TO: Licensees, Insurers and Interested Parties
FROM: Linda Ruthardt, Commissioner of Insurance
DATE: September 21, 1998
RE: The Federal Violent Crime Control and Law Enforcement Act of 1994

This Bulletin is intended to advise all persons and entities engaged in or contemplating being engaged in the business of insurance in Massachusetts of the implications of the federal "Violent Crime Control and Law Enforcement Act of 1994," Title 18 U.S. Code, Sections 1033 and 1034 ("the Act") signed into law on September 13, 1994. The Act included new federal criminal and civil enforcement provisions aimed at white-collar crime and insurance fraud.

Under the Act, it is a criminal offense for anyone "engaged in the business of insurance" to willfully permit a "prohibited person" to conduct insurance activity. Section 1033 specifies certain activities as crimes if they are carried out by individuals, agents and employees engaged in the business of insurance. Section 1034 authorizes the U.S. Attorney General to bring civil actions against a person who engages in conduct constituting an offense under the previous section. A civil penalty does not preclude the application of any other criminal or civil statutory, common law or administrative remedy otherwise available.

Notification Requirements: A "prohibited person" is an individual who has been convicted of any felony involving dishonesty or a breach of trust or who has been convicted of an offense falling under this section and who willfully engages in the business of insurance as defined by the Act. A "prohibited person" who is engaged or intends to be engaged in the business of insurance in Massachusetts must notify, in writing, the Division of Insurance of their status and whether he or she seeks the written consent of the Commissioner. Any entity conducting insurance activity has the responsibility of notifying, in writing, the Division of Insurance of all employees and agents who are affected by this law and have them apply for an exemption or otherwise have such individuals cease or desist from their engagement. An insurer domiciled in a state other than Massachusetts which has agents or employees who transact business in Massachusetts shall forward, in writing, the names of each employee or agent who is deemed to be a "prohibited person" to the Massachusetts Division of Insurance.

Applications for Written Consent: Every "prohibited person" may not engage in the business of insurance unless and until that person has received the specific written consent to do so from the Commissioner of Insurance with appropriate jurisdiction. Such consent must specify that it is granted for the purpose of Title 18 U.S. Code, Section 1033. Written consent from the appropriate regulatory official of other states should be likewise forwarded to the Massachusetts Division of Insurance if it has already been obtained.

Upon written notification and application for such consent, the Commissioner may request any relevant information to assist in the determination of the issue and will decide whether to grant or deny such consent on a case-by-case basis. The Division of Insurance encourages applicants to provide full and complete disclosure of such relevant information.

Specific inquiries concerning this Bulletin and applications for written consent should be addressed to the Massachusetts Division of Insurance's Office of the General Counsel.