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304.9-440 Probation, suspension, revocation, and refusal of license -- Grounds -Penalty.
(1)
The commissioner may place on probation, suspend, or may impose conditions
upon the continuance of a license for not more than twenty-four (24) months,
revoke, or refuse to issue or renew any license issued under this subtitle or any
surplus lines broker, life settlement broker, or life settlement provider license, or
may levy a civil penalty in accordance with KRS 304.99-020, or any combination of
actions for any one (1) or more of the following causes:
(a) Providing incorrect, misleading, incomplete, or materially untrue information
in the license application;
(b) Violating any insurance laws, or violating any administrative regulations,
subpoena, or order of the commissioner or of another state's insurance
commissioner;
(c) Obtaining or attempting to obtain a license through misrepresentation or
fraud;
(d) Improperly withholding, misappropriating, or converting any moneys or
properties received in the course of doing insurance or the business of life
settlements;
(e) Intentionally misrepresenting the terms of an actual or proposed insurance
contract, life settlement contract, or application for insurance;
(f) Having been convicted of or having pled guilty or nolo contendere to any
felony;
(g) Having admitted or been found to have committed any unfair insurance trade
practice, insurance fraud, or fraudulent life settlement act;
(h) Using fraudulent, coercive, or dishonest practices; or demonstrating
incompetence, untrustworthiness, or financial irresponsibility; or being a
source of injury or loss to the public in the conduct of business in this state or
elsewhere;
(i) Having an insurance license, life settlement license, or its equivalent, denied,
suspended, or revoked in any other state, province, district, or territory;
(j) Surrendering or otherwise terminating any license issued by this state or by
any other jurisdiction, under threat of disciplinary action, denial, or refusal of
the issuance of or renewal of any other license issued by this state or by any
other jurisdiction; or revocation or suspension of any other license held by the
licensee issued by this state or by any other jurisdiction;
(k) Forging another's name to an application for insurance, to any other document
related to an insurance transaction, or to any document related to the business
of life settlements;
(l) Cheating, including improperly using notes or any other reference material to
complete an examination for license;
(m) Knowingly accepting insurance or life settlement business from an individual
or business entity who is not licensed, but who is required to be licensed under
(2)
(3)
(4)
(5)
(6)
this subtitle;
(n) Failing to comply with an administrative or court order imposing a child
support obligation;
(o) Failing to pay state income tax or to comply with any administrative or court
order directing payment of state income tax;
(p) Having been convicted of a misdemeanor for which restitution is ordered in
excess of three hundred dollars ($300), or of any misdemeanor involving
dishonesty, breach of trust, or moral turpitude;
(q) Failing to no longer meet the requirements for initial licensure;
(r) If a life settlement provider, demonstrating a pattern of unreasonable
payments to owners or failing to honor contractual obligations set out in a life
settlement contract;
(s) Entering into any life settlement contract or using any form that has not been
approved pursuant to Subtitle 15 of this chapter;
(t) If a licensee, having assigned, transferred, or pledged a policy subject to a life
settlement contract to a person other than a life settlement provider licensed in
this state, an accredited investor or qualified institutional buyer as defined,
respectively, in Regulation D, Rule 501 or Rule 144a of the Federal Securities
Act of 1933, as amended, a financing entity, a special purpose entity, or a
related provider trust; or
(u) Any other cause for which issuance of the license could have been refused,
had it then existed and been known to the commissioner.
The license of a business entity may be suspended, revoked, or refused for any
cause relating to an individual designated in or registered under the license if the
commissioner finds that an individual licensee's violation was known or should
have been known by one (1) or more of the partners, officers, or managers acting on
behalf of the business entity and the violation was not reported to the Department of
Insurance nor corrective action taken.
The license of a pharmacy benefit manager may, in the discretion of the
commissioner, be suspended, revoked, or refused for any cause enumerated in
subsection (1) of this section, and for violations of KRS 205.647, 304.9-053, 304.9054, 304.9-055, and 304.17A-162. The pharmacy benefit manager shall also be
subject to the same civil penalties under KRS 304.99-020 as an insurer.
The applicant or licensee may make written request for a hearing in accordance with
KRS 304.2-310.
The commissioner shall retain the authority to enforce the provisions and penalties
of this chapter against any individual or business entity who is under investigation
for or charged with a violation of this chapter, even if the individual's or business
entity's license has been surrendered or has lapsed by operation of law.
The commissioner may suspend, revoke, or refuse to renew the license of a licensed
insurance agent operating as a life settlement broker, pursuant to KRS 304.15-700,
if the commissioner finds that such insurance agent has violated the provisions of
KRS 304.15-700 to 304.15-725.
(7)
(8)
If the commissioner denies a license application or suspends, revokes, or refuses to
renew the license of a life settlement provider or life settlement broker, or suspends,
revokes, or refuses to renew the license of a licensed life insurance agent operating
as a life settlement broker pursuant to KRS 304.15-700, the commissioner shall
comply with the provisions of this section and KRS Chapter 13B.
The sanctions and penalties applicable to licenses and licensees under subsection
(1) of this section shall also be applicable to registrations and registrants under KRS
304.52-030(3).
Effective: June 29, 2021
History: Amended 2021 Ky. Acts ch. 36, sec. 14, effective June 29, 2021. -- Amended
2018 Ky. Acts ch. 157, sec. 2, effective July 1, 2018. -- Amended 2010 Ky. Acts ch.
24, sec. 1074, effective July 15, 2010. -- Amended 2008 Ky. Acts ch. 32, sec. 19,
effective July 15, 2008. -- Amended 2005 Ky. Acts ch. 58, sec. 5, effective June 20,
2005; and ch. 143, sec. 17, effective June 20, 2005. -- Amended 2002 Ky. Acts ch.
273, sec. 36, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 393, sec. 34,
effective July 14, 2000. -- Amended 1998 Ky. Acts ch. 213, sec. 4, effective July 15,
1998. -- Amended 1982 Ky. Acts ch. 123, sec. 6, effective July 15, 1982. -- Created
1970 Ky. Acts ch. 301, subtit. 9, sec. 44, effective June 18, 1970.
Legislative Research Commission Note (7/15/2008). 2008 Ky. Acts ch. 32 intended to
change all existing references in the KRS from "viatical settlements" to "life
settlements" and from "viator" to "owner." References to "viatical settlements" and to
"viator" in this section were overlooked during the bill drafting process. The Reviser
of Statutes has made these changes upon the authority of KRS 7.136(1)(h).
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