BULLETIN 2001-1
FROM: Kathleen
Sebelius
Commissioner of Insurance
RE: Written Consent for a
Prohibited Person to Engage in the Business of Insurance Under Title 18, United
States Code, §§ 1033 and 1034
DATE: June 8, 2001
This
Bulletin is to advise all persons and entities currently engaged or
participating, or seeking to engage or participate, in the business of
insurance in this State that the Kansas Insurance Department (“KID”) has
adopted an Application for Written Consent to Engage in the Business of
Insurance Pursuant to The Violent Crime Control and Law Enforcement Act of 1994
(“Act”), 18 U.S.C. §§1033 and 1034 (“Application for Written Consent”).
Under
the Act, it is a criminal offense for any individual who has been convicted of
any criminal felony involving dishonesty or a breach of trust, or an offense
under the Act, to willfully engage or participate in the business of insurance,
or to willfully permit such participation, without the written consent of the
Commissioner of Insurance of the State of Kansas. The written consent must specify that the consent is granted for
the purpose of permitting insurance activity pursuant to §1033(e) of the Act.
The Act defines the term “business
of insurance” as (1) the writing of insurance; (2) the reinsurance of risks; or
(3) all acts necessary or incidental to such writing or reinsuring; and, the
activities of persons who act as, or are, officers, directors, agents,
solicitors, brokers or employees of insurers, or who are authorized to act on
behalf of such persons. The Act
provides no exemptions or “grandfather” provisions for convictions that occurred
prior to its enactment or for persons who are already engaged or participating
in the business of insurance.
Individuals prohibited from engaging or participating in the business of
insurance without written consent are referred to as “prohibited persons.” KID has jurisdiction under the Act to
consider requests for written consent filed by the following types of
prohibited persons:
1. Officers,
directors, employees, consultants, and subcontractors of domestic insurers,
including but not limited to insurance companies, associations and exchanges,
Lloyds insurers, health maintenance organizations, fraternal benefit societies,
beneficial
associations, hospital plan corporations,
health services plan corporations, preferred provider organization, premium
finance companies, risk retention groups and purchasing groups.
2. Resident licensees and their officers, directors and employees, including but not limited to agents, brokers, agencies, insurance administrators, managers, exclusive general agents, managing general agents, reinsurance intermediaries, surplus lines agents, public adjusters, public adjuster solicitors and motor vehicle physical damage appraisers.
A Kansas resident who is a
prohibited person must apply for and obtain written consent of KID to begin or
to continue to engage or participate in the business of insurance. Written consent under the Act must be
obtained even if the prohibited person is now or has ever been licensed or
otherwise approved by KID to transact business. The burden is upon the applicant to establish that written
consent is warranted. In addition, a
prohibited person who resides outside of Kansas must obtain the written consent
of his or her domiciliary insurance regulatory official to be permitted to
begin or continue to engage or participate in the business of insurance in
Kansas. Written consent from the
regulatory official of the state of domicile of the insurer should be forwarded
if it has been obtained.
While the Act provides a mechanism
whereby a prohibited person may apply to the Commissioner of Insurance for
written consent, it does not allow a prohibited person to work in the business
of insurance while applying for that consent.
KID maintains full discretion in deciding whether or not to grant
written consents, which will be determined on a case-by-case basis taking into
account materials submitted to KID by the applicant.
All
affected persons are encouraged to thoroughly review the Act and insure that
they are complying with it. Failure to
inform KID of a prior felony on a license application may result in a violation
of the Act as well as constitute grounds for denial of the license. Employers must make diligent efforts to
identify prohibited persons and insure that they are not violating the Act by
permitting prohibited persons to engage or participate in the business of
insurance without written consent.
KID’s application for written
consent may be obtained by contacting its Legal Division at (785)296-7811 or
(785)296-7809, FAX (785)296-2283. Questions
concerning this bulletin may be directed to:
Kansas Insurance Department
Legal Division
420 S.W. 9th Street
Topeka, Kansas 66612-1678
Kathleen
Sebelius
Commissioner
of Insurance