payable to the state and conditioned that the person will faithfully comply with the law regulating surplus line brokers.  Under the bill, this bond is required only for resident surplus line broker licenses.  (R.C. 3905.35.)

Variable life-variable annuity line of authority

The bill specifies that a person who applies for a resident insurance agent license with a variable life-variable annuity line of authority must include in the person's application the person's individual central registration depository number (R.C. 3905.05(A)).

Surety bail bond agents

Under current law, the Superintendent must issue to an applicant a license that states in substance that the person is authorized to do the business of a surety bail bond agent, if the Superintendent is satisfied that all of the following apply:

(1)  The applicant is 18 years of age or older.

(2)  The applicant is a person of high character and integrity.

(3)  The applicant has successfully completed the educational requirements and passed the required examination.

The bill differentiates four types of surety bail bond licenses:  individual resident and nonresident surety bail bond licenses and business entity resident and nonresident surety bail bond licenses. 

In order to receive the individual resident surety bail bond license, the person must satisfy the above requirements and must not have committed any act that is grounds for the refusal to issue, suspension of, or revocation of a license.  Additionally, the applicant's home state must be Ohio and the applicant must be a United States citizen or have provided proof of having legal authorization to work in the United States. 

In order to receive the individual nonresident surety bail bond license, the person must be 18 years of age or older, currently licensed as a resident in another state and in good standing in the applicant's home state for surety bail bond or qualified for the same authority.  Additionally, the person must be a person of high character and integrity and must not have committed any act that is grounds for the refusal to issue, suspension of, or revocation of a license.  (R.C. 3905.85(B).)

To receive the business entity resident or nonresident surety bail bond license, all of the following must be true of the applicant:  (1) the applicant has submitted an application for the license in a manner prescribed by the Superintendent and the $150 application fee, (2) the applicant has designated an individual licensed surety bail bond agent who will be responsible for the applicant's compliance with the insurance laws of Ohio, (3) the applicant has not committed any act that is grounds for the refusal to issue, suspension of, or revocation of a license, and (4) the applicant has submitted any other documents requested by the Superintendent.  In order to receive the resident business entity license, the applicant additionally must either be domiciled in Ohio or maintain its principal place of business in Ohio, and the applicant must be authorized to do business in Ohio by the Secretary of State if required under current law.  In order to receive the nonresident business entity license, the applicant additionally must be currently licensed and be in good standing in the applicant's home state with surety bail bond authority.  (R.C. 3905.85(B).)

Under current law, a person that holds a surety bail bond license cannot execute or deliver a bond during the first 180 days after the initial issuance of the person's license.  Under the bill, however, this prohibition does not apply to resident or nonresident business entity licenses.  (R.C. 3905.85(C).)

Application fees

Under current law, each applicant for licensure as an individual insurance agent except applicants for licensure as limited lines insurance agents and surplus line brokers must pay $10 for each line of authority requested.  The bill requires all insurance agents, rather than only individual agents, to pay this fee and excludes surety bail bond agents rather than limited lines insurance agents.  (R.C. 3905.40(C).)

License renewal

General

Current law does not require license renewal.  Under current law, a resident or nonresident agent license is perpetual unless surrendered by the licensee or suspended or revoked by the Superintendent.

The bill requires resident and nonresident agents to renew their licenses.  Under the bill, an individual seeking to renew a resident or nonresident insurance agent license must apply biennially for a renewal of the license on or before the last day of the licensee's birth month.  A business entity seeking to renew a resident or nonresident insurance agent license must apply biennially for a renewal of the license on or before the date determined by the Superintendent.  The Superintendent must send a renewal notice to all licensees at least one month prior to the renewal date.  (R.C. 3905.06(C) and 3905.07(C).)

Applications for license renewal must be submitted to the Superintendent on forms prescribed by the Superintendent.  Each application must be accompanied by a biennial renewal fee (see "License renewal fee" below).  The Superintendent also may require an applicant to submit any document reasonably necessary to verify the information contained in the renewal application.  (R.C. 3905.06(C) and 3905.07(C).)

To be eligible for renewal of an individual resident insurance agent license, the applicant must complete the continuing education requirements prior to the renewal date.  To be eligible for renewal of an individual or business entity nonresident license, the applicant must maintain a resident license in the applicant's home state for the lines of authority held in Ohio.  If an applicant submits a completed renewal application, qualifies for renewal under the above requirements, and has not committed any act that is a ground for the refusal to issue, suspension of, or revocation of a license, the Superintendent must renew the applicant's resident or nonresident insurance agent license.  (R.C. 3905.06(C) and 3905.07(C).)

Under the bill, if an individual or business entity does not apply for the renewal of the individual or business entity's license on or before the license renewal date, the individual or business entity may submit a late renewal application along with all applicable fees prior to the first day of the second month following the license renewal date.  A license that is not renewed on or before its normal renewal date or its late renewal date automatically is suspended for nonrenewal on the first day of the second month following the normal renewal date.  If a license is suspended for nonrenewal, the individual or business entity is eligible to apply for reinstatement of the license within the 12-month period following the date by which the license should have been renewed by complying with the reinstatement procedure established by the Superintendent and paying all applicable fees.  (R.C. 3905.06(D) and (E) and 3905.07(D) and (E).)

A license that is suspended for nonrenewal that is not reinstated as described above automatically is canceled unless the Superintendent is investigating any allegations of wrongdoing by the agent or has initiated proceedings under the Administrative Procedure Act (R.C. Chapter 119.).  In that case, the license automatically is canceled after the completion of the investigation or proceedings unless the Superintendent revokes the license.  (R.C. 3905.06(F) and 3905.07(F).)

Under the bill, an individual licensed as a resident or nonresident insurance agent who is unable to comply with the license renewal procedures and who is unable to engage in the business of insurance due to military service, a long-term medical disability, or some other extenuating circumstance may request an extension of the renewal date of the individual's license.  To be eligible for such an extension, the individual must submit a written request with supporting documentation to the Superintendent.  At the Superintendent's discretion, the Superintendent may not consider a written request made after the renewal date of the license.  (R.C. 3905.06(G) and 3905.07(G).)

Surety bail bond agents

Under current law, a surety bail bond agent license may be renewed, at the discretion of the Superintendent and the payment of a $150 fee, effective the first day of March next after its issue and after the first day of March in each succeeding year unless the license is revoked or suspended by the Superintendent or surrendered by the surety bail bond agent.  Under the bill, a person seeking to renew a surety bail bond agent license must apply annually for a renewal of the license on or before the last day of February.  Applications must be submitted to the Superintendent on forms prescribed by the Superintendent.  Each application must be accompanied by a $150 renewal fee.  To be eligible for renewal, an individual applicant must complete the applicable continuing education requirements prior to the renewal date.  If an applicant submits a completed renewal application, qualifies for renewal pursuant to the above requirements, and has not committed any act that is a ground for the refusal to issue, suspension of, or revocation of a license, the Superintendent must renew the applicant's surety bail bond insurance agent license.  (R.C. 3905.85(F)(1) to (3).)

If an individual or business entity does not apply for the renewal of the individual or business entity's license on or before the last day of February, the bill allows the individual or business entity to submit a late renewal application along with all applicable fees prior to the last day of March following the renewal date.  The Superintendent must renew the license of an applicant that submits a late renewal application if the applicant satisfies all of the following conditions:  (1) the applicant submits a completed renewal application, (2) the applicant pays the $150 renewal fee, (3) the applicant pays the late renewal fee established by the Superintendent, (4) the applicant provides proof of compliance with the continuing education requirements, and (5) the applicant has not committed any act that is grounds for the refusal to issue, suspension of, or revocation of a license.  (R.C. 3905.841(F)(4).)

A surety bail bond agent license that is not renewed on or before the last day of March is automatically suspended for nonrenewal effective the first day of April.  If a license is suspended for nonrenewal, the individual or business entity is eligible to apply for reinstatement of the license within the 12-month period following the date by which the license should have been renewed by complying with the reinstatement procedure established by the Superintendent and paying all applicable fees.  (R.C. 3905.841(F)(5) and (6).)

A license that is suspended for nonrenewal that is not reinstated as discussed above automatically is canceled unless the Superintendent is investigating any allegations of wrongdoing by the agent or has initiated proceedings under the Administrative Procedure Act (R.C. Chapter 119.).  In that case, the license automatically is canceled after the completion of the investigation or proceedings unless the Superintendent revokes the license.  (R.C. 3905.841(F)(7).)

License renewal fee

The bill requires each insurance agent doing business in Ohio to pay a biennial license renewal fee of $25, except the bill does not require the following insurance agents to pay the license renewal fee:  (1) individual resident agents who have met their continuing education requirements, (2) surety bail bond agents, and (3) surplus line brokers (R.C. 3905.40(E)).

Change of address

Under current law, if a person licensed as a resident insurance agent changes the person's address within Ohio, or if a nonresident agent changes the person's address within that other state, the person must, within 30 days after making that change, file a change of address with the Superintendent.  Under the bill, the person must file that change of address with either the Superintendent or the Superintendent's designee.  (R.C. 3905.061(A) and 3905.071(A)(1).)

Under current law, if a resident insurance agent changes the person's state of residence, or if a nonresident agent changes the person's state of residence or the state in which the person's principal place of business is located, the person must, within 30 days after making that change, file a change of address with the Superintendent and provide the Superintendent with certification from the new state of residence or, in the case of a nonresident insurance agent, the new state in which the principal place of business is located.  As a result, the resident agent's license becomes a nonresident license.  No fee or license application can be required in either situation. 

The bill requires a resident or nonresident insurance agent to file a change of address when the person's home state changes, not necessarily when the state of residence or the state in which the person's principal place of business is located changes (R.C. 3905.061(B) and 3905.071(A)(2)).  "Home state" is defined to mean the state or territory of the United States, including the District of Columbia, in which an insurance agent maintains the insurance agent's principal place of residence or principal place of business and is licensed to act as an insurance agent (R.C. 3905.01(B), not in the bill).  Additionally, the bill adds that, in order to avoid application or fee requirements as discussed above, the agent submitting a change of address must be in good standing with the Superintendent.  The bill also adds, for purposes of license renewal, that the residency status of a license does not change the license renewal date established by the initial license.  (R.C. 3905.061(B) and 3905.071(A)(2) and (B).)

Under current law, each person licensed as a surety bail bond agent must notify in writing the appropriate insurer or managing general agent, and the clerk of the court of common pleas of the county in which the licensee resides, within 30 days after a change in the licensee's principal business address or telephone number.  Rather than the clerk of the court of common pleas of the county in which the licensee resides, the bill requires the agent to notify the clerk of the court of common pleas of the county in which the licensee is registered.  (R.C. 3905.89.)

Criminal records checks

Under current law, an applicant for licensure must request a criminal records check conducted by the Superintendent of the Bureau of Criminal Identification and Investigation (BCII), other governmental agencies, or other sources, as required and designated by the Superintendent of Insurance.  The applicant must direct that the responses to the request be transmitted to the Superintendent of Insurance, or to the Superintendent's designee.  If the Superintendent of Insurance or the Superintendent's designee fails to receive a response to a requested criminal records check, or if the applicant fails to request the criminal records check, the Superintendent may refuse to issue a license.  (R.C. 3905.05(A) and 3905.85(A).)

Under the bill, each applicant must consent to a criminal records check and submit a full set of fingerprints to the Superintendent for that purpose.  The Superintendent, then, rather than the applicant, must request the Superintendent of BCII to conduct a criminal records check based on the applicant's fingerprints.  The Superintendent also must request that criminal record information from the Federal Bureau of Investigation (FBI) be obtained as part of the criminal records check.  The bill allows the Superintendent to receive criminal record information directly in lieu of the BCII that submitted the fingerprints to the FBI.  (R.C. 3905.051(C), (D), and (F) and 3905.85(A)(2).)

Under the bill, the Superintendent may contract for the collection and transmission of fingerprints, may agree to a reasonable fingerprinting fee to be charged by the contractor, and may order the fee for collecting and transmitting fingerprints to be payable directly to the contractor by the applicant.  As under current law, any fee required in relation to the criminal records check must be paid by the applicant.  (R.C. 3905.051(E).)

The bill requires the Superintendent to treat and maintain an applicant's fingerprints and any criminal record information obtained by the required criminal records checks as confidential.  The Superintendent must apply security measures consistent with the criminal justice information services division of the FBI standards for the electronic storage of fingerprints and necessary identifying information and limit the use of records solely to the purpose of criminal records checks.  The fingerprints and any criminal record information are not subject to subpoena other than one issued pursuant to a criminal investigation, are confidential by law and privileged, are not subject to discovery, and are not admissible in any private civil action.  (R.C. 3905.051(G).)

Under the bill, only individuals applying for a resident license as an insurance agent or surety bail bond agent or applying for an additional line of authority under an existing resident insurance agent license if a criminal records check has not been obtained within the last 12 months for insurance license purposes must consent to a criminal records check.  Agents applying for renewal of an existing resident or nonresident license in Ohio are not required by the bill to consent to a criminal records check.  (R.C. 3905.08, 3905.051(H), and 3905.85.)

For purposes of criminal records checks, the bill defines "fingerprint" as an impression of the lines on the finger taken for the purpose of identification. The impression may be electronic or converted to an electronic format.  (R.C. 3905.051(B).)

Continuing education

General requirements

Current law requires each person who is issued a license as an agent to complete at least 20 hours of continuing education offered in a course or program of study approved by the Superintendent in consultation with the Insurance Agent Education Advisory Council.  A person may complete continuing education requirements by demonstrating to the Council that the person has completed the minimum number of hours required in a substantially similar course or program of study offered in another state.  Additionally, any person who teaches any approved course or program of study qualifies for the same number of classroom hours as would be granted to any person who takes and successfully completes that course or program.

The bill requires 24 hours of continuing education, including at least three hours of approved ethics training.  The bill does not allow a person to meet those requirements in any course or program of study offered in another state or by teaching approved courses.  (R.C. 3905.481 and 3905.484(D).)

Under current law, the person must complete the initial 20 hours of continuing education during a period not to exceed 24 months starting on the first day of January of the year immediately following the year of the issuance of the license and ending on the 31st day of December of the second year following the year of the issuance of the license.  After that, the person must complete at least 20 hours of continuing education in every subsequent 24-month period starting on the first day of January and ending on the 31st day of December of the following year. 

Under the bill, the person must complete the continuing education requirements during the person's license renewal period.  (R.C. 3905.481.)  However, the bill requires the Superintendent to establish a prorated phase-in schedule for the completion of continuing education requirements for the first license renewal period after the effective date of the bill (Section 3).

Additionally, the bill replaces the member of the Insurance Agent Education Advisory Council who is a representative of the Ohio Association of Life Underwriters with a representative of the National Association of Insurance and Financial Advisors-Ohio (R.C. 3905.483).

Under current law, the Superintendent must suspend the license of a person that does not meet the continuing education requirements unless the Superintendent grants an extension.  If the Superintendent grants an extension and the agent fails to meet the continuing education requirements within that time period, the Superintendent may revoke the person's license.  The bill repeals these provisions and instead includes continuing education as a requirement for the renewal of a license.  (R.C. 3905.06 and 3905.482.)

Surety bail bond agents

Under current law, each individual who is issued a license as a surety bail bond agent must complete, according to current law's continuing education requirements for agents described above, at least 14 hours of continuing education offered in a course or program of study related to the bail bond business that is approved by the Superintendent in consultation with the Insurance Agent Education Advisory Council.  The bill requires only resident surety bail bond agent licensees to comply with the continuing education requirements and instead of tying those requirements to the general agent requirements, the bill requires that the resident surety bail bond agents complete the continuing education requirements in each license renewal period.  The bill also decreases the number of required hours to seven and requires that the course or program of study include at least one hour of approved ethics training.

Current law generally requires the Superintendent to suspend or revoke the license of any surety bail bond agent who fails to complete the required continuing education.  The bill, instead, requires the Superintendent to not renew the license of such a licensee and removes an allowance for an extension of time in which to complete those requirements.  (R.C. 3905.482(B), 3905.85(D), and 3905.88.)

Prohibitions

Generally prohibited acts

Current law lists 33 reasons for which the Superintendent may suspend, revoke, or refuse to issue or renew the license of an insurance agent, assess a civil penalty, or impose any other sanction or sanctions authorized under the Insurance Agent Licensing Law.  The bill revises several of those reasons and adds five more.  The table below gives an overview of those revisions and additions.  The table is not exhaustive and does not list the reasons unchanged by the bill.  (R.C. 3905.14(B).)

Current law

Under the bill

Obtaining or attempting to obtain a license through misrepresentation or fraud*

Adds maintaining or attempting to maintain a license through misrepresentation or fraud*

Having been convicted of a felony*

Adds having pleaded guilty or no contest to a felony and adds that this expanded reason exists regardless of whether a judgment of conviction has been entered by the court*

Having been convicted of a misdemeanor that involves the misuse or theft of money or property belonging to another, fraud, forgery, dishonest acts, or breach of a fiduciary duty, that is based on any act or omission relating to the business of insurance, securities, or financial services, or that involves moral turpitude*

Adds having pleaded guilty or no contest to such a misdemeanor and adds that this expanded reason exists regardless of whether a judgment of conviction has been entered by the court*

Improperly using notes or any other reference material to complete an examination for an insurance agent license*

Adds improperly using equipment or devices of any kind*

Failing to comply with any administrative or court order directing payment of state income tax*

Failing to comply with any official invoice, notice, assessment, or order directing payment of federal, state, or local income tax, state or local sales tax, or workers' compensation premiums*

Having any professional license suspended or revoked as a result of a mishandling of funds or breach of fiduciary responsibilities or having been subject to a cease and desist order or permanent injunction for unlicensed activities*

Breaks into the following two reasons:

Having any professional license or financial industry regulatory authority registration suspended or revoked or having been barred from participation in any industry*
Having been subject to a cease and desist order or permanent injunction related to mishandling of funds or breach of fiduciary responsibilities or for unlicensed or unregistered activities*

Causing or permitting a policyholder or applicant for insurance to designate the insurance agent or the insurance agent's spouse, parent, child, or sibling as the beneficiary of a policy or annuity sold by the insurance agent, unless the insurance agent or a relative of the insurance agent is the insured or applicant*

Expands this reason to include policies and annuities for which the agent, at any time, was designated as the agent of record*

No provision

Causing or permitting a policyholder or applicant for insurance to designate the insurance agent or the insurance agent's spouse, parent, child, or sibling as the owner or beneficiary of a trust funded, in whole or in part, by a policy or annuity sold by the insurance agent or by a policy or annuity for which the agent, at any time, was designated as the agent of record, unless the insurance agent or a relative of the insurance agent is the insured or applicant*

Failing to provide a written response to the Department of Insurance within 21 calendar days after receipt of any written inquiry from the Department, unless a reasonable extension of time has been requested of, and granted by, the Superintendent*

Adds that the extension may be requested of and granted by the Superintendent's designee*

No provision

Failing to appear to answer questions before the Superintendent after being notified in writing by the Superintendent of a scheduled interview, unless a reasonable extension of time has been requested of, and granted by, the Superintendent or the Superintendent's designee*

Submitting or using a document in the conduct of the business of insurance when the person knew or should have known that the document contained the forged signature of another person*

Rather than referring to a forged signature, refers to a "writing that was forged" as defined under Ohio's Theft and Fraud Statute (R.C. 2913.01), which includes any computer software, document, letter, memorandum, note, paper, plate, data, film, or other thing having in or upon it any written, typewritten, or printed matter, and any token, stamp, seal, credit card, badge, trademark, label, or other symbol of value, right, privilege, license, or identification*

Misrepresenting the person's qualifications or using in any way a professional designation that has not been conferred upon the person by the appropriate accrediting organization*

Adds misrepresenting the person's status or relationship to another person, agency, or entity*

Obtaining a premium loan or causing a premium loan to be made to or in the name of an insured without that person's knowledge and written authorization*

Adds obtaining a policy surrender or causing a policy surrender to be made to or in the name of an insured or policy holder without the person's knowledge and written authorization*

Soliciting, marketing, or selling any product or service that offers benefits similar to insurance but is not regulated by the Superintendent, without fully disclosing to the prospective purchaser that the product or service is not insurance and is not regulated by the Superintendent*

Removes "marketing" and adds "negotiating" any such product or service and specifies that the disclosure must be orally and in writing*

With respect to a surety bail bond agent license, rebating or offering to rebate, or unlawfully dividing or offering to divide, any commission*

Expands this reason to also include rebating or offering to rebate, or unlawfully dividing or offering to divide, any premium or fee*

No provision

In the case of a resident business entity, failing to be qualified to do business in Ohio, failing to be in good standing with the Secretary of State, or failing to maintain a valid appointment of statutory agent with the Secretary of State

No provision

In the case of a nonresident agent, failing to maintain licensure as an insurance agent in the agent's home state for the lines of authority held in Ohio

No provision

Knowingly aiding and abetting another person or entity in the violation of any insurance law of Ohio or the rules adopted under it

*This violation is a class A offense.  Current law details the actions that the Superintendent may take based upon which of the reasons was violated.  The actions include a civil penalty, assessment of administrative costs, suspension of the license, permanent revocation of the license, refusal to issue or renew the license, a prohibition against being employed in any capacity in the business of insurance and from having any financial  interest in any insurance agency, ordering corrective action, and accepting a surrender of license.  Under current law, certain violations are class A offenses, and the Superintendent may impose any of the penalties listed.  (R.C. 3905.14(D) and (F).)

Under current law, if an agent's license is surrendered, revoked, or suspended, all appointments held by the agent are void.  Under the bill, all appointments held by the agent also are void if the license is canceled or inactivated by request.  If a new license is issued to that person or if that person's previous license is reinstated (the bill adds renewed), any appointment of the person to represent an insurer must be made in accordance with the requirements of the law regulating insurance agents.  Additionally, under the bill, if an agent's license is surrendered, revoked, or canceled and the person wishes to apply for a new license, the person must apply as a new agent and must satisfy all requirements for a new agent license including, if applicable, submitting to a criminal records check.  (R.C. 3905.16.)

Prohibitions for surety bail bond agents

Under current law, certain persons and classes of persons are prohibited from acting as surety bail bond agents or employees of a surety bail bond agent or business including jailers, peace officers, court employees, and attorneys.  Those persons or classes of persons are also prohibited from receiving any benefits from the execution of a bail bond, except as a principal.  The bill adds to that list:  prisoners incarcerated in any jail, prison, or any other place used for the incarceration of persons; any person employed at an attorney's office; and judges.  The bill also clarifies that "peace officers" includes volunteer and honorary peace officers.  (R.C. 3905.841.)

Additionally, the bill prohibits surety bail bond agents and insurers from posting anything without using a bail instrument representing an insurer, to have a defendant released on bail on all types of set court bail, except for the following:

(1)  Cash court fees or cash reparation fees;

(2)  Ten per cent assignments;

(3)  Other nonsurety court bonds, if the agent provides full written disclosure and receipts and retains copies of all documents and receipts for not less than three years.

The bill defines "instrument" as a fiduciary form showing a dollar amount for a surety bail bond.  (R.C. 3905.932.)

Appointments by insurers

Current law allows insurers to appoint a person that is licensed as a surety bail bond agent by certifying to the Superintendent before the 30th day of June each year the names and addresses of the agents.  Under the bill, the insurer must file a notice of appointment with the Superintendent in the manner prescribed by the Superintendent.  The bill does not specify a date for that filing.  (R.C. 3905.86.) 

In addition to continuing law's $20 fee for each agent and surety bail bond agent appointment by an insurer and each annual renewal of an agent or surety bail bond agent appointment by insurer, the bill requires a fee of $5 for each termination or expiration of an agent or surety bail bond agent appointment (R.C. 3905.20(B)(1), 3905.40(A)(8) and (9), 3905.86(B), and 3905.862).

Registering with a court

Current law prohibits a surety bail bond agent from filing a bond in a court of Ohio unless the agent has registered with the clerk of that court, if registration is required by the court, and the agent has registered with the clerk of the court of common pleas of the county in which the agent resides.  The bill removes the requirement that the agent be registered with the clerk of the court of common pleas of the county in which the agent resides.  In addition to the copy of the agent's appointment required for registration with a court under current law, the bill requires the agent to submit a copy of the agent's surety bail bond license and driver's license or state identification card.  Rather than registering and filing a certified copy of a renewed power of attorney, the bill requires each agent to renew the agent's registration with the court biennially by the first day of August of each odd-numbered year.  (R.C. 3905.87.)

Additionally, the bill requires the clerk of the court to make available a list of court-registered surety bail bond agents to the appropriate holding facility, jail, correction facility, or other similar entity within the court's jurisdiction annually not later than the first day of September.  If an agent registers with a court after the last day of August, the court must add that agent to the list and make the updated list available to the appropriate holding facility, jail, correction facility, or other similar entity within the court's jurisdiction within 24 hours of the court's approval of that registration.  (R.C. 3905.87.)

Appointment of solicitors by agent

Current law allows any property, casualty, personal, or title agent qualified and licensed, and appointed to represent one or more insurance corporations within Ohio, to appoint as many solicitors as the agent desires to represent the agent and the agent's agency.  However, the solicitors must not represent themselves, by advertisement or otherwise, as agents of insurance companies for which their employer may be the authorized agent, and the solicitors must in all instances represent themselves only as solicitors for the agent.  To be eligible for appointment, a solicitor must be qualified and licensed as a property, casualty, personal, or title agent under the Insurance Law and be familiar with the provisions of the policies and contracts of insurance the solicitor proposes to solicit.  Under current law, an agent qualified and licensed to sell accident and health insurance may appoint a solicitor to solicit accident and health insurance only if both of the following apply:

(1)  The solicitor is qualified and licensed as an accident and health insurance agent.

(2)  The solicitor solicits only accident and health insurance products that are issued and underwritten by an insurer that is authorized to write accident and health insurance and that holds a certificate of authority granted under R.C. 3929.01.

Additionally, a solicitor may solicit only those lines of insurance for which both the solicitor and the appointing agent are licensed, and no solicitor may be appointed by more than one agent.  Unless the solicitor's license is revoked or suspended by the Superintendent, such appointment may, in the discretion of the Superintendent, and at the request of the agent who employs the solicitor and the payment of the required fee, be continued past the 30th day of June next after its issue and after the 30th day of June each succeeding year.  Each agent must certify to the Superintendent, before the 30th day of June each year, the names and addresses of the solicitors the agent has employed during the preceding year, indicating those for whom the agent wishes appointments to be continued.  The agent giving written notice must pay to the Superintendent a fee of $20 for every such appointment and for each continuance.  The issuance of a solicitor's appointment is limited to a natural person.

The bill repeals all of the above requirements.  (R.C. 3905.10.)

Rules adopted by the Superintendent

Current law allows the Superintendent to adopt rules in accordance with the Administrative Procedure Act (R.C. Chapter 119.) to establish procedures for the issuance and renewal of insurance agent licenses.  The bill also allows the Superintendent to adopt rules to establish procedures for late renewal, extension, reactivation, and reinstatement.  Continuing law also allows the Superintendent to adopt rules in accordance with the Administrative Procedure Act to provide for the issuance of limited authority licenses, and establish any prelicensing education, examination, or continuing education requirements the Superintendent considers appropriate for such licenses.  The bill expands these rules to apply to the renewal of those licenses.  (R.C. 3905.12.)

Continuing law requires insurance companies doing business in Ohio to pay certain fees including a $175 fee for filing each statement, a $175 fee for each certificate of authority or license and a $5 fee for each certified copy of that certificate or authority or license, and a $60 fee for issuing certificates of compliance or certified copies of a certificates of compliance (R.C. 3905.40).  Seventy per cent of the fees specifically listed here must be credited to the Department of Insurance Operating Fund.  The remaining 30% must be credited to the General Revenue Fund.  (R.C. 3901.021(B).)  The bill additionally allows the Superintendent to adopt rules to establish a schedule of fees to be paid to the Superintendent for extensions, late renewals, reinstatements, and reactivations of a license and for credit card payments, electronic processing service, and manual processing service.  The bill requires that fees collected under this authority and all of the current fees required under section 3905.40 of the Revised Code except those specifically listed above be credited to the Department of Insurance Operating Fund.  However, the bill maintains current law's distribution of those fees specifically listed above.  (R.C. 3901.021, 3905.12, and 3905.40.)

Fees

The bill specifies that all fees collected by the Superintendent under R.C. 3905.40, with the exception of a few, must be credited to the Department of Insurance Operating Fund.  The fees that must be so credited include fees for filing charters and issuing certificates of deposit, administrative fees, and agent appointment and termination fees.  The fees for filing a statement, for issuing certificates of compliance, and for each certificate of authority or license are excluded from this crediting requirement; instead, under continuing law 70% of these fees are credited to the Department of Insurance Operating Fund, with the remaining 30% credited to the General Revenue Fund.  (R.C. 3101.021(B) and 3905.40(F).)

Foreign insurers tax

Under continuing law, with certain exceptions, every insured association, company, corporation, risk retention group, or other person that enters into any agreements, either directly or through a surplus lines broker, with any insurance company, association, individual, firm, underwriter, or Lloyd's, not authorized to do business in Ohio ("foreign insurer"), to procure, continue, or renew insurance covering subjects resident in Ohio must do both of the following annually on or before the 31st day of January:  (1) return to the Superintendent of Insurance a form containing certain business activity and premium collections information and (2) pay to the Treasurer of State (for deposit into the GRF) a tax equal to 5% of the gross premium, fee, assessment, dues, or other consideration for the insurance.  The bill moves the due date to on or before the 31st day of March but maintains the current reporting period.  (R.C. 3905.36 and 3960.03.)

Effective date

The Superintendent of Insurance may delay the implementation and enforcement of all of the provisions and repeals of the bill except the changes and additions to the prohibited acts detailed in the above table (see "Prohibited acts") and the new due date for the foreign insurers tax (see "Foreign insurers tax") until the earlier of January 1, 2011, or 30 days after the Superintendent determines that the Department of Insurance is able to implement those requirements and places a notification of that determination on the Department's web site.  The bill requires the Superintendent to continue to enforce the previous requirements, as they existed immediately prior to the effective date of the act, until the Superintendent implements requirements amended, enacted, or repealed by this act.  (Section 5.)

Additionally, for the time period beginning on the effective date of this act and ending on June 1, 2010, notwithstanding the Superintendent's implementation of R.C. 3905.40, each applicant for licensure as an insurance agent except applicants for licensure as surety bail bond agents and surplus line brokers must pay $10 for each line of authority requested.  These fees collected must be credited to the Department of Insurance Operating Fund.  (Section 4.)

Other

The bill makes additional technical, conforming, and nonsubstantive changes (R.C. 3901.021, 3905.041(A)(2), 3905.061(B), 3905.07(A)(3), 3905.071(A)(2), 3905.20(B)(1), 3905.40(A)(8), 3905.41, and 3905.85(A)).

HISTORY

ACTION

DATE

 

 

Introduced

10-06-09

Reported, H. Insurance

11-05-09

Passed House (97-1)

12-01-09

 

 

 

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