1.3 Indiana Insurance Code & Regulations

The Two-Layer Legal Framework

Indiana insurance regulation rests on two sources you must distinguish on the exam:

Exam Tip: Statute vs. rule is a classic test point. If the legislature wrote it, it's Title 27. If IDOI adopted it through rulemaking, it's Title 760.

Prohibited Unfair Trade Practices

Indiana's unfair trade practices provisions are the most heavily tested part of the law section. Know each by definition, not just by name.

• Rebating – giving the applicant any valuable inducement not stated in the policy (cash, gifts, paying part of the premium, sharing commission) to buy or keep insurance.
• Misrepresentation – making false or misleading statements about a policy's terms, benefits, dividends, or about an insurer's financial condition.
• Twisting – using misrepresentation to convince a policyholder to drop one policy and replace it to the insured's detriment.
• Churning – twisting using values from the same insurer's existing policy.
• Defamation – false statements that injure another insurer or producer.
• Boycott, coercion, intimidation – forcing insurance arrangements through unreasonable pressure.

Discrimination: Prohibited vs. Allowed Factors

Penalties: the Commissioner may issue a cease-and-desist order, suspend or revoke the license, and impose civil penalties — commonly cited as up to roughly $5,000 per violation — with larger amounts for knowing, repeated conduct.

Cancellation & Non-Renewal

Indiana draws a bright line at 60 days for property policies.

Within the first 60 days (new policy)

The insurer has broad latitude to cancel for underwriting reasons with advance written notice. This is the "get-acquainted" period during which the insurer can still decline a risk it would not have written.

After 60 days in force

Mid-term cancellation is limited to specific grounds:

1. Non-payment of premium
2. Material misrepresentation or fraud in the application
3. Substantial change/increase in the insured hazard
4. The policy/insured no longer meets underwriting standards or a regulatory determination makes continuation improper

Notice periods (memorize the table)

Trap: Cancellation ends a policy mid-term; non-renewal simply declines to continue at the end of the term. Mixing the two is a frequent wrong answer.

Producer Duties

Reporting to IDOI

Failure to report these is itself a disciplinable offense — the cover-up can cost the license even when the underlying matter would not have.

Recordkeeping

Producers must retain transaction records — applications, premium receipts, and correspondence — and make them available to IDOI on request. Maintaining a complete file is the producer's first line of defense in any market-conduct exam.

Fair Claims-Handling Standards

Indiana's unfair claim settlement practices rules require insurers to act promptly and in good faith. Tested obligations include:

• Acknowledge receipt of a claim promptly.
• Investigate reasonably and not deny without a reasonable basis.
• Settle promptly once liability is reasonably clear.
• Provide a written explanation when denying a claim.

Unfair claim practices the exam asks you to spot: misrepresenting policy provisions to claimants, unreasonably delaying payment, offering substantially less than the claim is worth to force litigation, and failing to adopt reasonable claim-handling standards.

Policyholders may file a complaint with IDOI Consumer Services, which can prompt a market-conduct review against an insurer with a pattern of violations.

Distinguishing the Replacement Offenses

The exam loves to separate the four "selling" violations that look similar:

Read the fact pattern for the purpose: an inducement to buy is rebating; a lie that swaps policies is twisting; a lie that merely describes coverage (no replacement) is misrepresentation. This single distinction resolves a large share of law-section questions.

Penalties and the Enforcement Ladder

When IDOI finds a violation, it does not jump straight to revocation. The typical ladder is: a cease-and-desist order to stop the conduct, civil penalties (fines), license suspension, and finally revocation for serious or repeated misconduct. The Commissioner must generally provide notice and an opportunity for a hearing before disciplining a licensee — a due-process step the exam tests by contrasting it with "automatic revocation without a hearing," which is a wrong answer. Fraud may also be referred for criminal prosecution separate from the administrative case.

Producer Liability and Documentation

Because a producer can be held responsible for errors and omissions, Indiana producers commonly carry E&O coverage. Whether or not E&O is mandated for a given license type, sound documentation is the practical defense: a complete file showing what coverage was offered, what the insured declined, and signed acknowledgments protects the producer if a coverage gap surfaces after a loss. When replacing coverage, retaining the comparison disclosure and the insured's signed acknowledgment is essential — it is the evidence that the replacement was proper and not twisting.

Quick-Reference Deadlines

Memorizing this table answers a disproportionate number of Indiana-specific law questions, because the test favors precise numeric deadlines over open-ended concepts.