Federal law bars anyone who has been convicted of a felony involving dishonesty or breach of trust from willfully engaging in or participating in the business of insurance. It is a criminal offense, found under the the Violent Crime Control and Law Enforcement Act of 1994, Title 18, United States Code, section 1033. Furthermore, it is a criminal offense for any person to willfully employ, or willfully permit, such “prohibited persons” to participate in the business of insurance without the required written consent. A “Prohibited Person” may be an officer, director or employee of an insurance agency or an insurance company, an agent, solicitor, broker, consultant, third party administrator, managing general agent, or subcontractor representing an insurance agency or insurance company who engages in or transacts the business of insurance.
The Act does not provide an exemption for prohibited persons who currently hold an insurance license. And it is the responsibility of insurers and producers to make a diligent effort to identify employees or prospective employees who may be prohibited persons, and to ensure that prohibited persons are not engaging in the business of insurance in violation of the Act or CDI’s regulations.
There is an exception, however. It is called the “1033 Consent Waiver.” It provides for waiver in three instances:

  1. A prohibited person who is currently engaged in the business of insurance in California must immediately file a 1033 consent waiver application, pay the application fee, provide all required documentation and receive written consent before continuing to engage in such business.
  2. A prohibited person who proposes to engage in the business of insurance in California must file a 1033 consent waiver application, pay the application fee, provide all required documentation and receive written consent before becoming engaged in such business.
  3. A prohibited person who intends to engage in or become licensed in the business of insurance in California with a foreign insurer or a nonresident licensee must obtain the written consent of his or her domiciliary insurance regulatory official prior to engaging or continuing to engage in the business of insurance in California.

The California Department of Insurance (CDI) promulgated regulations (Title 10, California Code of Regulations, Chapter 5, Subchapter 1, Article 4.5, Section 2175.1 to 2177.14) setting forth the process and requirements for requesting written consent under these three exceptions. These regulations set forth:

  • the process and requirements to request the Commissioner’s written consent;
  • the circumstances under which the consent will be granted;
  • the circumstances under which consent will be revoked; and,
  • the process to appeal denial of the written consent.

All 1033 Consent Waiver applicants must be fingerprinted. Factors to be considered by the Commissioner in granting or denying an Application for Written Requests for Consent will include, but are not limited to the following:

  • The nature and severity of the crime.
  • The length of time since the conviction
  • The injury and/or loss caused by the Prohibited Person. Whether the conviction is related to the business of insurance.
  • Whether the Prohibited Person received a pardon from the sovereign that convicted him.
  • Whether the Prohibited Person completed parole or probation.
  • Whether a breach of trust, dishonesty or a violation of the Act was involved.
  • Strength of character reference letters.
  • The person’s business and personal record before and after the conviction.
  • Whether and to what extent the person has made material false statements in an application, renewal or in other documents filed with the Commissioner.
  • Whether and to what extent the person has made material false statements in applications or other documents filed with other State or federal agencies.
  • Whether the Prohibited Person’s conviction was expunged.
  • Whether the conviction was received in a foreign country.

Failure of the Prohibited Person to comply with all the terms and conditions will result in the termination of the Written Consent and if applicable, summary revocation of the license to transact the business of insurance in California or a foreign jurisdiction.
The federal statute, California regulations, and other related information, including the application for written consent, are available on the CDI web site at  1033 application filing requirements.