Indiana's insurance law is Indiana Code (IC) Title 27, with the Department of Insurance's rules in 760 IAC. The main chapters:

• IC 27-1-15.6: producer licensing.
• IC 27-1-15.7: continuing education.
• IC 27-4-1: unfair practices.
• IC 27-1-15.8: surplus lines.

These notes cover the rules the Indiana state questions draw on.

About the exam

Indiana's licensing exams are given by Pearson VUE, and the passing score is 70%.

Unscored pretest questions are added to each exam.

No separate Property or Casualty exam. A resident producer may not request separate property and casualty qualifications (IC 27-1-15.6-7(c)). Property and casualty are tested together on the P&C exam.

Prelicensing education is required:

• The course completion certificate must be no more than six months old when the Department receives the application (IC 27-1-15.6-6(c)).
• Pearson VUE's handbook also requires testing within six months of finishing the course.

Designation holders skip prelicensing and take only the Indiana law portion of the exam (IC 27-1-15.6-9):

• CLU, CFP and ChFC for life, health or variable;
• CPCU, CIC and AAI for property, casualty or personal lines.

Retakes: a candidate who fails or misses the exam must reapply and pay again (IC 27-1-15.6-5(e)), and must wait 48 hours before retaking.

Age: applicants must be at least 18.

The regulator

• The insurance commissioner is appointed by the governor and serves at the governor's pleasure. There is no fixed term, and the office is not elected (IC 27-1-1-2).
• The commissioner must know insurance and be chosen solely for fitness, "irrespective of political beliefs." The commissioner posts a $50,000 bond.
• The commissioner is the chief executive officer of the Department of Insurance and works with the NAIC toward uniform laws.
• Examinations: every licensed insurer at least once every five years, under the NAIC examiners' handbooks (IC 27-1-3.1-8). A company that refuses an exam can have its authority suspended or revoked (IC 27-1-3-10).
• Insurers:
  • An insurer needs a certificate of authority before transacting business, and may write only the kinds of insurance listed on it (IC 27-1-3-20).
  • New directors and principal officers must be reported within 30 days.
  • Admitted foreign and alien companies have the same rights as domestic companies, but no more (IC 27-1-17-2).
• Insurer types: domestic = organized in Indiana; foreign = another U.S. state, territory or D.C.; alien = another country (IC 27-1-2-3).
• Violating the Insurance Code: a reckless violation is a Class C infraction. It becomes a Class C misdemeanor if there was a prior violation within five years (IC 27-1-2-4).

Producer licensing

Lines of authority (IC 27-1-15.6-7):

• life;
• accident and health;
• property;
• casualty;
• variable life and variable annuity;
• personal lines;
• credit;
• title.

Variable products require a life qualification plus FINRA registration (Series 6 or 7).

Limited lines licenses are issued without an exam for travel, credit, portable electronics and self-storage insurance (IC 27-1-15.6-18).

Basic rules:

• License required: no one may sell, solicit or negotiate without a license, and insurers must require their sellers to be licensed (IC 27-1-15.6-3).
• No authority from the license: a license alone gives no authority to represent an insurer. That comes from an appointment (IC 27-1-15.6-2).
• Business entities name an individual licensed producer responsible for compliance (IC 27-1-15.6-6(d)).
• Consultants: a person who gives insurance advice for a fee needs a consultant license (IC 27-1-15.6-23).
  • A consultant can't hold a producer license at the same time.
  • Attorneys, producers, bank trust officers, actuaries and CPAs acting in their professional roles are exempt.
  • The signed fee agreement is kept for two years.

Term, renewal and reinstatement:

• Two-year licenses that expire on the last day of the birth month. Renew through Sircon or NIPR.
• Late renewal: reinstatement within 12 months without an exam, with a penalty of three times the renewal fee. The Department may waive the penalty if payment arrives within 30 days (IC 27-1-15.6-7(e)).

Notices:

• Change of address within 30 days (IC 27-1-15.6-7(h)).
• Assumed names are reported before use (IC 27-1-15.6-10).

Moving and nonresidents:

• A producer moving to Indiana applies within 90 days, with no exam or prelicensing for lines already held (IC 27-1-15.6-9(b)).
• A producer leaving Indiana reports within 30 days (IC 27-1-15.6-8).
• Nonresidents are licensed on a reciprocal basis.

Temporary license: up to 180 days without an exam (IC 27-1-15.6-11), for:

• a surviving spouse or representative;
• the designee of a producer entering military service.

The commissioner may require a licensed sponsor.

Reporting:

• administrative actions within 30 days of final disposition;
• criminal prosecutions within 30 days of the initial pretrial hearing (IC 27-1-15.6-17).

Continuing education (IC 27-1-15.7)

• Hours: 24 hours for each two-year renewal, and never more than 24 even with several lines.
• Ethics: producers with life, health or variable qualifications need at least 3 hours of ethics.
• Topic limits:
  • No more than 4 hours in sales, motivation, psychology or time management.
  • No more than 2 hours for professional organization participation.
• Carryover: up to 12 extra hours carry over, but only courses finished within 120 days before the last renewal. Ethics and LTC hours never carry over (IC 27-1-15.7-2.2).
• A credit hour is 50 minutes of instruction.
• Attorneys may use relevant continuing legal education.
• Extensions: an extension request costs $25. If it is denied, the producer has 90 days to finish.
• LTC sales carry separate training requirements; see the Senior and Special Needs guide.

Appointments and commissions

• A producer must be appointed before acting for an insurer (IC 27-1-15.6-14).
• Terminations for cause are reported within 30 days (IC 27-1-15.6-15). The producer gets a copy within 15 days and may comment within 30 days.
• Commissions: none to unlicensed persons. Renewal commissions may go to someone licensed at the time of sale (IC 27-1-15.6-13).
• Disclosure: commissions, service fees and brokerage fees must be disclosed in writing where required, including whether they are a percentage of premium or a flat fee (IC 27-1-15.6-13.5).
• Controlled business: a license is presumed used for controlled business when commissions on the producer's own, family or employer business exceed 25% of all commissions in 12 months (IC 27-1-15.6-12(j)).

Discipline

Grounds (IC 27-1-15.6-12) include:

• false application statements;
• misappropriation;
• fraud or untrustworthiness;
• using notes on the exam;
• unpaid child support or state income tax;
• failing to report a change of address.

Penalties and procedure:

• Civil penalties of $50 to $10,000.
• A hearing may be demanded within 63 days after a denial or nonrenewal notice. It is held within 30 days of the demand.
• Permanent revocation means the person can never be licensed again.
• A child support order requires suspension until the court allows reinstatement (IC 27-1-15.6-28).

Unfair practices (IC 27-4-1-4)

• Misrepresentation of terms, benefits or dividends.
• Twisting: a misrepresentation that induces a lapse or surrender.
• False advertising, defamation of an insurer, boycott, coercion and intimidation, false financial statements.
• Lender tie-ins: requiring a borrower to use a particular producer is banned, though the lender may approve the insurer.
• Free insurance given as an inducement to buy other goods.
• Unfair discrimination, including discrimination based on blindness.
• Cancelling health coverage between renewals because of a medical condition.

Rebating (IC 27-4-1-4(a)(8); IC 27-1-47):

• Prohibited, and an insured may not knowingly accept a rebate (IC 27-1-22-18).
• Gift exception: gifts worth up to $250 per person per year, and drawing prizes up to $500, never in cash.
• Value-added services that assess, reduce or prevent risk are allowed.
• Paying a commission to another licensed producer is not a rebate.

Penalties (IC 27-4-1-6, 27-4-1-12):

• up to $25,000 per violation;
• up to $50,000 if the person knew or should have known;
• up to $25,000 per act for violating a cease and desist order.

Undefined practices: the commissioner can bring charges for unfair practices that aren't listed (IC 27-4-1-8).

Claims

• Unfair claim settlement practices (IC 27-4-1-4.5) include:
  • misrepresenting coverage;
  • refusing to pay without a reasonable investigation;
  • lowball offers that force litigation;
  • failing to explain a denial;
  • assigning fault to a claimant who clearly isn't at fault.
• Claim complaints (IC 27-4-1-5.6):
  • The Department forwards a claim complaint to the insurer within 10 business days.
  • The insurer reports back within 20 business days.
  • A public adjuster needs the claimant's written consent to file one.

Fraud

• A fraudulent insurance act is knowingly presenting materially false claim or application information with intent to defraud (IC 27-1-3-22).
• Reporting: anyone regulated under Title 27 who knows of or reasonably believes in fraud must report it to the Department or the NICB within 60 days. Good-faith reporters are immune.
• Criminal penalties: insurance fraud is a crime under IC 35-43-5-4.

Guaranty associations

Neither association may be used to sell insurance (IC 27-6-8-19; 27-8-8-18).

Surplus lines (IC 27-1-15.8)

• Allowed only after a diligent effort to place the coverage with authorized insurers.
• The surplus lines producer must already be licensed for the lines written.
• The producer files a monthly affidavit by the 20th.
• The tax is 2.5% of gross premium, due February 1. Late payment adds 10% plus 1% a month.
• An insurer that issues a surplus lines policy is treated as having appointed the commissioner to receive service of process.

Common exam traps

• Indiana's commissioner serves at the governor's pleasure, with no fixed term.
• There is no separate property or casualty license. They are taken together as P&C.
• CE: 24 hours, 3 ethics hours for life and health producers, up to 12 carryover hours, and no ethics or LTC carryover.
• A late renewal penalty is triple the fee. A denial hearing must be demanded within 63 days.
• Gifts: $250 a year, drawings up to $500, never cash.
• Controlled business is presumed above 25% of commissions.
• Fraud reports go to the Department or NICB within 60 days.