Key Takeaways
- LICENSE SUSPENSION is temporary removal of license privileges; LICENSE REVOCATION is permanent termination (may reapply after waiting period, typically 3-5 years)
- Fines typically range from $500 to $10,000 PER VIOLATION, with each day of continued violation potentially counting as a separate offense
- CEASE AND DESIST orders require immediate stop of specific conduct—violation can result in additional penalties
- Criminal penalties for fraud can include FELONY charges, prison sentences (1-10+ years), and restitution requirements
- Common grounds for license action include fraud, misappropriation of funds, misrepresentation, twisting/churning, and failure to disclose material information
Last updated: December 2025
Penalties and Disciplinary Actions
License Suspension vs. Revocation
| Action | Definition | Duration | Can Reapply? |
|---|---|---|---|
| Suspension | Temporary removal of license privileges | Fixed period (30 days to 1 year) | Automatic reinstatement after period |
| Revocation | Permanent termination of license | Indefinite | May reapply after 3-5 years |
| Non-Renewal | License expires and not renewed | Permanent until reapplication | Can reapply immediately |
Fines and Monetary Penalties
Typical Fine Structure
| Violation Type | Typical Fine Range |
|---|---|
| Per violation | $500 - $10,000 |
| Serious violations | Up to $50,000+ |
| Continued violations | Each day = separate violation |
| Pattern of violations | Aggregate fines can be substantial |
Failure to Pay
Failure to pay fines can result in license revocation.
Cease and Desist Orders
Definition: An order requiring immediate stop of specific conduct.
| Element | Details |
|---|---|
| When Used | Ongoing violations, consumer harm risk |
| Effect | Must stop immediately |
| Violation | Additional penalties, license action |
| Appeal | Can seek judicial review |
Criminal Penalties for Fraud
Insurance Fraud
Making false claims, staging losses, misrepresenting facts.
Embezzlement/Misappropriation
Using fiduciary funds (premiums, claims) for personal use.
Criminal Penalty Ranges
| Offense Level | Potential Penalties |
|---|---|
| Misdemeanor | Up to 1 year jail, fines |
| Felony | 1-10+ years prison, substantial fines ($50,000+) |
| Restitution | Must repay stolen/defrauded amounts |
| License | Automatic revocation for fraud conviction |
Grounds for License Action
Character Issues
- Fraud or dishonesty in insurance business
- Misappropriation of fiduciary funds
- Material misstatement on license application
- Criminal conviction involving dishonesty
- Demonstrated unworthiness or untrustworthiness
Business Practice Violations
- Twisting or churning
- Rebating (in states where prohibited)
- Misrepresentation in sale of insurance
- Unfair discrimination
- Controlled business violations
- Sharing commissions with unlicensed persons
Regulatory Violations
- Violation of insurance laws or regulations
- Failure to comply with commissioner's orders
- Acting as unlicensed insurer
- Failure to pay state fees or taxes
- Submitting fraudulent documents
Competency Issues
- Failure to complete continuing education
- Demonstrated incompetence
- Unable to perform producer duties
Administrative Process
- Investigation: Department investigates complaint or violation
- Notice: Producer receives written notice of charges
- Hearing: Right to hearing before license action
- Decision: Commissioner issues decision with findings
- Order: Formal order of penalty/disciplinary action
- Appeal: Right to appeal to court (judicial review)
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Test Your Knowledge
What is the difference between license suspension and license revocation?
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Test Your Knowledge
A producer is convicted of insurance fraud. What happens to their license?
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Test Your Knowledge
What is the typical maximum fine per violation of insurance laws?
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