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Difficulty: EasyLicense Discipline and Penalties

Following a formal administrative hearing, the State Commissioner of Insurance concludes that a licensed producer has intentionally violated multiple provisions of the state insurance code. Which of the following actions represents a penalty the Commissioner is legally authorized to impose?

  1. A
    Sentencing the producer to a term of imprisonment in a state correctional facility
  2. Revoking the producer's license and levying a civil monetary penaltyAnswer
  3. C
    Enacting a new statutory law to specifically criminalize the producer's conduct
  4. D
    Ordering the state Guaranty Association to pay restitution for the producer's actions

Answer

Revoking the producer's license and levying a civil monetary penalty
The correct answer correctly identifies that the Commissioner's disciplinary authority is administrative in nature. When a producer violates the insurance code, the Commissioner has the power to suspend or revoke the producer's license, issue a cease and desist order, and levy civil fines. These actions directly regulate the privilege of conducting insurance business within the state.

Step-by-Step Solution

1
Identify the role of the State Commissioner of Insurance.
The Commissioner is an administrative official responsible for enforcing state insurance codes, not a legislative body or a criminal court.
Understanding the limits of regulatory power helps rule out actions that belong to the legislature or judiciary.
2
Evaluate the listed penalties against administrative authority.
License revocation and civil fines are standard administrative penalties. Imprisonment and law creation are outside the Commissioner's jurisdiction.
Administrative penalties specifically target the privilege of holding a license and include monetary fines, while criminal penalties (like jail) require criminal prosecution.

Key Concept

Administrative Penalties and Commissioner Authority
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Topics

License Discipline and Penalties

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