PRIOR PRINTER'S NO. 793 PRINTER'S NO. 1379
No. 748 Session of 1991
INTRODUCED BY CORMAN, HOLL, STOUT, HOPPER, ROBBINS, FISHER, MADIGAN, HELFRICK, SCHWARTZ, BORTNER, SCANLON, ANDREZESKI, REIBMAN, MUSTO, BAKER, JUBELIRER, PUNT, STEWART, LEMMOND, MELLOW, HART, WENGER, O'PAKE AND AFFLERBACH, MARCH 19, 1991
SENATOR TILGHMAN, APPROPRIATIONS, RE-REPORTED AS AMENDED, JUNE 24, 1991
AN ACT 1 Amending the act of May 17, 1921 (P.L.789, No.285), entitled, as 2 amended, "An act relating to insurance; establishing an 3 insurance department; and amending, revising, and 4 consolidating the law relating to the licensing, 5 qualification, regulation, examination, suspension, and 6 dissolution of insurance companies, Lloyds associations, 7 reciprocal and inter-insurance exchanges, and certain 8 societies and orders, the examination and regulation of fire 9 insurance rating bureaus, and the licensing and regulation of 10 insurance agents and brokers; the service of legal process 11 upon foreign insurance companies, associations or exchanges; 12 providing penalties, and repealing existing laws," further 13 providing for the licensing and regulation of agents and 14 brokers; and imposing penalties. 15 The General Assembly of the Commonwealth of Pennsylvania 16 hereby enacts as follows: 17 Section 1. Section 601 of the act of May 17, 1921 (P.L.789, 18 No.285), known as The Insurance Department Act of one thousand 19 nine hundred and twenty-one, amended June 5, 1947 (P.L.439, 20 No.200), is amended to read: 21 Section 601. [Insurance Agents Defined.--An agent is an 22 individual, copartnership or corporation, authorized in writing
1 by a company, association, or exchange-- 2 (a) To solicit risks and collect premiums, and to issue or 3 countersign policies in its behalf; or 4 (b) To solicit risks and collect premiums in its behalf. 5 A person, copartnership, association, or corporation, not a 6 duly licensed insurance broker, who, for or without 7 compensation, solicits insurance on behalf of any insurance 8 company, association, or exchange, or transmits for a person, 9 copartnership, association, or corporation, other than himself 10 or itself, an application for a policy of insurance to or from 11 such company, association, or exchange, or offers or assumes to 12 act in the negotiation of such insurance, or in any manner aids 13 in transacting the insurance business of any such company, 14 association, or exchange, by negotiating for or placing risks or 15 delivering policies or collecting premiums for such company, 16 association, or exchange, shall be an insurance agent within the 17 intent of this act, and shall thereby become liable to all the 18 duties, requirements, liabilities, and penalties to which an 19 agent of such company, association, or exchange is subject: 20 Provided, however, That the word "agent" shall not include non- 21 resident salaried employes of foreign exchanges which maintain 22 no offices in this Commonwealth and pay no commissions to such 23 employes, or officers or salaried employes of any insurance 24 company, association or exchange, which is authorized to 25 transact business in this Commonwealth, who do not solicit, 26 negotiate or place risks or as to title insurance, duly admitted 27 attorneys-at-law, licensed real estate agents, or real estate 28 brokers.] Certain Words Defined.--The word "agent," as used in 29 this article, means any of the following: 30 (1) Any person authorized in writing by an entity: 19910S0748B1379 - 2 -
1 (i) to solicit risks and collect premiums and to issue or 2 countersign policies on its behalf; or 3 (ii) to solicit risks and collect premiums on its behalf. 4 (2) A person, not a licensed insurance broker, who, whether 5 or not for compensation: 6 (i) solicits insurance on behalf of any insurance entity; 7 (ii) transmits for a person other than himself an 8 application for a policy of insurance to or from the entity; 9 (iii) offers or assumes to act in the negotiation of such 10 insurance; or 11 (iv) in any manner aids in transacting the insurance 12 business of any entity by negotiating for or placing risks or 13 delivering policies or collecting premiums for the entity. 14 The term "agent" does not include: 15 (1) Nonresident salaried employes of foreign exchanges which 16 maintain no offices in this Commonwealth and pay no commissions 17 to such employes. 18 (2) Officers or salaried employes of any insurance entity 19 authorized to transact business in this Commonwealth who do not 20 solicit, negotiate or place risks. 21 (3) Individuals employed and used by agents, brokers or any 22 entity exclusively for the performance of clerical, stenographic 23 or similar office duties. 24 (4) This section does not apply to title insurance agents. 25 The word "appointment," as used in this article, is a written 26 agreement between an agent and an entity under which the agent 27 may solicit, negotiate, make, or procure insurance policies, for 28 compensation, which are issued by the appointing insurer or 29 insurers. 30 The term "certificate of qualification" or "certificate," as 19910S0748B1379 - 3 -
1 used in this article, is a document issued by the Insurance 2 Department attesting that an agent has met the standards set 3 forth under this subarticle to act as an agent in this 4 Commonwealth. 5 The term "entity," as used in this article, means any person 6 doing the business of insurance, including, but not limited to: 7 (1) the issuance or delivery of contracts or certificates of 8 insurance to persons resident in this Commonwealth; 9 (2) the solicitation of applications for such contracts or 10 other negotiations preliminary to the execution of such 11 contracts; 12 (3) the collection of premiums, membership fees, assessments 13 or other considerations for such contracts; or 14 (4) the transaction of matters subsequent to execution of 15 such contracts arising out of them, 16 whether or not such person has obtained a certificate of 17 authority, license or certificate of qualification. 18 The term "nonresident agent," as used in this article, is an 19 applicant or certificate holder with both business address and 20 legal residence outside this Commonwealth. 21 The term "person," as used in this article, means any 22 individual, corporation, association, partnership, reciprocal 23 exchange, inter-insurer, Lloyds insurer, fraternal benefit 24 society, beneficial association and any other legal entity 25 engaged in the business of insurance, including agents, brokers 26 and adjusters and also means health care plans as defined in 40 27 Pa.C.S. Chs. 61 (relating to hospital plan corporations), 63 28 (relating to professional health services plan corporations), 65 29 (relating to fraternal benefit societies) and 67 (relating to 30 beneficial societies) and the act of December 29, 1972 19910S0748B1379 - 4 -
1 (P.L.1701, No.364), known as the "Health Maintenance 2 Organization Act." For purposes of this article, health care 3 plans, fraternal benefit societies and beneficial societies 4 shall be deemed to be engaged in the business of insurance. 5 Section 2. Section 602 of the act is amended to read: 6 Section 602. [Insurance Companies, Et Cetera, To Certify 7 Names of Agents.--Insurance companies, associations, and 8 exchanges, authorized by law to transact business within this 9 Commonwealth, shall, from time to time, certify to the Insurance 10 Commissioner the names of all agents appointed by them to 11 solicit insurance in this Commonwealth.] Requirements to Act as 12 an Agent.--(a) A person may not act as an agent unless he 13 complies with all of the following: 14 (1) That person has obtained a certificate from the 15 Insurance Department reflecting the lines of authority for the 16 kinds of insurance for which that person intends to act as 17 agent. 18 (2) That person has a current appointment or appointments 19 from an insurer or insurers. 20 (3) That person with a valid license to sell insurance 21 issued after December 31, 1970 has complied with any continuing 22 education requirements set forth in the regulations promulgated 23 by the Insurance Department. 24 (b) A certificate to act as an agent shall not be granted to 25 any corporation unless by provisions of its charter it is 26 authorized to engage in the business of insurance or real estate 27 and unless individual certificates are also secured for each 28 active officer of such corporation. A certificate shall not be 29 granted to a partnership unless individual certificates are also 30 secured for each active member of the partnership. 19910S0748B1379 - 5 -
1 Section 3. Section 603 of the act, amended or added August 2 21, 1961 (P.L.1018, No.457), July 31, 1968 (P.L.1029, No.310), 3 June 16, 1972 (P.L.436, No.131) and repealed in part April 28, 4 1978 (P.L.202, No.53), is amended to read: 5 Section 603. [Agent's Licenses.--(a) The Insurance 6 Commissioner may issue, upon certification as aforesaid by any 7 company, association, or exchange, authorized by law to transact 8 business within this Commonwealth, an agent's license to any 9 person of at least eighteen years of age and to any 10 copartnership or corporation. No license as agent shall be 11 granted to any corporation unless by provisions of its charter 12 it is authorized to engage in the business of insurance or real 13 estate, and unless individual licenses are also secured for each 14 active officer of such corporation; and no license shall be 15 granted to a copartnership or firm unless individual licenses 16 are also secured for each active member of such copartnership or 17 firm. Before any such license is granted, the applicant shall 18 first make answer, in writing and under oath, to interrogatories 19 on forms and supplements such as the Insurance Commissioner 20 shall prepare and submit, which answers shall be vouched for by 21 indorsement of the company, association, or exchange interested, 22 and to the effect that the applicant is of good business 23 reputation, and of experience in underwriting, other than 24 soliciting, and is worthy of a license: Provided, That any 25 applicant who shall have held, for any period during the five 26 years immediately preceding the application, a license to 27 transact, as agent, any class or kind of insurance business for 28 any company, association, or exchange, authorized to transact 29 business within this Commonwealth, shall be entitled, upon 30 proper application, to receive a license to transact, as agent, 19910S0748B1379 - 6 -
1 the same class or kind of insurance business for any other 2 company, association, or exchange, so authorized to transact 3 business, without the necessity of submitting to an examination. 4 When the Insurance Commissioner is satisfied that the applicant 5 is worthy of license, and that he is reasonably familiar with 6 provisions of the insurance law of this Commonwealth, he shall 7 issue a license stating that the company, association, or 8 exchange, represented by the agent, has complied with the 9 requirements of law and has been authorized by the Insurance 10 Commissioner to transact business within this Commonwealth, and 11 that the agent has been duly appointed by the company, 12 association, or exchange named in the license. Licenses of life 13 insurance agents shall expire annually at midnight of March 14 thirty-first, licenses of fire insurance agents shall expire 15 annually at midnight of September thirtieth, and the licenses of 16 casualty and health and accident insurance agents shall expire 17 annually at midnight of December thirty-first, unless sooner 18 terminated as the result of severance of business relations 19 between the company, association, or exchange and the agent, or 20 unless revoked by the Insurance Commissioner for cause. The 21 provisions of this section shall apply to domestic mutual fire 22 insurance companies, but no agent of a domestic mutual fire 23 insurance company acting or authorized to act as such on the 24 effective date of this act shall be required to take an 25 examination for licensure. 26 (b) Nothing in subsection (a) of this section shall be 27 construed as requiring agents of domestic mutual fire insurance 28 companies which agents write only coverages other than insurance 29 upon automobiles authorized by clauses (1), (2) and (3) of 30 subsection (b) of section 202 of the act of May 17, 1921 (P.L. 19910S0748B1379 - 7 -
1 682), known as "The Insurance Company Law of 1921," to submit to 2 examination prior to licensure by the Insurance Commissioner. 3 (c) The examination provided for in subsection (a) shall not 4 be required of any person who has received the designation of 5 Chartered Life Underwriter, (C.L.U.) from the American College 6 of Life Underwriters, except, that such person may be examined 7 on pertinent provisions of the insurance laws as determined by 8 the Insurance Commissioner.] Requirements to Obtain a 9 Certificate of Qualification.--(a) In order to obtain a 10 certificate to act as an agent a person shall comply with all of 11 the following: 12 (1) Be at least eighteen years of age. 13 (2) Have successfully passed an examination required by the 14 Insurance Department demonstrating reasonable familiarity with 15 insurance laws and the business of insurance in general. 16 (3) Complete a verified application on a form approved by 17 the Insurance Department. 18 (4) Have secured on the application a verified statement by 19 the sponsoring entity that the applicant is of good business 20 reputation and is worthy of a certificate. 21 (5) Pay in full all appropriate fees. 22 (b) The Insurance Department may, upon proper and acceptable 23 application, exempt from the requirement to successfully pass an 24 examination for such appropriate line or lines of authority any 25 person who has met at least one of the following: 26 (1) Has held, for any period during the two years 27 immediately preceding the application, a certificate of 28 qualification from the Insurance Department reflecting at least 29 one of the same lines of authority for which he is now applying. 30 (2) Received the designation of Chartered Life Underwriter 19910S0748B1379 - 8 -
1 (C.L.U.) from the American College of Life Underwriters, the 2 designation of Chartered Property and Casualty Underwriter 3 (C.P.C.U.) from the American Institute for Property and 4 Liability Underwriters, the designation of Certified Insurance 5 Counselor (C.I.C.) from the Society of Certified Insurance 6 Counselors, or any other professional designation approved by 7 the Insurance Commissioner. 8 (3) Is an agent of a domestic mutual fire insurance company, 9 whose agents write only coverages other than insurance upon 10 automobiles authorized by paragraphs (1), (2) and (3) of 11 subdivision (b) of section 202 of the act of May 17, 1921 12 (P.L.682, No.284), known as "The Insurance Company Law of 1921." 13 (4) Is qualified to apply for and receive authorization from 14 the Insurance Department to act as an agent on the effective 15 date of this act. 16 (5) Is an agent of a fraternal benefit society who, under 17 section 706 of the act of July 29, 1977 (P.L.105, No.38), known 18 as the "Fraternal Benefit Society Code," is not required to take 19 an examination. 20 Section 4. Section 604 of the act, amended December 3, 1975 21 (P.L.471, No.137), is amended to read: 22 Section 604. [Penalty for Acting as Agent Without License.-- 23 Any individual, copartnership, or corporation transacting 24 business within this Commonwealth as the agent of an insurance 25 company, association, or exchange, without a license as required 26 by this act, shall be guilty of a misdemeanor, and, upon 27 conviction thereof, shall be sentenced to pay a fine not 28 exceeding one thousand dollars. Prosecution for any violation 29 under this section may be instituted by the Insurance 30 Commissioner or a duly designated deputy.] Issuance of 19910S0748B1379 - 9 -
1 Certificate of Qualification.--(a) When the Insurance 2 Department is satisfied that the applicant is worthy of a 3 certificate of qualification and has successfully passed an 4 examination and otherwise complied with this article, it shall 5 issue a certificate. The certificate shall state that the agent 6 has complied with this article and has been authorized by the 7 Insurance Department to transact business in specific lines of 8 authority in this Commonwealth. 9 (b) A person who was licensed to act as an agent on the 10 effective date of this act may obtain a certificate to act as an 11 agent reflecting the lines of authority for which that person 12 was previously licensed or qualified by filing the appropriate 13 application for an original certificate of qualification with 14 the Insurance Department and paying the fee for an original 15 agent's certificate as specified under this subarticle. 16 (c) A certificate of qualification shall state that a person 17 is empowered to act as an insurance agent under the laws of the 18 Commonwealth for specified lines of authority. The agent shall 19 display his certificate of qualification in the agent's place of 20 business. 21 (d) (1) All agents licensed on the effective date of this 22 act shall complete and submit a conversion application in 23 accordance with Insurance Department instructions. For the 24 purpose of conversion each person shall pay a fee not to exceed 25 six dollars and fifty cents. Such fee shall accompany the 26 conversion application and be returned to the Insurance 27 Department no later than three months from date of receipt. The 28 fees collected by the Insurance Department shall be placed in an 29 Insurance Department Restricted Revenue Account dedicated to 30 fund the conversion to the single license system established by 19910S0748B1379 - 10 -
1 this act. 2 (2) Those persons who have complied with subsection (d)(1) 3 shall receive, complete, and submit a single license application 4 to convert their existing licenses to a certificate of 5 qualification in accordance with Insurance Department 6 regulation. The regulation shall provide for, but not be limited 7 to, timeliness of compliance, amount of fee, if any, to be 8 charged, and any late fee penalties for noncompliance. 9 (3) Persons in compliance with subsection (d)(2) shall 10 receive a certificate of qualification from the Insurance 11 Department. A person receiving a valid certificate of 12 qualification will be able to solicit additional appointments 13 immediately. However, a licensed agent who fails to comply with 14 subsection (d)(2) as of the transition date to a single license 15 system shall have his license or licenses terminated. 16 (4) Insurers will be deemed to have appointed all their 17 agents licensed on the transition date as provided for by 18 Insurance Department regulation. The first appointment report 19 shall be filed with the Insurance Department ninety days after 20 the transition date and must include all existing agents and any 21 new appointments. Appointment reports shall be filed on a 22 monthly basis thereafter pursuant to Insurance Department 23 regulation. 24 Section 5. Sections 605 and 606 of the act are amended to 25 read: 26 Section 605. [Personal Liability of Agents Acting for 27 Unauthorized Companies.--An insurance agent shall be personally 28 liable on all contracts of insurance or suretyship unlawfully 29 made by or through him, directly or indirectly, for or in behalf 30 of any company, association, or exchange not authorized to do 19910S0748B1379 - 11 -
1 business in this Commonwealth. Any person soliciting risks, 2 forwarding premiums, or countersigning or delivering policies, 3 shall be deemed to be the agent of the company, association, or 4 exchange, within the meaning of this section.] Appointment.--(a) 5 No agent shall do business on behalf of any entity without a 6 written appointment from that entity. 7 (b) All appointments shall be obtained by procedures 8 established by the Insurance Department's regulations. 9 (c) Insurance entities authorized by law to transact 10 business in this Commonwealth shall, from time to time as 11 determined by the Insurance Department, certify to the Insurance 12 Department the names of all agents appointed by them. 13 (d) Each appointment fee, both new and renewal, shall be 14 paid in full by the entity appointing the agent. 15 Section 606. [Penalty for Advertising as Agent of 16 Unauthorized Company, Et Cetera.--Any person who, by poster, 17 circular, letter, or in any other way or manner, represents or 18 advertises himself as the agent of any insurance company, 19 association, or exchange of any other State or government, which 20 has not complied with the laws of this State, shall be guilty of 21 a misdemeanor, and, upon conviction, shall be sentenced to pay a 22 fine of not more than one thousand dollars.] Reports by Entities 23 to the Insurance Department.--All entities shall report to the 24 Insurance Department all appointments and terminations of 25 appointments in the format and time frame required by the 26 Insurance Department's regulations. 27 Section 6. Section 607 of the act, amended December 30, 1974 28 (P.L.1047, No.343), is amended to read: 29 Section 607. [Penalty for Soliciting for Fictitious or Dead 30 Companies, Et Cetera.--Any individual, and the officers, 19910S0748B1379 - 12 -
1 managers, agents, owners, or representatives of and any 2 corporation, partnership, or association, offering within this 3 State, in person or by advertisement, poster, letter, circular, 4 or otherwise to sell, procure, or obtain policies, certificates, 5 agreements, binders, or applications for insurance, surety, or 6 indemnity, for or on behalf of any spurious, fictitious, 7 nonexisting, dissolved, inactive, liquidated or liquidating or 8 bankrupt insurance company, association, exchange, society, or 9 order, shall be guilty of a misdemeanor, and, upon conviction, 10 shall be sentenced to not more than one year or less than six 11 months imprisonment, and, in addition, shall pay a fine not 12 exceeding one thousand dollars for each and every violation.] 13 Personal Liability of Agents for Unauthorized Entity.--An 14 insurance agent shall be personally liable on all contracts of 15 insurance or suretyship unlawfully made by or through him, 16 directly or indirectly, for or on behalf of any entity not 17 authorized to do business in this Commonwealth. This section 18 applies to any person who transacts business in this 19 Commonwealth as an agent of an insurance entity without a 20 certificate as required by this article. 21 Section 7. Section 608 of the act, amended July 14, 1977 22 (P.L.88, No.31), is amended to read: 23 Section 608. [Nonresident Agents.--(a) The Insurance 24 Commissioner may issue a license as agent to a person not 25 resident of this Commonwealth, upon compliance with the 26 applicable provisions of this act, if the state or the Province 27 of Canada of such person's residence will accord the same 28 privilege to a resident of this Commonwealth. 29 (b) The Insurance Commissioner may enter into reciprocal 30 agreements with the appropriate official of any such other state 19910S0748B1379 - 13 -
1 or province waiving the written examination of any applicant 2 resident in such other state or province, if: 3 (1) A written examination is required of applicants for an 4 insurance agent's license in such other state or province; 5 (2) The appropriate official of the other state or province 6 certifies that the applicant holds a currently valid license as 7 an insurance agent in such other state or province and either 8 passed such a written examination or was the holder of an 9 insurance agent's license prior to the time a written 10 examination was required; 11 (3) That in such other state or province a resident of this 12 Commonwealth is privileged to procure an insurance agent's 13 license upon the foregoing conditions and without discrimination 14 as to fees otherwise in favor of the residents of such other 15 state or province. 16 (c) No such applicant or licensee shall have a place of 17 business in the Commonwealth, nor be an officer, director, 18 stockholder, or partner in any corporation or partnership doing 19 business in the Commonwealth as a life insurance agency. 20 (d) If the laws of another state or the Province of Canada 21 require the sharing of commissions with resident agents of that 22 state or province on applications for insurance written by 23 nonresident agents, then the same provisions shall apply when 24 resident agents of that state or province, licensed as 25 nonresident agents of Pennsylvania, write applications for 26 insurance on residents of the Commonwealth.] Penalty for 27 Advertising as Agent of Unauthorized Entity.--Any person who 28 represents or advertises himself as the agent of any foreign or 29 alien insurance entity which has not complied with the laws of 30 this Commonwealth commits a misdemeanor of the third degree. 19910S0748B1379 - 14 -
1 Section 8. The act is amended by adding sections to read: 2 Section 609. Penalty for Soliciting for Nonexistent 3 Entity.--Any individual, and the officers, managers, agents, 4 owners or representatives of and any corporation or partnership, 5 offering in this Commonwealth to sell, procure or obtain 6 policies, certificates, agreements, binders or applications for 7 insurance, surety or indemnity, for or on behalf of any 8 spurious, fictitious, nonexistent, dissolved, inactive, 9 liquidated, liquidating or bankrupt insurance entity, society or 10 order, commits a misdemeanor of the third degree. 11 Section 610. Requirements for Nonresidents to Obtain 12 Certificate of Qualification.--(a) The Insurance Department may 13 issue a certificate to a person not a resident of this 14 Commonwealth, upon compliance with the applicable provisions of 15 this article, if the state or the province of the Dominion of 16 Canada of the person's residence accords the same privilege to a 17 resident of this Commonwealth. 18 (b) The Insurance Department may enter into reciprocal 19 agreements with the appropriate official of any such other state 20 or province waiving the written examination of any applicant 21 resident in the other state or province if the following 22 conditions exist: 23 (1) A written examination, with no exemptions not 24 substantially similar to those set forth in section 603(b)(1) 25 and (2), is required of applicants for an insurance agent's 26 certificate or its equivalent in the other state or province. 27 (2) The appropriate official certifies that the applicant 28 holds a currently valid certificate or its equivalent as an 29 insurance agent in the other state or province and either passed 30 a written examination or was the holder of an insurance agent's 19910S0748B1379 - 15 -
1 certificate or its equivalent prior to the time a written 2 examination was required. 3 (3) In the other state or province, a resident of this 4 Commonwealth may obtain an insurance agent's certificate or its 5 equivalent upon the conditions stated in this subsection, 6 without discrimination as to fees or otherwise in favor of the 7 residents of the other state or province. 8 (c) If the law of another state or province of the Dominion 9 of Canada requires the sharing of commissions with resident 10 agents of the state or province on applications for insurance 11 written by nonresident agents, then the same provisions shall 12 apply when resident agents of that state or province authorized 13 as nonresident agents in this Commonwealth write applications 14 for insurance on residents of this Commonwealth. 15 Section 9. Section 621 of the act is amended to read: 16 Section 621. [Insurance Broker Defined.--An insurance broker 17 is a person, copartnership, or corporation, not an officer or 18 agent of the company, association, or exchange interested, who 19 or which, for compensation, acts or aids in any manner in 20 obtaining insurance for a person other than himself or itself.] 21 Definitions and Applicability.--(a) As used in this subarticle 22 and Subarticle C, the term "insurance broker" means a person, 23 not an officer or agent of the entity interested, who, for 24 compensation, acts or aids in any manner in obtaining insurance, 25 other than title insurance, for a person other than himself. 26 (b) This subarticle does not apply to title insurance 27 brokers. 28 Section 10. Section 622 of the act, amended March 28, 1974 29 (P.L.231, No.52) and repealed in part April 28, 1978 (P.L.202, 30 No.53), is amended to read: 19910S0748B1379 - 16 -
1 Section 622. Brokers' Licenses.--[The Insurance Commissioner 2 may issue, to any person of at least eighteen years of age or to 3 any copartnership or corporation, a license to act as an 4 insurance broker to negotiate contracts of insurance or 5 reinsurance, with any insurance company, association, or 6 exchange, or the agents thereof, authorized by law to transact 7 business within this Commonwealth. No license shall be issued to 8 any corporation to act as an insurance broker unless by its 9 charter it is authorized to engage in the business of insurance 10 or real estate. Before any license is issued, the applicant 11 shall make answer, in writing and under oath, to such 12 interrogatories and on such forms and supplements as the 13 Insurance Commissioner shall prepare and submit, which answers 14 shall be vouched for by indorsement of at least two agents or by 15 the officers of any insurance company, association, or exchange, 16 who are acquainted with the applicant, to the effect that the 17 applicant is of good business reputation, and has experience in 18 underwriting, other than soliciting, and is worthy of a license. 19 When the Insurance Commissioner is satisfied that the applicant 20 is worthy of a license, and that he is reasonably familiar with 21 provisions of the insurance laws of this Commonwealth, he shall 22 issue a broker's license to expire annually one year from date 23 of issue, unless sooner revoked by the Insurance Commissioner 24 for cause.] (a) The Insurance Department may issue to any 25 individual or to any partnership or corporation a license to act 26 as an insurance broker to negotiate contracts of insurance or 27 reinsurance with any insurance entity or the appointed agents 28 thereof authorized by law to transact business in this 29 Commonwealth. 30 (b) A license shall not be issued to any partnership or 19910S0748B1379 - 17 -
1 corporation to act as an insurance broker unless by its charter 2 it is authorized to engage in the business of insurance or real 3 estate and unless individual certificates or licenses are also 4 secured for each active partner or officer of such partnership 5 or corporation. 6 (c) No person shall act as an insurance broker without a 7 license. 8 (d) In order to obtain a license to act as a broker a person 9 shall: 10 (1) Be at least eighteen years of age. 11 (2) Have successfully passed an examination required by the 12 Insurance Department demonstrating reasonable familiarity with 13 insurance laws and the business of insurance in general. 14 (3) Complete a verified application on a form approved by 15 the Insurance Department. 16 (4) Pay in full all appropriate fees. 17 (e) The Insurance Department may, upon proper and acceptable 18 application, exempt from the requirement to successfully pass an 19 examination for such appropriate lines of authority for the 20 kinds of insurance business any person who has received the 21 designation of Chartered Life Underwriter (C.L.U.), from the 22 American College of Life Underwriters, the designation of 23 Chartered Property and Casualty Underwriter (C.P.C.U.) from the 24 American Institute for Property and Liability Underwriters, the 25 designation of Certified Insurance Counselor (C.I.C.) from the 26 Society of Certified Insurance Counselors, or any other 27 professional designation approved by the Insurance Commissioner. 28 (f) When the Insurance Department is satisfied that the 29 applicant is worthy of a license and is reasonably familiar with 30 the insurance laws of this Commonwealth and the business of 19910S0748B1379 - 18 -
1 insurance in general, it shall issue a broker's license to 2 expire two years from the date of issue, unless sooner revoked 3 by the Insurance Department for cause. 4 (g) A broker's license shall state that a person is 5 empowered to act as an insurance agent BROKER under the laws of <-- 6 the Commonwealth for specified lines of authority. The broker 7 shall display his broker's license in the broker's place of 8 business. 9 (h) Insurance brokers with a valid license to sell, issued 10 after December 31, 1970, shall comply with any continuing 11 education requirements established by the Insurance Department 12 by regulation. 13 Section 11. Section 623 of the act, amended December 3, 1975 14 (P.L.471, No.137), is amended to read: 15 Section 623. [Penalties for Acting as Broker Without a 16 License, and Transacting Business with an Unlicensed Broker.-- 17 Any person, copartnership, or corporation transacting business 18 as an insurance broker, within this Commonwealth, or soliciting 19 insurance or transmitting for a partnership, copartnership, 20 association, or corporation, other than himself or itself, an 21 application for a policy of insurance, or offering or assuming 22 to act in the negotiation of such insurance, or in any manner 23 aiding in transacting an insurance business, or negotiating for 24 or placing risks, or delivering policies or collecting premiums 25 for policies which are effective in this State, without a 26 license as broker, or in the case of title insurance without 27 being admitted to practice as an attorney-at-law or being 28 licensed as a real estate broker or real estate agent, unless he 29 or she or it be acting as a licensed agent and then only for the 30 companies he, she or it is duly licensed by this Commonwealth to 19910S0748B1379 - 19 -
1 represent, shall be deemed guilty of a misdemeanor, and, upon 2 conviction thereof, shall pay a fine not exceeding one thousand 3 dollars. Any company, association, or exchange, or the agent of 4 any company, association, or exchange, accepting applications or 5 orders for insurance or securing any insurance business through 6 anyone acting without a license, as aforesaid, shall be guilty 7 of a misdemeanor, and, upon conviction thereof, shall pay a fine 8 not exceeding one thousand dollars. Prosecution for any 9 violation under this section may be instituted by the Insurance 10 Commissioner or a duly designated deputy.] Doing Business with 11 Unlicensed Brokers.--Any entity or the appointed agent of any 12 entity accepting applications or orders for insurance or 13 securing any insurance business through anyone acting without a 14 license commits a misdemeanor of the third degree. 15 Section 12. Section 626 of the act, added June 5, 1947 16 (P.L.456, No.206), is amended to read: 17 Section 626. [Payment of Commissions to Brokers.--Any 18 insurance company, association or exchange, or the agent 19 thereof, may pay money, commission or brokerage, or give or 20 allow anything of value to a duly licensed insurance broker for, 21 or on account of, the solicitation or negotiation of contracts 22 for insurance on property or risks within the Commonwealth.] 23 Payment of Commissions to Brokers.--Any insurance entity or the 24 appointed agent thereof may pay money, commission or brokerage, 25 or give or allow anything of value to a duly licensed broker for 26 the solicitation or negotiation of contracts for insurance on 27 property or risks in this Commonwealth. 28 Section 13. Section 631 of the act is amended to read: 29 Section 631. [Penalty for Acting for Companies, Et Cetera, 30 Failing to Appoint Insurance Commissioner for Service of 19910S0748B1379 - 20 -
1 Process.--Any person, copartnership, or corporation, acting as 2 agent or broker for himself or for others, not having been 3 specially and lawfully licensed so to do, who solicits or 4 procures, or aids in the solicitation or procurement of, 5 policies or certificates of insurance from, or adjusts losses, 6 or in any manner aids in the transaction of any business for, 7 any foreign insurance company, association, or exchange, which 8 has not executed and filed in the office of the Insurance 9 Commissioner a written appointment of the commissioner to be the 10 true and lawful attorney of such company, association, or 11 exchange in and for this State, upon whom all lawful process in 12 any action or proceeding against the company, association, or 13 exchange may be served, is guilty of a misdemeanor, and, upon 14 conviction, shall be sentenced to pay a fine of not less than 15 three hundred dollars and not more than one thousand dollars.] 16 Fraudulent Unlicensed Activity.--A person who without a 17 certificate of qualification performs the duties of an agent as 18 defined in section 601 and any regulations promulgated 19 thereunder, or who without a license performs the duties of a 20 broker as defined in section 621 and any regulations promulgated 21 thereunder, commits a felony of the third degree. 22 Section 14. Section 639 of the act, amended December 30, 23 1974 (P.L.1047, No.343) and repealed in part April 28, 1978 24 (P.L.202, No.53), is amended to read: 25 Section 639. [Revocation, Et Cetera, of License; Penalty.-- 26 Upon satisfactory evidence of the violation of any of the 27 provisions of sections six hundred four, six hundred six, six 28 hundred seven, six hundred twenty-three, six hundred thirty-one, 29 six hundred thirty-two, six hundred thirty-three, six hundred 30 thirty-three point one, six hundred thirty-four, six hundred 19910S0748B1379 - 21 -
1 thirty-five, six hundred thirty-six, six hundred thirty-seven, 2 and six hundred thirty-eight of this act, by any agent or 3 solicitor of any insurance company, association, or exchange, or 4 by any insurance broker or excess insurance broker, or upon 5 satisfactory evidence of such conduct as would disqualify such 6 agent or broker or excess broker from initial issuance of a 7 license under sections six hundred three, six hundred twenty-two 8 and six hundred twenty-four, the Insurance Commissioner may, in 9 his discretion, pursue any one or more of the following courses 10 of action regardless of whether such agent, solicitor or broker 11 was licensed or not licensed by the Insurance Commissioner: 12 (1) Suspend or revoke or refuse to renew the license of such 13 offending party or parties; 14 (2) Impose a civil penalty of not more than one thousand 15 dollars for each and every act in violation of any of said 16 sections by said party or parties. 17 Before the Insurance Commissioner shall take any action as 18 above set forth, he shall give written notice to the person, 19 company, association, or exchange, accused of violating the law, 20 stating specifically the nature of such alleged violation and 21 fixing a time and place, at least ten (10) days thereafter, when 22 a hearing of the matter shall be held. After such hearing or 23 upon failure of the accused to appear at such hearing, the 24 Insurance Commissioner shall impose such of the above penalties 25 as he deems advisable. 26 Any agent or solicitor of any insurance company, association, 27 or exchange, or any insurance broker, or any person, 28 copartnership, association, or corporation, violating the 29 provisions of sections six hundred thirty-three point one, six 30 hundred thirty-five, six hundred thirty-six, six hundred thirty- 19910S0748B1379 - 22 -
1 seven, and six hundred thirty-eight of this act, shall be guilty 2 of a misdemeanor, and, upon conviction thereof, shall be 3 sentenced to pay a fine of not more than one thousand dollars 4 ($1,000.00) for each and every violation, or, at the discretion 5 of the court, to imprisonment in the county jail of the county 6 in which the offense is committed for a period of not more than 7 six months, or both.] Penalties Imposed by Insurance 8 Department.--(a) Upon satisfactory evidence of the violation of 9 sections 602, 605, 606, 608, 609, 622, 631 through 638 by any 10 agent of any insurance entity or by any insurance broker or upon 11 satisfactory evidence of such conduct that would disqualify the 12 agent or broker from initial issuance of a certificate of 13 qualification under section 604 or 622, the department may 14 pursue any one or more of the following courses of action 15 regardless of whether the agent or broker was so authorized by 16 the department: 17 (1) Suspend or revoke or refuse to issue the certificate of 18 qualification or license of the offending party or parties. 19 (2) Impose a civil penalty of not more than one thousand 20 dollars for each act in violation of any of the provisions 21 listed in this subsection. 22 (b) Before the Insurance Commissioner shall take any action 23 as above set forth, he shall give written notice to the entity, 24 accused of violating the law, stating specifically the nature of 25 such alleged violation and fixing a time and place, at least ten 26 days thereafter, when a hearing of the matter shall be held. 27 After such hearing or upon failure of the accused to appear at 28 such hearing, the Insurance Commissioner shall impose such of 29 the above penalties as he deems advisable. 30 (c) Any agent or solicitor of any entity, or any insurance 19910S0748B1379 - 23 -
1 broker, or any person, partnership, association, or corporation, 2 violating the provisions of sections 633.1, 635, 636, 637 and 3 638 of the act, shall be guilty of a misdemeanor, and, upon 4 conviction thereof, shall be sentenced to pay a fine of not more 5 than one thousand dollars for each and every violation, or, at 6 the discretion of the court, to imprisonment in the county jail 7 of the court in which the offense is committed for a period of 8 not more than six months. 9 Section 15. This act shall take effect immediately. C12L40VDL/19910S0748B1379 - 24 -