This post is part of a series sponsored by AgentSync. Insurance licenses can be hard to get and keep, even for those with the most pristine backgrounds. So, what’s an insurance producer to do if they find themselves in the unfortunate position of being up for license renewal with a change to their criminal history? Ironically, even going from having a criminal record to not having one can cause a problem for insurance licenseholders (see our coverage of Michigan’s Clean Slate law and the challenges of automatic criminal record expungement). However, more commonly, someone with an insurance license may get involved in the criminal justice system and have new charges or convictions to report. To be clear, a producer in this situation shouldn’t wait until their next renewal to report the change in their criminal background to every state they’re licensed in. Every single state requires producers to inform them within 30 days of new charges, convictions, or administrative actions – although the specifics of how to do that change state to state. To say that each state handles this a bit differently shouldn’t surprise anyone. So, please remember that this article isn’t a substitute for legal advice! We’ll try, however, to briefly outline what each state expects an insurance licenseholder to do if they have a new criminal record when it comes time to renew their license.
A federal law with state-by-state enforcement
At first glance, you might think there’s a simple answer to the issue of how an insurance agent needs to proceed with their license renewal if they’ve got a new criminal history to report. That’s because there’s actually a federal law called 18 U.S.C. 1033 that governs “crimes by or affecting persons engaged in the business of insurance whose activities affect interstate commerce.” This law declares that it’s a federal offense for someone who’s been convicted of a criminal felony consisting of dishonesty or a breach of trust to conduct insurance-related business without the written consent of their resident state’s insurance regulator. Thus, to get permission to work in insurance, someone with this kind of criminal history (theoretically) needs a 1033 waiver from their resident state’s insurance commissioner (and often from their nonresident license states as well). It sounds straightforward, at least until you start asking which crimes specifically involve dishonesty and breaches of trust (there’s no official, comprehensive list). And it becomes even murkier when you look at how each state interprets and enforces this federal rule.
Just a few examples include:
– Florida: The state doesn’t grant 1033 consents. Therefore, someone with a criminal history involving dishonesty or breach of trust can’t hold a Florida insurance license, period.
– Alabama: The state has a proprietary form on which a producer must report any and all new criminal charges and convictions. Using this form, Alabama decides whether the producer needs to apply for a 1033 consent, and whether or not to grant one.
– Alaska: This state seems to leave the judgment call to the producer as to whether their crime qualifies as one that needs a 1033 consent. If you think you need one, you have to apply for one. If you don’t think you need one and proceed selling insurance, and the state has a different opinion about your conviction, you’re going to be in hot water!
With the understanding that, specifically for felonies related to dishonesty and breaches of trust, there’s this whole other can of worms, what about other charges and convictions? For the purposes of this article, we’ll summarize our findings of each state’s stance on what an insurance license holder is required to do if – after already holding an insurance license – they get charged with or convicted of a new crime*. *Remember, we’re talking about crimes that don’t fall under the need for a 1033 waiver. However, you’ll see plenty of mentions of the 1033 waiver because, often, the state wants all the information before determining if one is required.