As a licensed insurance agent, your livelihood hinges on your license to sell insurance. It represents a public trust as you provide an important public service. So when your license is jeopardized by a formal complaint or an allegation of misconduct, it can throw your whole life into upheaval. Sadly, many agents end up losing their licenses over misunderstandings or a single mistake or lapse in judgment—simply because they don't understand the disciplinary process and how to respond to complaints or board investigations.
The fact is, what you don't know can hurt you. If you are a licensed insurance agent, you need to understand what's at stake and how to defend your license if the licensing board investigates you. Attorney Joseph D. Lento has extensive experience helping licensed insurance agents in New Jersey, Pennsylvania, and New York. To that end, the Lento Law Firm has compiled the following answers to many common questions insurance agents have about licensing boards, complaints, and investigations.
What agency do I answer to when someone files a formal complaint against me?
Each state has its own licensing board for the licensing and regulating of insurance agents. In New Jersey, it's the New Jersey Division of Insurance, in Pennsylvania, it's the Pennsylvania Insurance Department, and in New York, it's the Department of Financial Services. These respective licensing boards oversee agent licensing and disciplinary measures for agents in their state.
On what grounds could my insurance agent license be revoked?
While each state has its own rules of conduct for licensed insurance agents, the types of offenses for which an agent can lose their license are fairly common across all states. Some of the most common offenses include:
- Fraudulent activity. Examples might include misappropriating or stealing premium payments, creating fictitious policies, etc.
- Criminal convictions. Being convicted of certain crimes after being licensed can prompt a revocation. So can failing to report any criminal convictions you had before applying for a license.
- Substance abuse/addiction. Addictive behaviors can affect your performance and your decision. If substance abuse interferes with your ability to act as an agent, or if you get a DUI, you might be facing a loss of your license.
- Misrepresentation. For example, making untrue assertions or false statements about what a policy covers.
- Failure to abide by insurance regulations. Any violations of the rules in your state can cost you your license.
Will a violation of the rules automatically cost me my license?
Not necessarily. Depending on the circumstances, the licensing board can invoke other sanctions that don't involve losing your license. Examples include:
- Suspension. You may be restricted from acting as an insurance agent for a period of time.
- Probation. You may be allowed to continue as an insurance agent under probation and/or monitoring.
- Fines. The board may penalize you financially.
- Restrictions on your license. The board may impose certain restrictions on your license for certain activities or services.
- Formal reprimand. The board may issue a written reprimand that appears on your public record.
Can these other penalties still hurt my career even if I get to keep my license?
Yes, they can. Any disciplinary action taken by the board is a matter of public record, which means anyone can look you up and see if you've been disciplined. This may affect whether certain agencies, employers, firms, or clients are willing to work with you. Hiring a good attorney can improve your chances of avoiding these penalties.
How does the disciplinary process work?
The disciplinary process for licensed insurance agents works similarly to that of other professional licenses, with some variations from state to state. The general process usually moves along these lines:
- Complaint. Most disciplinary processes will begin when someone files a formal complaint against you, whether it's a policyholder, colleague, insurance company, or another interested party.
- Investigation. The licensing board has an obligation to investigate the complaint to determine whether the allegations have merit. This process usually involves asking you to respond formally to the complaint, as well as interviewing the complainant, summoning and interviewing witnesses, and issuing subpoenas for relevant documents.
- Consent order. If the board finds evidence to support the complaint, it may give you the option of signing a consent order as an alternative to going through a formal hearing.
- Formal hearing. If no consent order is offered or agreed to, the board will summon you to a formal hearing, which may take place either before the board or before an Administrative Law Judge.
- Final determination and disciplinary action. When the formal hearing concludes, the insurance licensing board will make a final determination and decide on an appropriate penalty.
At numerous points during the disciplinary process, the board may determine that there is insufficient evidence to move forward, at which point they may dismiss the complaint. Also, a good attorney may be able to negotiate with the board to dismiss the complaint or to agree to a more lenient penalty.
What is a consent order?
A consent order is a written, binding agreement between the state, the licensing board, and you, in which you essentially admit to the allegations being made against you (or a version of them) and voluntarily submit to an agreed-upon penalty imposed by the board. A consent order basically eliminates the need for a formal hearing. In that regard, it's not unlike a settlement offer in a civil suit or a plea bargain for criminal charges, both of which are used to avoid taking the case to court.
Should I agree to a consent order if it is offered?
It depends on the situation. The upside of a consent order is that it demonstrates cooperation with the board, which may result in either a lighter penalty or a better chance at getting your license reinstated if it is suspended or revoked. The downside of a consent order is that it constitutes an admission of guilt on your part, and it still goes on your public record as an adverse action—plus, it still may not prevent your license from being revoked. If there is significant evidence against you and the board is likely to rule against you anyway, a consent order may be the best way to go, especially if it can be negotiated in a way that lets you keep your insurance agent's license intact. If you have evidence that disproves the complaint, signing a consent order would make that evidence irrelevant, and it might be better to defend yourself in a formal hearing. To avoid giving up your rights, never accept a consent order without the advice of experienced legal counsel.
Do I really need an attorney? Can't I just try to resolve the complaint informally with the board?
You always have the right to act as your own representative in interactions with the board, but it's highly inadvisable if a complaint is filed against you because the chances of a negative outcome are much more likely. Here's why it helps to have an attorney:
- This is a legal matter, not a “professional misunderstanding.” Your professional license is a legal document, so any alleged violation of that license is a legal matter (falling under the heading of Administrative Law). When you're in legal trouble of any kind, it's always best to have a legal expert representing you.
- The licensing board is not working in your favor. The board exists not to protect you, but to protect the public. When a complaint is filed, the board is obligated to act in the public interest. Therefore, any attempt you make to “talk your way out of the problem” will likely be taken in a negative light and will be used against you. Think of the board as a prosecutor looking to prove you guilty. In such cases, you'd do much better having an attorney to help you prove your innocence.
- The board has the “home field” advantage in disciplinary matters. No matter how “fair” the proceedings are, the fact remains that the board understands the disciplinary process better than you do, which puts you at an inherent disadvantage. Having an attorney in your corner who also understands the process is the best way for you to even the odds.
Can I simply choose not to cooperate with the investigation?
Not really. Your insurance agent's license comes with a certain amount of accountability—either an implied or directly expressed mandate that you will comply with any investigation. If you don't respond to the complaint or refuse to appear before the board when asked, they will rule summarily against you and invoke whatever discipline they decide—which will very likely be the suspension or revocation of your license.
On the other hand, cooperating with the investigation does not mean you forfeit the right to defend yourself against any allegations of misconduct or that you have to place yourself at a disadvantage. For example, it is not considered a lack of cooperation to defer to your attorney if an investigator wishes to question you.
Does hiring an attorney make me appear guilty?
No. Hiring an attorney is not an implication of guilt, especially not in the eyes of a licensing board. In fact, hiring an attorney tells them you are serious about resolving the complaint made against you.
What kind of an attorney do I need?
Technically, any lawyer who is licensed to practice law in your state can represent you in license disciplinary matters. However, not every attorney has a good working knowledge of the disciplinary process in that state. For best results, you should hire an attorney with specific knowledge and experience in professional license defense.
What can an experienced attorney do to help me?
Hiring an experienced license defense attorney quite often results in a more positive outcome for your case than you might have achieved otherwise. A good license defense attorney can:
- Explain the nature of the complaint, what is at stake, and what you can do about it;
- Work with you to prepare an effective defense strategy;
- Act as your official legal representative in all interactions with the board and/or the Administrative Law Judge;
- Gather evidence and witnesses on your behalf;
- Negotiate for the best possible outcome; and
- Defend you in a formal hearing, if necessary.
Can a license defense attorney help me get my agent's license reinstated if it's already been revoked or suspended?
Yes. Each state has its own stipulations as to how to get one's license reinstated and the conditions for eligibility. An attorney skilled in professional license defense can serve as a liaison between you and the licensing board during this process, coordinating your paperwork and fees, monitoring the progress of your application, and negotiating for the most favorable conditions for reinstatement of your license.
How soon after I receive notice of a complaint should I hire an attorney?
An attorney can get involved as soon as you receive notice of a complaint and/or investigation. In fact, the earlier you get an attorney on board, the better your chances for a more favorable outcome. Waiting until a formal hearing is announced to hire an attorney forces you into a defensive posture because by then, the board may already have made up its mind about the complaint. By hiring an attorney early, you may be able to resolve the complaint with minimal damage to your career and without ever needing to go to a formal hearing.
If you are an insurance agent in New Jersey, Pennsylvania, or New York, and you are facing an investigation over alleged wrongdoing, there's simply too much at stake for you to take risks with your license. Even if you are completely innocent of the allegations, your career as an insurance agent could be at risk without skilled legal representation. Attorney Joseph D. Lento has unparalleled experience with the state licensing boards and the disciplinary process, and he has helped many licensed professionals save their licenses with minimal damage to their public reputations. Don't gamble on your future; take control of it. Call the Lento Law Firm today at (888) 535-3686 to discuss the details of your case and explore your options.