1. Department of Insurance Agency/Individual Examinations

2. REASONS FOR EXAMINATION Consumer complaint Other agent complaint Current employee complaint Ex-employee complaint Association complaint Termination for cause letters from insurers

3. REBATES No insurance agent or broker shall offer, promise, allow, give, set off or pay, directly or indirectly, any rebate of or part of the premium payable on the policy, or on any policy or agent's commission thereon or earnings, profits, dividends or other benefits founded, arising, accruing or to accrue thereon or therefrom, or any special advantage in date of policy or age of issue, or any paid employment or contract for services of any kind or any other valuable consideration or inducement to or for insurance on any risk in this State, now or hereafter to be written, or for or upon any renewal of any such insurance, which is not specified in the policy contract of insurance, or offer, promise, give, option, sell, purchase any stocks, bonds, securities or property or any dividends or profits accruing or to accrue thereon, or other thing of value whatsoever as inducement to insurance or in connection therewith, or any renewal thereof which is not specified in the policy.

4. CERTIFICATES OF INSURANCE Must be truthful Agent must have authority to issue Will result in Exam May have criminal ramifications

5. SERVICE FEES Memorandums Must clearly specify amount or extent Must have for every Service Fee every year Only needs to be signed if greater than 10% of premium Cancellations Must return prorated portion of Service Fee if policy is cancelled within 90 days of inception Can retain entire amount if certain criteria are met

6. SERVICE FEE BEST PRACTICES Put on separate memorandum by itself Label it as a service fee or agency fee (not policy fee) Get signature every time Signs on wall do not meet requirements Maintain copy in consumer file

7. Department Concerns FIDUCIARY (monies held in trust) RETURN PREMIUMS (returned timely) COMMISSIONS (matched & identified)

8. FIDUCIARY Department should be able to trace money from the time it is deposited until it is paid to the Company. i.e. if insured gives you $100 and $20 is your commission, you will need to have $80 in your Premium Fund Trust Account until the insurer cashes your check or sweeps the funds.

9. FIDUCIARY (continued) Violation occurs when balance in PFTA is less than Min PFTA Balance Required. Licensee is deemed to have misappropriated Fiduciary monies for each day that they have less than are required to have. If deficiency is less than $150, class A misdemeanor. If more than $150, class 4 felony.

10. OUT OF TRUST REASONS Paying premiums to insurer before they are deposited; Withdrawing commissions improperly; Returning return premiums early; Not accounting for bank account fees; Theft

11. RETURN PREMIUMS Department looks for return premiums being paid in a timely manner. Must be paid or credited to consumers account within 15 days of payment or due date of company statement, whichever is first.

12. COMMISSIONS Department looks for commissions withdrawals being matched & identified with premiums previously deposited in the PFTA.

13. QUESTIONS ? LICENSING (217) 782-6366 Email: licensing@illinois.govlicensing@illinois.gov REGULATORY (217) 782-6368 Email: mike.teer@illinois.govmike.teer@illinois.gov