Producer Money, Conduct and Fraud in Georgia

A property and casualty producer handles other people’s money every day. Georgia law says how premium money must be held, what a producer may charge beyond the premium, who may share in a commission, what may be said and given to win business, and when a false statement becomes a crime.

Definitions

Fiduciary capacity

Holding money that belongs to someone else, in trust for that person. In Georgia, premiums an agent receives and return premiums due an insured are held in the agent’s fiduciary capacity (O.C.G.A. § 33-23-35(b)).

Commingling

Mixing money held for others with one’s own funds.

Rebate

Any part of the premium, or any valuable consideration or inducement not specified in the policy, given or offered to induce the purchase of insurance (§ 33-6-4(b)(8)(B)).

Fiduciary responsibility (O.C.G.A. § 33-23-35)

Premiums belong to the insurer and the insured

When a customer pays a premium to an agent, the money is not the agent’s. Georgia requires that all funds representing premiums received, or return premiums due the insured, be accounted for in the agent’s fiduciary capacity, kept out of the agent’s personal funds, and promptly accounted for and paid to the insurer, insured or agent entitled to them (§ 33-23-35(b)). An agent, limited subagent or other representative who effectuates an insurance contract must also report the premium to the insurer or its agent, and the amount must be shown in the contract; each willful violation of that requirement is a misdemeanor (§ 33-23-35(a)).

The duty runs in both directions. A premium collected from the customer is held for the insurer until it is remitted. A return premium, such as the unearned premium refunded when a policy is canceled midterm, is held for the insured until it is paid over.

What can go wrong

Misusing premium money exposes a producer to every kind of consequence Georgia has:

• License action. Any violation of § 33-23-35 is grounds for probation, suspension or revocation, and each act is grounds for fines set by rule (§ 33-23-35(c)). Misappropriating, converting or illegally withholding money belonging to an insurer, insured or applicant, and refusing on written demand to pay over money that belongs to someone else, are separate grounds for losing a license (§ 33-23-21(4), (13)).
• Crime. A willful violation of § 33-23-35 is a misdemeanor, and a felony when the amounts involved exceed $1,000 (§ 33-23-35(c)).
• Insurance fraud. A natural person who knowingly or willfully receives money to buy insurance and converts it to his or her own benefit commits insurance fraud, a felony (§ 33-1-9(a)(2), (e)).
• Collecting for coverage that does not exist. Knowingly collecting premium for insurance that is not provided, and is not in due course to be provided, is an unfair trade practice (§ 33-6-5(6)(A)).

Suppose an agent deposits an $1,800 homeowners premium in a personal account and spends it on office rent, planning to repay it next month. The agent has commingled fiduciary funds and failed to account for them promptly. Because the amount exceeds $1,000, a willful violation is a felony, and spending a customer’s premium on the agency’s own bills can also be the conversion that § 33-1-9(a)(2) makes insurance fraud.

Other fiduciaries

All claim proceeds a public adjuster receives are held in a fiduciary capacity and may not be diverted or misappropriated (§ 33-23-43.6(a)). A public adjuster authorized to endorse an insured’s claim check may deposit it only into the adjuster’s escrow or trust account (§ 33-23-43.3(e)(1)).

Commingling (O.C.G.A. § 33-23-35(b))

Georgia prohibits commingling in so many words: premium funds “shall not be commingled with the licensee’s personal funds” (§ 33-23-35(b)).

The rule targets mixing premium money with the agent’s own money. It does not require a separate bank account for every insurer: an agent need not keep a separate deposit for each principal’s funds if the funds held for each principal are reasonably ascertainable from the agent’s books and records (§ 33-23-35(b)). An agency can therefore keep one premium account holding premiums for several insurers, as long as its records show how much of the balance belongs to each insurer and each insured. What it cannot do is pay its own expenses from that money or run premiums through its operating account. Many single premiums exceed $1,000, so one misused payment can be a felony (§ 33-23-35(c)).

Additional fees (O.C.G.A. §§ 33-23-46, 33-6-5(6))

The premium is what the policy says

No person may knowingly collect, as premium or charge for insurance, any sum more or less than the premium specified in the policy under the filed and approved classifications and rates (§ 33-6-5(6)(B)), and no agent or broker may knowingly charge, demand or receive a premium except as Georgia’s rating law allows (§ 33-9-36(b)). Charging more overcharges the customer. Charging less gives the customer a discount the policy does not provide. A surplus lines broker may collect applicable state and federal taxes on top of the premium (§ 33-6-5(6)(B)).

Fees from the customer

An insurance producer who is not licensed as a counselor may not accept or receive any compensation from the customer for placing insurance (§ 33-23-46(b)(2)). An agent is paid by the insurer, through commission, for placing a policy, and may not bill the customer a “service fee,” “broker fee” or “placement fee” for placing it, whatever the charge is called.

Three things do not count as compensation from the customer (§ 33-23-46(a)(3)):

1. The late-payment service charge that § 33-6-5(6)(C) allows, described below
2. An amount or fee that does not exceed an amount the Commissioner establishes
3. A premium or fee the producer bills solely on behalf of an insurer, such as a fee that is part of the insurer’s own charges

Section 33-23-46 as a whole, including this fee rule, does not apply to a producer who acts only as an intermediary between an insurer and a producer (such as a managing general agent, sales manager or wholesale broker), to a reinsurance intermediary, to the renewal or other continuation of a policy, or to a producer whose sole compensation for the placement comes from the insurer (§ 33-23-46(d)).

Counselors

When a producer licensed as a counselor, or the producer’s affiliate, receives compensation from the customer or charges the customer any fee, neither may accept compensation from an insurer or other third party for placing that customer’s insurance unless, before the customer buys, the producer has (§ 33-23-46(b)(1)):

• Obtained the customer’s documented acknowledgment that the producer will receive that compensation. This means the customer’s written consent before the initial purchase or, for a phone or electronic sale where written consent cannot reasonably be obtained, consent the producer documents (§ 33-23-46(a)(4)).
• Disclosed the amount of the insurer or third-party compensation or, if the amount is not yet known, the method for calculating it and a reasonable estimate if possible

“Compensation from an insurer or other third party” is broad: commissions, fees, overrides, bonuses, contingent commissions, loans, stock options, gifts and prizes. Only de minimis gifts of less than $45 in value are left out (§ 33-23-46(a)(2)). This disclosure rule must be read together with the counselor definition, which separately provides that a counselor paid for counseling may not receive compensation from any other source on or relating to the same transaction (§ 33-23-1(a)(6)).

Service charges on unpaid premium

Georgia expressly authorizes agents and agencies to charge customers a service charge on late premium. An agent or agency may, but need not, charge it on any unpaid premium account with a balance owing for 30 days or more. The charge may not exceed 15 cents per $10 per month on the amounts unpaid; if that computes to less than $1.00 for the month, a $1.00 charge may be made (§ 33-6-5(6)(C)).

For a $400 balance owed 30 days or more, the maximum is 40 × $0.15, or $6.00 for the month. For a $50 balance, the computation gives 75 cents, so the agent may charge $1.00 instead. The service charge does not stop the agent from canceling the policy as Georgia law allows (§ 33-6-5(6)(C)).

Sharing commissions (O.C.G.A. §§ 33-23-38, 33-23-4)

A commission is pay for doing licensed work, so Georgia lets it flow only to licensed people. An agent may share a commission only with another agent licensed in Georgia, with an agency that has as a proprietor, partner, officer or employee one or more agents licensed for the insurance within its scope, or with an agent or agency licensed in another state (§ 33-23-38(a)). The same subsection bars an agent from placing, or receiving any remuneration on, insurance outside the scope of the agent’s own license; a property and casualty agent cannot be paid for placing a life policy.

Section 33-23-4 closes the loop from the payer’s side:

• No insurer or agent doing business in Georgia may pay any commission or other valuable consideration to anyone for services as an agent, subagent or adjuster in Georgia unless that person is licensed (§ 33-23-4(b)).
• An insurer may pay a commission to a licensed agency in which everyone who sells, solicits or negotiates is properly licensed, and an agent may share a commission with such an agency (§ 33-23-4(c)).
• No one other than a licensed adjuster, agent, limited subagent or counselor may pay or accept any commission or other valuable consideration, except as subsections (b) and (c) allow (§ 33-23-4(d)).
• A person who stops being an agent may still receive renewal or deferred commissions, and a temporary licensee may be paid commissions (§ 33-23-4(e)).

A willful violation of § 33-23-4 is a misdemeanor (§ 33-23-4(g)), and a violation of § 33-23-38 authorizes revocation of the violator’s license (§ 33-23-38(c)).

Suppose an agent’s unlicensed friend, an office manager at a construction company, steers the company’s commercial package to the agent, and the agent offers the friend a third of the first-year commission. The friend is not on the list of people with whom a commission may be shared (§ 33-23-38(a)), and no exception in § 33-23-4 lets an unlicensed person accept it (§ 33-23-4(d)). Calling the payment a “referral fee” does not change that.

Agents often place business through other agents. A licensed agent who acts for another licensed agent in selling, soliciting or negotiating, and who has on file with the Commissioner a certificate of authority from each agent with whom he or she places insurance, is a subagent (§ 33-23-1(a)(16)). The sponsoring agent applies for the subagent certificate of authority immediately upon appointing the subagent (Ga. Comp. R. & Regs. r. 120-2-3-.22(1)). An agent who places 12 or fewer policies in a calendar year through another agent is not a subagent, nor is an agent who places surplus lines insurance through a surplus lines broker, as to that surplus lines business (§ 33-23-1(a)(16)(A)-(B)).

Public adjusters face their own limits on referral money. An adjuster may not pay a referral fee to anyone who is not a licensed public adjuster, and a public adjuster may not accept a fee for referring an insured to an attorney, appraiser, contractor or other firm (§ 33-23-43.8(i)(2), (l)).

Advertising (O.C.G.A. § 33-23-43.7)

Adjuster advertising

Every advertisement by an adjuster soliciting business must display the adjuster’s name and license number as they appear in the Commissioner’s records, and no adjuster may use an advertisement or solicitation unless the Commissioner has approved it (§ 33-23-43.7(a)-(b)).

Four kinds of statements in a public adjuster’s advertisement or solicitation are deceptive or misleading by law (§ 33-23-43.7(c)):

1. Inviting an insured to submit a claim when the insured has no covered damage
2. Inviting an insured to submit a claim by offering money or another valuable inducement
3. Inviting an insured to submit a claim by saying there is “no risk” in doing so
4. Any statement, logo or shield that implies, or could mistakenly be construed to imply, that a government agency issued, sanctioned or endorsed the solicitation

A public adjuster’s written advertisements, meaning newspapers, magazines, flyers and bulk mailers, must also carry this disclaimer in bold capital letters at least as large as the body text: “THIS IS A SOLICITATION FOR BUSINESS. IF YOU HAVE HAD A CLAIM FOR AN INSURED PROPERTY LOSS OR DAMAGE AND YOU ARE SATISFIED WITH THE PAYMENT BY YOUR INSURER, YOU MAY DISREGARD THIS ADVERTISEMENT”. Standard business cards are exempt (§ 33-23-43.7(d)).

Producer and insurer advertising

For agents and insurers, any advertisement or statement about the business of insurance that is untrue, deceptive or misleading is an unfair trade practice, whatever the medium (§ 33-6-4(b)(1)). Georgia adds specific rules that come up often in property and casualty marketing:

• Names. No person who is not an insurer may use a name that deceptively implies it is an insurer (§ 33-6-5(2)), such as an agency calling itself “Peachtree Mutual Insurance Company.”
• Government endorsement. It is an unfair practice to represent that a policy has been endorsed or sponsored by the federal or state government (§ 33-6-4(b)(12)(A)).
• Group endorsement. It is an unfair practice to represent that an individual policy is a group policy, or that the insurer, agent or policy is endorsed by, sponsored by or associated with any group or organization, unless that is true (§ 33-6-4(b)(12)(C)).
• Group advantages in property and casualty. An insurer, agent, counselor, solicitor or broker transacting property, marine, casualty or surety insurance may not circulate a solicitation that appears to come from a trade, social, fraternal or professional association, union, employee group or similar group not itself authorized to transact that insurance in Georgia, and suggests that the premium or coverage is a special advantage of, or available only to, that group, when that is false or, if true, would mean a discriminatory rate or an offering to a fictitious group. Knowingly letting someone else do it is equally prohibited, though long-established bona fide association groups are exempt (Ga. Comp. R. & Regs. r. 120-2-20-.01).
• Group preferences. An insurer may not give a preference in property, marine, casualty or surety insurance, in policy form, premium, rate or conditions, based on membership, nonmembership or employment in a particular group or organization, or make one available through a fictitious grouping that results in unfair discrimination. The restriction does not apply to a bona fide association of members in a common trade, business or profession that has had group insurance of the same type continuously for at least five years (§ 33-6-5(4)).

Coercion and rebating (O.C.G.A. § 33-6-4)

Coercion of buyers and borrowers

Agreeing to commit, or committing by concerted action, any act of boycott, coercion or intimidation that results or tends to result in unreasonable restraint of, or monopoly in, the business of insurance is an unfair practice (§ 33-6-4(b)(4)). Georgia also addresses an everyday tie-in. It is an unfair practice for an insurer or agent to be a party to requiring, as a condition of selling or financing real or personal property, of making or extending a loan secured by property, or of any other act in the sale or loan, that the insurance on the property be written through a particular insurer or agent (§ 33-6-4(b)(11)).

Three limits keep the rule practical (§ 33-6-4(b)(11)):

• It does not apply to a policy the seller or lender buys with its own funds and does not charge to the buyer or borrower.
• The seller or lender may still disapprove the buyer’s chosen insurer for reasons affecting solvency or other sensible and sufficient reasons.
• It does not apply to title insurance.

If a car dealer financing a vehicle requires the buyer to buy the physical damage coverage through the dealer’s affiliated agency, the agency or insurer that becomes a party to the requirement commits this unfair practice. Two related rules apply to the same transactions. When insurance is included in a purchase price or financing, the seller or lender must state the insurance charge, and any classifications it is based on, separately; including it may not change any other cost factor, though a lawful finance charge may apply to the premium (§ 33-6-5(3)). And no one may advertise, offer or give free insurance, or insurance below the approved or customary rate, in connection with the sale or bailment of property, except as Georgia’s group life insurance chapter provides (§ 33-6-5(1)).

Rebating

Rebating is prohibited in Georgia (§ 33-9-36(c)). Two features of Georgia’s rules deserve attention.

First, the ban reaches both sides. Rebating includes paying, allowing, giving or offering any rebate of premium or any valuable consideration or inducement not specified in the contract, and also receiving or accepting one (§ 33-6-4(b)(8)(B)). No insured named in a policy, nor any employee of the insured, may knowingly receive or accept a rebate, and a rebate offered after the insurance has been effected is prohibited too (§ 33-9-36(c)). A discount or credit given in accordance with a rate filing, rating plan or rating system filed with and approved by the Commissioner is not a prohibited rebate (§ 33-6-4(b)(8)(B)); a multi-policy discount the insurer has filed and had approved is an example.

Second, § 33-6-4 lists practices that are not rebates or unfair discrimination under that section (§ 33-6-4(b)(8)(C)), including:

• Adjusting a policy’s premium rate based on the loss or expense experience at the end of a policy year, retroactive only for that year
• Paying commissions to licensed agents, or returning dividends, savings or unabsorbed premium deposits to participating policyholders
• Paying for food or refreshments at group sales presentations and seminars, if no applications or contracts are offered or accepted there
• Paying for business meals and entertainment for current or prospective clients
• Promotional prizes, goods, store gift cards, gift certificates, sporting event tickets or merchandise worth no more than $100 per customer in the aggregate in a calendar year, as long as giving them is not contingent on the sale or renewal of a policy (§ 33-6-4(b)(8)(C)(x))

Section 33-9-36 has its own, shorter list: commissions and dividends, food or refreshments at sales presentations and seminars where no applications are offered or accepted, and promotional items within the same $100 limit (§ 33-9-36(d)-(f)).

The last condition deserves care. An agent may give a $25 store gift card to everyone who comes in for a quote, whether or not they buy, because it is not contingent on a sale, as long as each person’s items for the calendar year total no more than $100. The same card offered only to people who buy a policy is contingent on the sale and is an illegal rebate, even though it is well under $100.

Sidenote

Rebates you may not notice

Waiving part of your commission to lower a customer’s premium is a rebate, and the customer ends up paying less than the policy premium, which Georgia separately prohibits (O.C.G.A. § 33-6-5(6)(B)). So is any promotional item given only to customers who buy or renew. Anyone who knowingly advertises or promises to pay or rebate all or part of an insurance deductible as an inducement to the sale of goods or services commits a misdemeanor and is treated as a public adjuster for that purpose (§ 33-23-43(c)(4), (d), (e)).

A rebating violation is an unfair trade practice subject to the per-act penalties of § 33-6-8. Holding a license for the purpose of securing rebates, rather than carrying on business in good faith, is itself a ground for losing it (§ 33-23-21(9)).

Misrepresentation (O.C.G.A. § 33-24-7)

Misrepresentation by producers and insurers

Producer misrepresentation is an unfair trade practice. It includes misrepresenting a policy’s terms, benefits or advantages; misrepresenting any insurer’s financial condition; using a policy name that misrepresents its true nature; and misrepresenting facts to induce a policyholder to lapse, forfeit or surrender coverage (§ 33-6-4(b)(2)). Making unlawful false representations about the policy sold is also a misdemeanor (§ 33-6-4(c)), and materially misrepresenting a policy’s terms is a ground for license discipline (§ 33-23-21(6)).

Georgia also addresses the producer’s role in completing applications. An insurer must properly instruct and require its agents to include in applications all material facts about the risk that the agent knows or could have known with proper diligence (§ 33-6-4(b)(9)). An insurer may not encourage agents to accept applications that contain material misrepresentations or conceal information that would have prevented the policy from being issued (§ 33-6-4(b)(10)).

Misrepresentation by applicants

Georgia does not hold applicants to a warranty standard. All statements and descriptions in an application, or in negotiations for a policy, by or on behalf of the insured are representations, not warranties (§ 33-24-7(a)).

A misrepresentation, omission, concealment of facts or incorrect statement does not prevent recovery under the policy unless one of these is true (§ 33-24-7(b)):

1. It was fraudulent.
2. It was material either to the insurer’s acceptance of the risk or to the hazard the insurer assumed.
3. The insurer, in good faith, would not have issued the policy, would not have issued it in as large an amount or at the premium rate applied for, or would not have covered the hazard that caused the loss, if it had known the true facts.

An innocent, immaterial mistake therefore does not cost the insured coverage. A homeowner who innocently misstates by one year when the house was built, where the insurer would have issued the same policy at the same premium either way, can still recover. A homeowner who answers “no” to a question about prior water losses after filing two water claims is in a different position. If the insurer would have declined the risk or charged more had it known the truth, the misstatement can prevent recovery under § 33-24-7(b)(3), even if it was not made with intent to deceive.

Fraud (O.C.G.A. §§ 33-1-9, 33-1-16)

Section 33-24-7 states the civil consequence of a fraudulent statement in an application: it can prevent recovery under the policy (§ 33-24-7(b)(1)). Georgia’s criminal law goes further.

The crime of insurance fraud

A natural person commits the crime of insurance fraud by knowingly or willfully doing any of the following (§ 33-1-9(a)):

• Making, or helping make, a false or fraudulent statement of a material fact in a written statement or certificate, in filing a claim, in making an application, or in receiving an application or money for one, to obtain payment of a false or fraudulent claim or other benefit from an insurer
• Receiving money to buy insurance and converting it to his or her own benefit
• Issuing fake or counterfeit policies, certificates of insurance, insurance identification cards or binders
• Making a false or fraudulent representation of the death or disability of a policyholder or certificate holder to obtain money or a benefit from an insurer

Acting for an unauthorized insurer, knowingly and willfully or with reckless disregard, is also insurance fraud, except for insurance placed under Georgia’s surplus lines law, and so is knowingly and willfully filing a required statement with the Commissioner that contains a materially false statement, with intent to defraud (§ 33-1-9(b), (c), (f)). The crime may be prosecuted in the county of the purported loss, where the insurer or its agent received the false claim or application, where money for the application was received, or where any act in furtherance of the scheme occurred (§ 33-1-9(d)).

Insurance fraud is a felony punishable by 2 to 10 years’ imprisonment, a fine, or both (§ 33-1-9(e)).

Several of these acts are traps for producers. An agent who knowingly issues a certificate of insurance showing coverage that does not exist, perhaps to help a contractor client win a job, has issued a fake certificate. An agent who records an application as taken the day before a loss, so that the claim will be paid, has made a false statement of material fact in receiving an application. An agent who pockets a premium has converted money received to buy insurance.

Georgia treats staged auto accidents as separate felonies. Intentionally causing or attempting to cause a collision, or fabricating evidence of one that did not happen, with intent to commit insurance fraud is the crime of staging a collision, punishable by 1 to 5 years’ imprisonment. If it results in serious personal injury to another, it is aggravated staging, punishable by 2 to 10 years. Making or helping make a claim, or bringing a lawsuit, knowing the injuries came from a staged collision is also a felony (§ 33-1-9.1).

Reporting fraud

Georgia’s definition of a “fraudulent insurance act” includes knowingly and willfully transacting any contract, agreement or instrument that violates Title 33 (§ 33-1-16(a)(2)). Licensees must report such acts. Any insurer, agent or other person licensed under Title 33, or an employee of one, who knows or believes that a fraudulent insurance act is being or has been committed must send the Commissioner a report and any additional information requested. Anyone else may report (§ 33-1-16(f)).

Reporting carries legal protection. In the absence of fraud or bad faith, a person who, without malice, files a report or furnishes information required by § 33-1-16 or by the Commissioner under it is not liable for libel, slander or a similar claim (§ 33-1-16(d)(3)). An insurer, an agent authorized to act for it, or an insured who knows or has reasonable grounds to believe that a fraudulent insurance act was committed, and believes it has not been reported to Georgia law enforcement, may notify a law enforcement agency, and absent fraud or bad faith is likewise protected (§ 33-1-16(g)).

The Commissioner reviews the reports, investigates, and reports violations to the prosecuting attorney with jurisdiction. If prosecution is not begun within 90 days of that report, the prosecuting attorney must tell the Commissioner why (§ 33-1-16(f)).

The Commissioner’s fraud investigators

The Commissioner employs investigators to pursue fraudulent insurance acts; the Office of the Commissioner of Insurance and Safety Fire calls this unit its Criminal Investigations Division. Their powers come from § 33-1-16:

• In an investigation, the Commissioner may administer oaths, request witnesses and documents, and collect evidence, but can compel testimony or documents only through a superior court order (§ 33-1-16(b), (d)(1)).
• Investigation files are closed to public inspection for as long as the Commissioner considers reasonably necessary (§ 33-1-16(e)).
• The investigators may arrest for criminal violations established by their investigations, execute arrest and search warrants for those violations, serve subpoenas for offenses their investigations identify, and arrest without a warrant, on probable cause, anyone found in the act of violating the law. They may carry firearms in the performance of their duties, and resisting or interfering with their arrests is unlawful (§ 33-1-16(h)).

The work is supported by the Special Insurance Fraud Fund, created to pay for the investigation and prosecution of insurance fraud (§ 33-1-17(b)). Each foreign, alien and domestic insurance company doing business in Georgia pays an annual assessment, under a formula the Commissioner sets by rule and due September 1 (§ 33-1-17(c)(2)). The funds pay for fraud investigations and can reimburse prosecuting attorneys for the cost of assistant prosecutors who handle fraud cases (§ 33-1-17(c)(3)). Insurers must make their fraud investigators and files available to the Commissioner, the Attorney General and local prosecutors, at their own expense (§ 33-1-17(d)-(e)).

A producer who commits fraud can also lose the license. Obtaining a license by fraud and committing fraudulent or dishonest practices are both grounds for refusal, suspension or revocation (§ 33-23-21(3), (5)).

Lesson summary

• Premiums received and return premiums due are held in a fiduciary capacity and paid over promptly. Funds for several insurers may share one account if the records show whose money is whose, but premiums may never be mixed with the agent’s own funds.
• A willful violation of the premium-handling rules is a misdemeanor, or a felony when the amounts exceed $1,000, and knowingly converting premium money is the felony of insurance fraud.
• A producer who is not a counselor may not charge the customer for placing insurance. Agents may charge a late-payment service charge of up to 15 cents per $10 per month (or $1.00 when that computes to less) on balances owed 30 days or more.
• A counselor who charges the customer may accept insurer compensation for the placement only after the customer’s documented acknowledgment and disclosure of the amount or method, and a counselor paid for counseling may not take other compensation on the same transaction.
• Commissions may be paid to and shared with licensed persons only, though former licensees may still receive renewal and deferred commissions.
• Adjuster advertisements must show the adjuster’s name and license number and be approved by the Commissioner. Producers may not imply a government or group endorsement, or a group advantage, that is not real.
• An insurer or agent may not be a party to tying a sale or loan to a particular insurer or agent. Rebating is prohibited for giver and receiver; promotional items up to $100 per customer per calendar year are allowed only if not contingent on a sale or renewal.
• Applicants’ statements are representations, and a misstatement defeats recovery only if fraudulent, material or one that would have changed the insurer’s decision. Insurance fraud is a felony punishable by 2 to 10 years’ imprisonment, a fine or both; licensees must report suspected fraud, and the Commissioner’s investigators have arrest powers.