Source: https://case-law.vlex.com/vid/question-submitted-by-moore-739752841
Timestamp: 2020-07-02 07:33:25
Document Index: 236584606

Matched Legal Cases: ['§ 302', '§ 23', '§ 302', '§ 301', '§ 307', '§ 302', '§ 102', '§ 105', '§ 103', '§ 104', '§ 1', '§ 1435', '§ 2']

Question Submitted by Moore, 092118 OKAG, 2018 OK AG 10 - Oklahoma - Case Law - VLEX 739752841
Question Submitted by Moore, 092118 OKAG, 2018 OK AG 10
Docket Nº: 2018 OK AG 10
Party Name: Question Submitted by: The Honorable Lewis Moore, State Representative, District 96
Attorney: MIKE HUNTER ATTORNEY GENERAL OF OKLAHOMA SANDRA BALZER ASSISTANT ATTORNEY GENERAL
2018 OK AG 10
Question Submitted by: The Honorable Lewis Moore, State Representative, District 96
No. 2018 OK AG 10
SANDRA BALZER ASSISTANT ATTORNEY GENERAL
¶0 This office has received your request for an official Attorney General Opinion in which you ask, in effect, the following questions: 1. Does 36 O.S.2011, § 302 --which prohibits the Insurance Commissioner from being "financially interested, directly or indirectly, in any insurer, agency, or insurance transaction"--allow the Insurance Commissioner to (i) maintain an insurance license while in office, and (ii) receive continuing commissions for insurance business transacted prior to taking office?
2. If the Insurance Commissioner is not permitted to receive continuing commissions for insurance business transacted prior to taking office, may those commissions instead be held in trust for the Commissioner until the term of office ends?
¶1 The Oklahoma Insurance Commissioner (the "Commissioner") is a state official who is elected to serve a four-year term, but may serve no more than eight years in total. OKLA. CONST. art. VI, § 23. The Commissioner must be at least 25 years old and "well versed in insurance matters." Id.; see also 36 O.S.2011, § 302 (requiring the Commissioner to have at least five years' experience in insurance "administration, sales, servicing or regulation"). By statute, the Commissioner is the chief executive officer of the Oklahoma Insurance Department (the "Department") and is responsible for the administration and enforcement of the Oklahoma Insurance Code (the "Code"). 36 O.S.2011, § 301; 36 O.S.Supp.2017, § 307. Relevant to your questions, Section 302 of the Code provides that while the Commissioner must have a background in the insurance industry, he or she "shall not be financially interested, directly or indirectly, in any insurer, agency or insurance transaction except as a policyholder or claimant under a policy." 36 O.S.2011, § 302.
¶2 To determine how Section 302 affects the Commissioner's ability to maintain a license or receive commissions, it is necessary to first understand the meaning of certain statutory terms used therein. The Code defines "insurance" as "a contract whereby one undertakes to indemnify another or to pay a specified amount upon determinable contingencies." 36 O.S.2011, § 102. An "insurance transaction" includes the following actions with respect to an insurance contract: (i) "solicitation and inducement," (ii) "preliminary negotiations," (iii) "effectuation of a contract of insurance," and (iv) "transaction of matters subsequent to effectuation of the contract and arising out of it." Id. § 105. An "insurer" is defined as a "person engaged in the business of making contracts of insurance or indemnity." Id. § 103(A). A "person" may be an individual, as well as an entity such as a "company," "association," "organization," "society," or "corporation." Id. § 104.
¶3 The other key terms for our analysis of Section 302--"agency" and "financially interested"--are not defined in the Code or rules promulgated by the Department. When a statutory term is not defined, it must be "understood in its ordinary sense, except when a contrary intention plainly appears[.]" 25 O.S.2011, § 1. In divining the ordinary meaning of a term, we must also take into account the context in which it is used. See In re Initiative Petition No. 366, 2002 OK 21, ¶ 9, 46 P.3d 123, 127. The word "agency" is used in the Code and Department regulations to distinguish an individual licensee from a business entity licensee. See, e.g., 36 O.S.2011, § 1435.31 (B)(1) (permitting "[a]ny person licensed and appointed as an insurance producer, broker, or managing general agent," as well as "any insurance agency" to appoint and employ licensed customer service representatives"); OAC 365:25-17-7 (referring separately to a "general agent" and an "independent agency"). On its website, the Department lists "insurance agency" as one type of licensee, describing an "insurance agency" as a business entity that earns income from the sale, solicitation, and negotiation of insurance in Oklahoma. 1 Accordingly, for the purposes of Section 302, the word "agency" is best understood to mean an entity engaging in the business of insurance.
¶4 In the absence of a definition of "financially interested" in the Code, the definition of "material financial interest" in the rules of the Oklahoma Ethics Commission (the "Ethics Rules") is instructive. See 25 O.S.2011, § 2 ("Whenever the meaning of a word or phrase is defined in any statute, such definition is applicable to the same word or...