A. Expertise as to Premium Finance Companies and Premium Finance Arrangements. I have had significant experience and responsibility in connection with determining and passing judgment on premium finance companies (sometimes, “PFCos”) and premium finance agreements or arrangements (“PFA”). In addition to direct industry and regulatory experience as to these issues, I have testified as a premium finance expert several times, including, among others, trial testimony on behalf of the State of Florida, Division of Financial Services/ Office of Rehabilitation and Liquidations.
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From an insurance industry standpoint, I worked daily with PFCos. and PFA. From a regulatory standpoint, I had daily responsibility to assure and to hold accountable all of the state’s premium finance companies for their obligations and responsibilities. I did so through a series of action steps and tools. The action steps and tools included the following:
1. Premium Finance Companies and PFA: NAIC Market Regulation Handbook. As Commissioner, I utilized the NAIC Examiners Handbook in that it sets forth standards (see, e.g., Chapter 28) to assess premium finance company behavior as to operations, marketing and sales, producer licensing issues, claims, PFA and other issues relating to (i) applications and the application process, (ii) whether the PFCo. and the related PFA complied with all applicable regulations, (iii) responsibilities relating to the premium finance company’s duties and obligations to insurance company agents and brokers and (iv) issues that arise are to policyholders and insurers under PFA, including proper notice and cancellation. These standards are utilized by every state department of insurance and the standards of the Examiners Handbook are universally recognized as appropriate standards against which to judge PFA and premium finance companies.
2. Premium Finance Companies: Market Conduct Examinations. Also as discussed above, on a regular basis, Market Conduct Examinations of premium finance companies were conducted utilizing the Examiners Handbook to determine whether in fact the target PFCo was meeting all of their obligations to their insureds and insurers and others. This action entailed physically going into the PFCo’s application and PFA files to determine any errant action or inappropriate behavior. As further discussed below, errant PFCos. were warned, disciplined and prosecuted as required.
3. Premium Finance Companies: NAIC Financial Examiners Handbook. As above, I had available another tool, namely the Financial Examiners Handbook, which (parallel to the above discussion) sets forth standards to assess PFCos. on an ongoing basis. Among other documents reviewed by examiners in reaching financial conclusions are the PFCos’ agreements and arrangements with insureds. These standards have been universally agreed to by all of the nation’s Commissioners of Insurance as adopted formally by them through the NAIC and are universally recognized as appropriate standards against which to judge PFCo behavior.
4. Premium Finance Companies: Financial Examinations. As above, my Department conducted financial examinations of PFCos utilizing the Financial Examiners Handbook to determine, as with market conduct exams, among others things, (i) assurance of compliance various duties and (ii) assurance that PFAs were properly carried out. As further discussed below (and above), errant PFCos were warned, disciplined and prosecuted as required.
5. Premium Finance Companies: Complaints From the Public. On a daily basis, my Department received incoming consumer complaints as to practices of PFCos. This Consumer Protection Division was staffed by Department lawyers who resolved the individual complaint and also, equally importantly, were trained to determined whether a PFCo evidenced unacceptable practices — that is to say, whether the incoming consumer complaints in fact constituted a red flag as to a PFCos potential behavior across the board.
6. Premium Finance Companies: Prosecution. To the extent a PFCo’s behavior required formal action (whether as a result of complaints from the public or as a result of Department investigation through a Market Conduct Examination or the Financial Examination), my Department prosecuted such PFCo under the state’s civil Administrative Procedures Act consistent with the discussion in the prior section.
B. Expertise As to Duties and Responsibilities of Premium Finance Companies as an Insurance Industry Executive: CEO of a Major US Insurance Organization. I discuss my executive experience at the National Council on Compensation Insurance (“NCCI”) under this section because my experience at NCCI also resulted in expertise as to PFCos’ responsibilities as to (i) applications and the application process, (ii) duties that arise under PFA and the premium finance company’s adherence to those duties, (iii) responsibilities relating to the premium finance company’s duties and obligations to insurance company agents and brokers and (iv) issues that arise are to policyholders and insurers under PFA including proper notice and cancellation.
C. Expertise as to the Duties of Premium Finance Companies: General Counsel to the American Academy of Actuaries. I served as General Counsel and Director of Government Relations for the American Academy of Actuaries. Academy members included affiliation with virtually every insurance company in America. Among other things, such actuaries had duties relating to the duties and responsibilities of PFCos. The Academy’s Board of Directors was likewise made up of leading insurance company executives from insurance companies, most all of which provided products for which PFAs were routinely used in the purchase of such products.
D. Expertise as to the Underwriting Duties and Responsibilities of Premium Finance Companies: Attorney in Private Practice Iowa. As an attorney in private practice, I represented a number of PFAs’ and PFCos’ interests and became familiar with applicable industry standards of practice, including PFCos’ responsibilities toward their insureds and insurers the underwriting process, including working directly with the Iowa Association of Life Underwriters (whose duties included among others, arrangement of PFAs for interested insureds as to the purchase of life products) and the Professional Insurance Agents of Iowa (whose duties likewise included the arrangement of PFAs for their interested insureds as to property casualty coverages) and the Property Casualty Insurers Association of America (“PCIAA”) whose members are stock property casualty insurers who routinely engage with PFCos and PFAs. Although Iowa based, this experience has national applicability, given the universal standards (see above) that come to bear on PFCos and PFAs, as modified by local law.
E. Insurance Agents and Brokers as to PFCos and PFA. Often, the direct point of contact for PFCos is the insured’s agent or broker in terms of arranging PFAs. As such, issues often arise as to the related duties of agents and brokers (along with insurers) in connection with PFCos and PFAs. I have testified several times as to these duties and related issues and as an Insurance Commissioner and industry CEO, have dealt directly with such issues.
F. Other Expertise. This expertise should be read together with the balance of my background which can be reviewed in-depth at this website, namely www.expertinsurancewitness.com.
- Premium Finance Expert Witness
Contact Bill Hager at 561-306-5072 or via email to discuss your case.