Examkin

Question

Difficulty: MediumFraud and False Statements (18 U.S.C. 1033 and 1034)

Jonathan, a licensed insurance agency owner, wants to hire an applicant for a producer role. However, he discovers the applicant has a prior felony conviction for embezzlement. Jonathan is aware that under the federal Fraud and False Statements Act (18 U.S.C. 1033), individuals convicted of criminal felonies involving dishonesty or breach of trust are prohibited from engaging in the business of insurance without explicit written consent. To comply with this federal law and avoid criminal liability for his agency, from which specific authority must this written consent be obtained?

  1. Any state insurance Commissioner, Director, or Superintendent of InsuranceAnswer
  2. B
    The United States Attorney General, because the prohibition is established by a federal criminal statute
  3. C
    The appointing insurance company's executive board, as they assume the liability for the producer's actions
  4. D
    The National Association of Insurance Commissioners (NAIC), to ensure the consent is valid across all state lines

Answer

Any state insurance Commissioner, Director, or Superintendent of Insurance
Under 18 U.S.C. 1033(e), an individual who has been convicted of a criminal felony involving dishonesty or a breach of trust is federally prohibited from engaging in the business of insurance. The law provides an explicit exception if the individual obtains written consent from an insurance regulatory official authorized to regulate insurance in the state, which is typically the state Commissioner, Director, or Superintendent of Insurance.

Step-by-Step Solution

1
Identify the core legal restriction in the scenario.
The applicant has a felony conviction for dishonesty (embezzlement), triggering the employment prohibition under 18 U.S.C. 1033.
Federal law strictly regulates the employment of convicted felons in the insurance industry to protect consumers from financial fraud.
2
Determine the statutory exception to this prohibition.
Section 1033(e) allows a prohibited person to engage in the business of insurance only if they obtain written consent (often called a 1033 waiver).
The law provides a pathway for rehabilitation, provided a regulatory authority reviews and approves the individual's request.
3
Identify the specific authority designated by the statute to grant this consent.
The statute specifically designates any insurance regulatory official authorized to regulate insurance in the state (such as the Commissioner) as the granting authority.
Understanding the interplay between federal prohibitions and state-level regulatory enforcement is required for compliance.

Key Concept

18 U.S.C. 1033(e) Written Consent Waivers
Rate this question

Topics

Fraud and False Statements (18 U.S.C. 1033 and 1034)

More questions from this topic