Arkansas Code of 1987 (2023) › Title 23 - PUBLIC UTILITIES AND REGULATED INDUSTRIES (§§ 23-1-101 — 23-119-105) › Subtitle 3 - INSURANCE (§§ 23-60-101 — 23-103-417) › Chapter 65 - UNAUTHORIZED INSURERS AND SURPLUS LINES (§§ 23-65-101 — 23-65-403) › Subchapter 1 - GENERAL PROVISIONS (§§ 23-65-101 — 23-65-105) › Section 23-65-101 - Unauthorized insurance transactions prohibited

(a)
(1)
No person or entity in this state shall act as agent or broker for or otherwise represent or aid any insurer, health maintenance organization, multiple employer welfare arrangement, multiple employer trust, association, or any other person or entity in the solicitation, negotiation, or effectuation of insurance, inspection of risks, fixing of rates, investigation or adjustment of losses, collection of premiums, or in any other manner in the transaction of insurance with respect to subjects of insurance resident, located, or to be performed in this state if that person or entity is not authorized or licensed by the State Insurance Department for those purposes.
(2)
(A)
No person or entity shall act as a producer, adjuster, or consultant without first obtaining appropriate licensure or registration as required by the insurance laws of this state for the transaction of insurance with respect to subjects of insurance or self-insurance resident, located, or to be performed in this state.
(B)
No person or entity shall act as a multiple employer trust or multiple employer welfare arrangement without first obtaining appropriate registration or licensing as required by §
23-92-101
.
(C)
No person or entity shall act as a third-party administrator for a multiple employer trust, multiple employer welfare arrangement, collectively bargained trust, self-insurance plan, or any other plan providing accident and health insurance benefits to the citizens of this state without first obtaining appropriate registration as required by §
23-92-201
et seq.
(D)
Any producer who knows or has reason to know that a health plan is not licensed in accordance with the Arkansas Insurance Code shall immediately report the health plan to the department.
(b)
(1)
(A)
The Insurance Commissioner may summarily order a person or entity to cease and desist from an act or practice when the commissioner has reason to believe that the person or entity has not complied with the requirements of this section or any other provision of the Arkansas Insurance Code.
(B)
Upon the entry of the cease and desist order, the commissioner shall promptly notify the person or entity named:
(i)
That the order has been entered;
(ii)
The reasons for the order; and
(iii)
Of the person's or entity's right to a hearing on the order.
(2)
(A)
A hearing shall be held on the written request of the person or entity named in the cease and desist order if the commissioner receives the request within thirty (30) days of the date of the entry of the order or if otherwise ordered by the commissioner.
(B)
If no hearing is requested and none is ordered by the commissioner, the order will remain in effect until it is modified or vacated by the commissioner.
(C)
If a hearing is requested or ordered and after notice of an opportunity for hearing, the commissioner may affirm, modify, or vacate the cease and desist order.
(D)
The person or entity named in the cease and desist order shall have the burden of proving:
(i)
That the actions, methods, or practices described in the order are not in violation of the Arkansas Insurance Code; and
(ii)
The grounds upon which the commissioner should modify or vacate an order issued under this section.
(3)
(A)
After issuance of an order under subdivision (b)(1)(B) of this section, the commissioner may apply to Pulaski County Circuit Court to temporarily or permanently enjoin the act or practice and to enforce compliance with the Arkansas Insurance Code or any rule or order under the Arkansas Insurance Code.
(B)
However, the commissioner may apply directly to Pulaski County Circuit Court for a temporary or permanent injunction under subdivision (b)(3)(A) of this section.
(C)
Upon a proper showing, the court shall enter a permanent or temporary injunction, restraining order, or writ of mandamus.
(D)
The commissioner shall not be required to post a bond.
(c)
The commissioner may also seek and the appropriate court may grant any other ancillary relief which may be in the public interest, including the appointment of a receiver, temporary receiver, conservator, or declaratory judgment, obtaining an accounting, disgorgement, assessment of a fine, or other relief as may be appropriate in the public interest.
(d)
This section does not prohibit or restrict the informal disposition of a proceeding by stipulation, settlement, consent, or default.
(e)
Any insurance producer licensed in this state, or any other person, who knowingly sells, solicits, or negotiates a product of an unauthorized person or entity in violation of this section or who knowingly represents or aids an unauthorized person or entity in violation of this section shall be guilty of a Class D felony.
(f)
Any insurance producer licensed in this state, or any other person, who sells, solicits, or negotiates a product of an unauthorized person or entity in violation of this section or who represents or aids an unauthorized person or entity in violation of this section may be personally liable for all damages caused by the unauthorized person or entity, including claims unpaid by the unauthorized person or entity.
(g)
Any person or entity who violates or otherwise fails to comply with a cease and desist order of the commissioner under this section while that order is in effect may be subject, at the discretion of the commissioner, to any one (1) or more of the following:
(1)
A monetary penalty of not more than ten thousand dollars ($10,000);
(2)
Suspension or revocation of the person's or entity's license or registration; and
(3)
Upon the commissioner's petition filed in Pulaski County Circuit Court and upon good cause shown, that court may order injunctive relief.
(h)
The following shall be applicable to hearings held, orders issued, and penalties levied by the commissioner under this section:
(1)
The provisions of §
23-61-301
, as to witnesses and evidence;
(2)
Section
23-61-302
, as to immunity from prosecution;
(3)
The provisions of §§
23-61-303
-
23-61-305
, as to hearings;
(4)
The provisions of §§
23-61-306
and
23-61-307
, as to orders on hearings and appeals of orders;
(5)
The provisions of §
23-66-210(a)(1)
, as to monetary penalties; and
(6)
The provisions of §
23-66-212
, as to judicial review of cease and desist orders.
(i)
The commissioner may promulgate such reasonable rules as are necessary to carry out the provisions of this section.
(j)
(1)
The commissioner shall have the power to examine and investigate the affairs of every person or entity suspected of engaging in activities which are prohibited by this section or by any other provision of the Arkansas Insurance Code.
(2)
All licensees of the commissioner shall assist the commissioner in examinations and investigations conducted under this section.
(k)
The powers vested in the commissioner by this section shall be additional to any other powers to enforce any penalties, fines, or forfeitures authorized by law or other provisions of the Arkansas Insurance Code with respect to activities that are prohibited by this section or the Arkansas Insurance Code.
(l)
This section shall not apply to:
(1)
Acceptance of service of process by the commissioner under §
23-65-203
; and
(2)
Surplus lines insurance and other transactions as to which a certificate of authority is not required of an insurer, as stated in §
23-63-201
.
Amended by Act 2019, No. 315,§ 2661, eff. 7/24/2019.
Amended by Act 2017, No. 283,§ 12, eff. 8/1/2017.
Acts 1959, No. 148, § 181; A.S.A. 1947, § 66-2901; Acts 1987, No. 400, § 1; 1991, No. 1123, § 2; 1993, No. 901, § 32; 2001, No. 1603, § 22; 2003, No. 516, § 5; 2005, No. 1697, §§ 10, 11.