Silverwood Brokers is a licensed insurance agency that actively transacts property and casualty business across multiple state lines. Based on the federal provisions of 18 U.S.C. 1033, which of the following actions by individuals at the agency constitute prohibited acts? (Select all that apply.)
- An agent intentionally misappropriates commercial premium funds to cover a personal debt, even if they eventually repay the money to the insurer.Answer
- The agency principal knowingly allows a producer with a past felony conviction for fraud to transact business without obtaining written consent from an insurance regulatory official.Answer
- CA newly licensed agent offers a portion of their commission to a prospective client as a financial inducement to purchase a policy.
- DAn agent accepts a $15,000 cash overpayment for a premium and processes the client's immediate cancellation request without reporting it.
Answer
The prohibited acts under 18 U.S.C. 1033 are the intentional misappropriation of premium funds and the knowing employment of a convicted felon without written regulatory consent.
Under 18 U.S.C. 1033, it is a federal crime to embezzle or misappropriate premiums or insurer funds. Furthermore, the statute explicitly prohibits any person from willfully permitting an individual convicted of a felony involving dishonesty (such as fraud) to engage in the business of insurance without written consent from an insurance regulatory official.
Step-by-Step Solution
Key Concept
Fraud and False Statements (18 U.S.C. 1033)