First Regular Session 112th General Assembly (2001)
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HOUSE ENROLLED ACT No. 1120
AN ACT to amend the Indiana Code concerning insurance.
Be it enacted by the General Assembly of the State of Indiana:
SECTION 1. IC 27-1-15.6-2, AS ADDED BY HEA 1674-2001,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2002]: Sec. 2. The following definitions apply
throughout this chapter, IC 27-1-15.7, and IC 27-1-15.8:
(1) "Bureau" refers to the child support bureau of the division of
family and children established under IC 12-17-2-5.
(2) "Business entity" means a corporation, an association, a
partnership, a limited liability company, a limited liability
partnership, or another legal entity.
(3) "Commissioner" means the insurance commissioner appointed
under IC 27-1-1-2.
(4) "Consultant" means a person who:
(A) holds himself or herself out to the public as being engaged
in the business of offering; or
(B) for a fee, offers;
any advice, counsel, opinion, or service with respect to the
benefits, advantages, or disadvantages promised under any policy
of insurance that could be issued in Indiana.
(5) "Delinquent" means the condition of being at least:
(A) two thousand dollars ($2,000); or
(B) three (3) months;
past due in the payment of court ordered child support.
(6) "Home state" means the District of Columbia or any state or
territory of the United States in which an insurance producer:
(A) maintains the insurance producer's principal place of
residence or principal place of business; and
(B) is licensed to act as an insurance producer.
(7) "Insurance producer" means a person required to be licensed
under the laws of Indiana to sell, solicit, or negotiate insurance.
(8) "License" means a document issued by the commissioner
authorizing a person to act as an insurance producer for the lines
of authority specified in the document. The license itself does not
create any authority, actual, apparent, or inherent, in the holder to
represent or commit an insurance carrier.
(9) "Limited line credit insurance" includes the following:
(A) Credit life insurance.
(B) Credit disability insurance.
(C) Credit property insurance.
(D) Credit unemployment insurance.
(E) Involuntary unemployment insurance.
(F) Mortgage life insurance.
(G) Mortgage guaranty insurance.
(H) Mortgage disability insurance.
(I) Guaranteed automobile protection (gap) insurance.
(J) Any other form of insurance:
(i) that is offered in connection with an extension of credit
and is limited to partially or wholly extinguishing that credit
(ii) that the insurance commissioner determines should be
designated a form of limited line credit insurance.
(10) "Limited line credit insurance producer" means a person who
sells, solicits, or negotiates one (1) or more forms of limited line
credit insurance coverage to individuals through a master,
corporate, group, or individual policy.
(11) "Limited lines insurance" means any of the following:
(A) The lines of insurance defined in section 18 of this
(B) Any line of insurance the recognition of which is
considered necessary by the commissioner for the purpose of
complying with section 8(e) of this chapter.
(C) For purposes of section 8(e) of this chapter, any form of
insurance with respect to which authority is granted by a home
state that restricts the authority granted by a limited lines
producer's license to less than total authority in the associated
major lines described in section 7(a)(1) through 7(a)(6) of this
(12) "Limited lines producer" means a person authorized by the
commissioner to sell, solicit, or negotiate limited lines insurance.
(13) "Negotiate" means the act of conferring directly with or
offering advice directly to a purchaser or prospective purchaser of
a particular contract of insurance concerning any of the
substantive benefits, terms, or conditions of the contract, provided
that the person engaged in that act either sells insurance or
obtains insurance from insurers for purchasers.
(14) "Person" means an individual or a business entity.
(15) "Sell" means to exchange a contract of insurance by any
means, for money or its equivalent, on behalf of a company.
(15) (16) "Solicit" means attempting to sell insurance or asking or
urging a person to apply for a particular kind of insurance from a
(16) (17) "Surplus lines producer" means a person who sells,
solicits, negotiates, or procures from an insurance company not
licensed to transact business in Indiana an insurance policy that
cannot be procured from insurers licensed to do business in
(17) (18) "Terminate" means:
(A) the cancellation of the relationship between an insurance
producer and the insurer; or
(B) the termination of a producer's authority to transact
(18) (19) "Uniform business entity application" means the current
version of the national association of insurance commissioners
uniform business entity application for resident and nonresident
(19) (20) "Uniform application" means the current version of the
national association of insurance commissioners uniform
application for resident and nonresident producer licensing.
SECTION 2. IC 27-1-15.6-12, AS ADDED BY HEA 1674-2001,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2002]: Sec. 12. (a) For purposes of this section,
"permanently revoke" means that:
(1) the producer's license shall never be reinstated; and
(2) the former licensee, after the license revocation, is not eligible
to submit an application for a license to the department.
(b) The commissioner may levy a civil penalty, place an insurance
producer on probation, suspend an insurance producer's license, revoke
an insurance producer's license for a period of years, permanently
revoke an insurance producer's license, or refuse to issue or renew an
insurance producer license, or take any combination of these actions,
for any of the following causes:
(1) Providing incorrect, misleading, incomplete, or materially
untrue information in a license application.
(A) an insurance law;
(B) a regulation;
(C) a subpoena of an insurance commissioner; or
(D) an order of
the an insurance commissioner;
of Indiana or of another state.
(3) Obtaining or attempting to obtain a license through
misrepresentation or fraud.
(4) Improperly withholding, misappropriating, or converting any
monies or properties received in the course of doing insurance
(5) Intentionally misrepresenting the terms of an actual or
proposed insurance contract or application for insurance.
(6) Having been convicted of a felony.
(7) Admitting to having committed or being found to have
committed any unfair trade practice or fraud in the business of
(8) Using fraudulent, coercive, or dishonest practices, or
demonstrating incompetence, untrustworthiness, or financial
irresponsibility in the conduct of business in Indiana or elsewhere.
(9) Having an insurance producer license, or its equivalent,
denied, suspended, or revoked in any other state, province,
district, or territory.
(10) Forging another's name to an application for insurance or to
any document related to an insurance transaction.
(11) Improperly using notes or any other reference material to
complete an examination for an insurance license.
(12) Knowingly accepting insurance business from an individual
who is not licensed.
(13) Failing to comply with an administrative or court order
imposing a child support obligation.
(14) Failing to pay state income tax or to comply with any
administrative or court order directing payment of state income
(15) Failing to satisfy the continuing education requirements
established by IC 27-1-15.7.
(16) Violating section 31 of this chapter.
(17) Failing to timely inform the commissioner of a change in
legal name or address, in violation of section 7(h) of this chapter.
(c) The commissioner shall refuse to:
(1) issue a license; or
(2) renew a license issued;
under this chapter to any person who is the subject of an order issued
by a court under IC 31-14-12-7 or IC 31-16-12-10 (or
IC 31-1-11.5-13(m) or IC 31-6-6.1-16(m) before their repeal).
(d) If the commissioner refuses to renew a license or denies an
application for a license, the commissioner shall notify the applicant or
licensee and advise the applicant or licensee, in a writing sent through
regular first class mail, of the reason for the denial of the applicant's
application or the nonrenewal of the licensee's license. The applicant
or licensee may, not more than sixty-three (63) days after notice of
denial of the applicant's application or nonrenewal of the licensee's
license is mailed, make written demand to the commissioner for a
hearing before the commissioner to determine the reasonableness of the
commissioner's action. The hearing shall be held not more than thirty
(30) days after the applicant or licensee makes the written demand, and
shall be conducted under IC 4-21.5.
(e) The license of a business entity may be suspended, revoked, or
refused if the commissioner finds, after hearing, that a violation of an
individual licensee acting on behalf of the partnership or corporation
was known or should have been known by one or more of the partners,
officers, or managers of the partnership or corporation and:
(1) the violation was not reported to the commissioner; and
(2) no corrective action was taken.
(f) In addition to or in lieu of any applicable denial, suspension, or
revocation of a license under subsection (b), a person may, after a
hearing, be subject to the imposition by the commissioner under
subsection (b) of a civil penalty of not less than fifty dollars ($50) and
not more than ten thousand dollars ($10,000). A penalty imposed under
this subsection may be enforced in the same manner as a civil
(g) A licensed insurance producer or limited lines producer shall,
not more than ten (10) days after the producer receives a request in a
registered or certified letter from the commissioner, furnish the
commissioner with a full and complete report listing each insurer with
which the licensee has held an appointment during the year preceding
(h) If a licensee fails to provide the report requested under
subsection (g) not more than ten (10) days after the licensee receives
the request, the commissioner may, in the commissioner's sole
discretion, without a hearing, and in addition to any other sanctions
allowed by law, suspend any insurance license held by the licensee
pending receipt of the appointment report.
(i) The commissioner shall promptly notify all appointing insurers
and the licensee regarding any suspension, revocation, or termination
of a license by the commissioner under this section.
(j) The commissioner may not grant, renew, continue, or permit to
continue any license if the commissioner finds that the license is being
used or will be used by the applicant or licensee for the purpose of
writing controlled business. As used in this subsection, "controlled
(1) insurance written on the interests of:
(A) the applicant or licensee;
(B) the applicant's or licensee's immediate family; or
(C) the applicant's or licensee's employer; or
(2) insurance covering:
(A) the applicant or licensee;
(B) members of the applicant's or licensee's immediate family;
(i) a corporation, limited liability company, association, or
(ii) the officers, directors, substantial stockholders, partners,
members, managers, employees of such a corporation,
limited liability company, association, or partnership;
of which the applicant or licensee or a member of the
applicant's or licensee's immediate family is an officer,
director, substantial stockholder, partner, member, manager,
associate, or employee.
However, this section does not apply to insurance written or interests
insured in connection with or arising out of credit transactions. A
license is considered to have been used or intended to be used for the
purpose of writing controlled business if the commissioner finds that
during any twelve (12) month period the aggregate commissions earned
from the controlled business exceeded twenty-five percent (25%) of the
aggregate commission earned on all business written by the applicant
or licensee during the same period.
(k) The commissioner has the authority to:
(1) enforce the provisions of; and
(2) impose any penalty or remedy authorized by;
this chapter or any other provision of this title against any person who
is under investigation for or charged with a violation of this chapter or
any other provision of this title, even if the person's license or
registration has been surrendered or has lapsed by operation of law.
(l) For purposes of this section, the violation of any provision of
IC 28 concerning the sale of a life insurance policy or an annuity
contract shall be considered a violation described in subsection (b)(2).
(m) The commissioner may order a licensee to make restitution if
the commissioner finds that the licensee has committed a violation
(1) subsection (b)(4);
(2) subsection (b)(7);
(3) subsection (b)(8); or
(4) subsection (b)(16).
(n) The commissioner shall notify the securities commissioner
appointed under IC 23-2-1-15 when an administrative action or civil
proceeding is filed under this section and when an order is issued under
this section denying, suspending, or revoking a license.
SECTION 3. IC 27-7-9-8 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE SEPTEMBER 1, 2001]: Sec. 8. (a) Coverage for damage
due to mine subsidence must be available as an additional form of
coverage under any insurance policy providing the type of insurance
described in Class 3(a) of IC 27-1-5-1 to directly cover one (1) or more
structures located in a county identified under section 6 of this chapter.
The mine subsidence coverage must be available in an amount
adequate to indemnify the insured to the extent of the loss in actual
cash value of the covered structure due to mine subsidence, less a
deductible equal to two percent (2%) of the insured value of the
structure under the policy. However, the deductible must be no less
than two hundred fifty dollars ($250) and no more than five hundred
(b) An insurer proposing to issue a policy providing the type of
insurance described in Class 3(a) of IC 27-1-5-1 to cover one (1) or
more structures located in a county identified under section 6 of this
chapter shall inform the prospective policyholder of the availability of
mine subsidence coverage under this section. An insurer shall inform
the prospective policyholder of the availability of mine subsidence
coverage under this subsection when a policy described in this
subsection is issued.
However, an insurer is not required to inform a
prospective policyholder of the availability of mine subsidence
coverage if the issuance of the policy will take place after June 30,
(c) When an insurer informs a prospective policyholder of the
amount of the premium for the mine subsidence coverage that is
available as an additional form of coverage under a policy as required
by subsection (a), the premium for the mine subsidence coverage must
be stated separately from the premium for the other coverage provided
by the policy. The amount of the premium for mine subsidence
coverage provided by an insurer under this section must be set
according to the premium level set by the commissioner under section
10 of this chapter.
(d) Except as provided in subsection (f), an insurance policy
providing the type of insurance described in Class 3(a) of IC 27-1-5-1
to directly cover one (1) or more structures located in a county
identified under section 6 of this chapter must include the mine
subsidence coverage provided for under subsection (a) if the
prospective insured (before issuance of the policy) or the insured
(before renewal of the policy) indicates that the coverage is to be
included in the policy.
(e) An insurer is not required to provide mine subsidence coverage
under subsection (a) under any insurance policy in an amount
exceeding the amount that is reimbursable from the fund under section
9(a)(4) of this chapter.
(f) An insurer must decline to make the mine subsidence coverage
provided for under subsection (a) available to cover a structure
evidencing unrepaired mine subsidence damage, until necessary repairs
are made. An insurer may also decline to make the mine subsidence
coverage available under an insurance policy if the insurer has:
(1) declined to issue the policy;
(2) declined to renew the policy; or
(3) canceled all coverage under the policy for underwriting
reasons unrelated to mine subsidence.
SECTION 4. IC 27-7-9-9 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2001]: Sec. 9. (a) An insurer making the type
of insurance described in Class 3(a) of IC 27-1-5-1 shall enter into a
reinsurance agreement with the commissioner. The reinsurance
agreement must include the following terms:
(1) The insurer agrees to cede to the commissioner one hundred
percent (100%) of any mine subsidence coverage issued under
this chapter, subject to a maximum limit of
per structure insured.
(2) The insurer shall collect the premiums for mine subsidence
insurance, may retain a ceding commission in an amount set by
the commissioner, and shall remit the remainder of the premiums
to the commissioner for deposit in the mine subsidence insurance
(3) The insurer, in consideration of the ceding commission, shall:
(A) undertake the adjustment of losses under the mine
subsidence coverage issued under this chapter by the insurer,
with technical assistance provided under section 9.5 of this
(B) pay the taxes and absorb all other expenses necessarily
incurred by the insurer in the sale of policies and the
administration of the mine subsidence insurance program
under this chapter.
(4) The commissioner shall reimburse the insurer from the mine
subsidence insurance fund for all amounts paid to policyholders
for mine subsidence insurance claims.
(5) The insurer is not required to pay a claim for any mine
subsidence loss insured under this chapter if the amount available
in the mine subsidence insurance fund is insufficient to reimburse
the insurer for the claim.
(b) The determination of the commissioner as to the amount of the
ceding commission that an insurer may retain under subsection (a)(2)
must be based on a consideration of the insurer's reasonable
administrative costs (including agents' commissions).
SECTION 5. IC 27-7-9-18 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2001]: Sec. 18. The department of insurance shall, every three (3)
years beginning not later than November 1, 2001, publish a report
regarding mine subsidence insurance provided under this chapter,
(1) number of claims filed;
(2) amount paid for each claim; and
(3) amount remaining in the mine subsidence insurance fund
established under section 7 of this chapter;
since the date of the previous publication of the report under this
SECTION 6. HEA
1674-2001, SECTION 28, IS AMENDED TO
READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2002]: SECTION
28. (a) After December 31, 2001:
(1) any reference in the Indiana Code to an insurance agent shall
be treated as a reference to an insurance producer (as defined in
IC 27-1-15.6-2(7), as added by this act);
(2) any reference in the Indiana Code to a surplus lines insurance
agent shall be treated as a reference to a surplus lines producer (as
IC 27-1-15.6-2(16), IC 27-1-15.6-2(17), as added by
this act); and
(3) any reference in the Indiana Code to a limited insurance
representative shall be treated as a reference to a limited lines
producer (as defined in IC 27-1-15.6-2(12), as added by this act).
(b) This SECTION expires June 30, 2005.