31A-23a-114 - Temporary individual or agency license -- Trustee for terminated licensee's business.
31A-23a-114. Temporary individual or agency license -- Trustee for terminatedlicensee's business.
(1) (a) The commissioner may issue a temporary individual or agency license:
(i) to a person listed in Subsection (1)(b):
(A) if the commissioner considers that the temporary license is necessary:
(I) for the servicing of an insurance business in the public interest; and
(II) to provide continued service to the insureds who procured insurance in acircumstance described in Subsection (1)(b);
(B) for a period not to exceed 180 days; and
(C) without requiring an examination; or
(ii) in any other circumstance:
(A) if the commissioner considers the public interest will best be served by issuing thetemporary license;
(B) for a period not to exceed 180 days; and
(C) without requiring an examination.
(b) The commissioner may issue a temporary individual or agency license in accordancewith Subsection (1)(a) to:
(i) the surviving spouse or court-appointed personal representative of a licensee who diesor becomes mentally or physically disabled to allow adequate time for:
(A) the sale of the insurance business owned by the licensee;
(B) recovery or return of the licensee to the business; or
(C) the training and licensing of new personnel to operate the licensee's business;
(ii) to a member or employee of a business entity licensed as an agency upon the death ordisability of an individual designated in:
(A) the business entity application; or
(B) the license; or
(iii) the designee of a licensed agency entering active service in the armed forces of theUnited States of America.
(2) If a person's license is terminated under Section 31A-23a-111 or 31A-23a-113, thecommissioner may appoint a trustee to provide in the public interest continuing service to theinsureds who procured insurance through the person whose license is terminated:
(a) at the request of the person whose license is terminated; or
(b) upon the commissioner's own initiative.
(3) This section does not apply if the deceased or disabled licensee does not or did notown any ownership interest in the accounts and associated expiration lists that were previouslyserviced by the licensee.
(4) (a) A person issued a temporary license under Subsection (1) receives the license andshall perform the duties under the license subject to the commissioner's authority to:
(i) require a temporary licensee to have a suitable sponsor who:
(A) is a licensee; and
(B) assumes responsibility for all acts of the temporary licensee; or
(ii) impose other requirements that are:
(A) designed to protect the insureds and the public; and
(B) similar to the condition described in Subsection (4)(a)(i).
(b) A trustee appointed under Subsection (2) shall be appointed and perform the trustee's
duties subject to the terms and conditions described in Subsections (4)(b)(i) through (vi).
(i) (A) A trustee appointed under Subsection (2) shall be licensed under this chapter toperform the services required by the trustor's clients.
(B) When possible, the commissioner shall appoint a trustee who is no longer activelyengaged on the trustee's own behalf in business as a licensee.
(C) The commissioner shall only select a person to act as trustee who is trustworthy andcompetent to perform the necessary services.
(ii) (A) If the deceased, disabled, or unlicensed person for whom the trustee is acting wasa producer, the insurers through which the former producer's business was written shall cooperatewith the trustee in allowing the trustee to service the policies written through the insurer.
(B) The trustee shall abide by the terms of the agency agreement between the formerproducer and the issuing insurer, except that terms in those agreements terminating theagreement upon the death, disability, or license termination of the former producer do not bar thetrustee from continuing to act under the agreement.
(iii) (A) The commissioner shall set the trustee's compensation, which:
(I) may be stated in terms of a percentage of commissions; and
(II) shall be equitable.
(B) The compensation shall be paid exclusively from:
(I) the commissions generated by the former licensee's insurance accounts serviced bythe trustee; and
(II) other funds the former licensee or the licensee's successor in interest agree to pay.
(C) The trustee has no special priority to commissions over the former licensee'screditors.
(iv) (A) The commissioner or the state may not be held liable for errors or omissions of:
(I) the former licensee; or
(II) the trustee.
(B) The trustee may not be held liable for errors and omissions that were caused in anymaterial way by the negligence of the former licensee.
(C) The trustee may be held liable for errors and omissions which arise solely from thetrustee's negligence.
(D) The trustee's compensation level shall be sufficient to allow the trustee to purchaseerrors and omissions coverage, if that coverage is not provided the trustee by:
(I) the former licensee; or
(II) the licensee's successor in interest.
(v) (A) It is a breach of the trustee's fiduciary duty to capture the accounts of trustor'sclients, either directly or indirectly.
(B) The trustee may not purchase the accounts or expiration lists of the former licensee,unless the commissioner expressly ratifies the terms of the sale.
(C) The commissioner may adopt rules that:
(I) further define the trustee's fiduciary duties; and
(II) explain how the trustee is to carry out the trustee's responsibilities.
(vi) (A) The trust may be terminated by:
(I) the commissioner; or
(II) the person that requested the trust be established.
(B) The trust is terminated by written notice being delivered to:
(I) the trustee; and
(II) the commissioner.
(5) (a) The commissioner may by order:
(i) limit the authority of any temporary licensee or trustee in any way the commissionerconsiders necessary to protect insureds and the public; and
(ii) revoke a temporary license or trustee's appointment if the commissioner finds that theinsureds or the public are endangered.
(b) A temporary license or trustee's appointment may not continue after the owner orpersonal representative disposes of the business.
Renumbered and Amended by Chapter 298, 2003 General Session