Nebraska Producer Responsibilities & Prohibited Practices

Fiduciary Duties

Nebraska producers act as fiduciaries and must:

Primary Duties

Premium Handling Requirements

Producers handling premiums must:

• Deposit premiums in trust accounts within required timeframe
• Keep client funds separate from personal funds
• Maintain accurate records of all transactions
• Remit premiums to insurers as required
• Provide receipts for cash payments

Trust Account Requirements

Prohibited Practices

Misrepresentation

Definition: Making false or misleading statements about:

• Policy benefits, advantages, or conditions
• Dividends or share of surplus
• Financial condition of any insurer
• Policy terms or premiums

Examples:

• Telling client coverage exists when it doesn't
• Misrepresenting policy exclusions
• Overstating insurer financial strength
• Falsifying application information

Penalty: License revocation, fines up to $10,000 per violation

Rebating

Definition: Offering inducements not specified in the policy to purchase insurance

Prohibited Inducements:

• Cash payments or rebates
• Gifts of significant value
• Payment of premiums for client
• Merchandise or services
• Sharing of commissions with non-licensees

Exceptions:

• Company-approved promotional items of minimal value
• Group insurance administrative fees
• Dividends or experience rating credits in policy

Penalty: License revocation, fines up to $10,000 per violation

Exam Tip: Nebraska strictly prohibits rebating. Producers cannot share commissions or offer valuable inducements beyond what's specified in the filed policy.

Twisting

Definition: Misrepresenting facts to induce a policyholder to lapse, surrender, or replace existing insurance

Examples:

• Falsely stating existing policy is inadequate
• Misrepresenting cash value of life policies
• Hiding costs of replacement
• Failing to disclose surrender charges

Penalty: License revocation, criminal prosecution possible

Churning

Definition: Excessive replacement of policies to generate commissions

Indicators:

• Multiple replacements of same client's policies
• No demonstrable benefit to client
• Pattern of behavior across multiple clients
• Commission-driven recommendations

Penalty: License revocation, fines, possible restitution

Unfair Discrimination

Definition: Making insurance decisions based on criteria not related to risk

Prohibited Factors:

• Race or ethnicity
• Religion
• National origin
• Gender (except where actuarially justified)
• Credit score (limited restrictions apply)

Permitted Factors:

• Driving record
• Claims history
• Property condition
• Location/territory
• Policy limits and coverages

Defamation

Definition: Making false statements that damage another insurer's or producer's reputation

Examples:

• Falsely claiming competitor is financially weak
• Spreading untrue rumors about another producer
• Publishing false information about insurers

Penalty: License discipline, civil liability

Record Keeping Requirements

Mandatory Records

Producers must maintain records for 5 years:

Record Retention

Notification Requirements

Changes Requiring Notice

Producers must notify NDOI within 30 days of:

• Change of address (business or residence)
• Change of name
• Change of business entity structure
• Criminal charges or convictions
• Administrative actions by other states
• Termination of appointment for cause

How to Report Changes

Disciplinary Actions

Grounds for Discipline

The Director may discipline a producer for:

• Violating any insurance law or regulation
• Making material misstatement on application
• Obtaining license through fraud
• Misappropriating funds
• Failing to complete continuing education
• Being convicted of a felony
• Using fraudulent, coercive, or dishonest practices
• Having license revoked in another state

Types of Discipline

Due Process Rights

Producers facing discipline have rights to:

• Written notice of charges
• Administrative hearing
• Present evidence and witnesses
• Be represented by attorney
• Appeal adverse decisions

Exam Tip: Nebraska can impose fines up to $10,000 per violation. Multiple violations in a single case can result in substantial total penalties plus license revocation.

Termination of Appointments

Insurer Obligations

When an insurer terminates a producer:

• Must notify NDOI within 30 days
• Must state reason for termination
• Must notify producer of termination

Termination Categories

Producer Rights

If terminated for cause, producer may:

• Request copy of reasons from insurer
• Provide response to NDOI
• Request hearing if license action proposed