Receiving a complaint from the North Carolina Department of Insurance can be a stressful experience for any insurance professional, whether you’re an independent agent or working with one of the larger companies. Understanding the complaint process and knowing how to respond effectively is important to protecting your professional license and your career. This guide breaks down what you can expect when you receive an insurance license complaint in North Carolina and offers practical advice on how to navigate the process.
Understanding the Initial Complaint
When you get that unexpected letter or email from the Department of Insurance, the first step is to carefully review what you’ve received. It’s often a complaint detailing allegations against you. Complaints may arise from a variety of sources: a customer who believes something was mishandled, an audit that uncovered discrepancies in your financial records, or in some cases, even a criminal investigation.
The NC Department of Insurance has multiple divisions, including an Agent Services Division (ASD) and a criminal investigation unit staffed by sworn law enforcement officers. If you’re contacted by an investigator, especially one involved in a criminal matter, it’s essential to be cautious. Always remember your rights—respectfully invoke your right to remain silent and request an attorney before engaging in any conversation.
What Is the Agent Services Division (ASD) and the Informal Conference?
Most complaints you’ll encounter will come through the Agent Services Division (ASD). When you receive an informal conference notice marked “ASD,” it means the department is inviting you to a meeting to discuss the complaint. These informal conferences are typically held in person at the DOI’s office in Raleigh, and virtual meetings are no longer the norm.
The informal conference notice usually includes a detailed explanation of the allegations against you, including specific statutes and administrative codes that you are accused of violating. While the documents can be repetitive, they provide a clear picture of what the Department believes went wrong.
Who Will Be Present at the Informal Conference?
- A representative from the Department of Insurance who conducted the investigation
- The Department’s attorney from the Attorney General’s office
- Additional DOI staff as needed
- Yourself and, if you choose, your legal counsel
How to Approach the Informal Conference
During the informal conference, you have several options. If you believe no wrong doing occurred, you aren’t obligated to present evidence immediately. You can reserve your defense for a formal contested hearing later on.
However, if you have documentation or affidavits that can clarify or refute the allegations, presenting them at this stage may lead to the complaint being dismissed early. For example, you might provide proof that contradicts the Department’s evidence or that corrective actions have already been taken.
Showing Remediation and Mitigation
If you acknowledge a mistake, the informal conference is a valuable opportunity to demonstrate that you have taken steps to correct the issue and prevent future occurrences. This might include:
- Implementing new office policies or procedures
- Conducting staff training or retraining
- Providing evidence that no harm came to the public or that any harm was addressed promptly
Mitigation efforts can persuade the Department to impose a lighter penalty or even dismiss the complaint.
Understanding Penalties and Voluntary Settlement Agreements
The NC Department of Insurance typically imposes penalties that are somewhat binary in nature: either a suspension/revocation of your license or a monetary fine. While no one wants to pay fines, many professionals prefer that over losing their license. It’s important to carefully review any Voluntary Settlement Agreement (VSA) offered by the Department. Although “voluntary,” you are not required to accept the terms, and there may be room to negotiate aspects such as the fine amount or specific findings.
Keep in mind that any settlement or disciplinary action will be reported to the insurance licensing registry and must be disclosed to other states where you hold a license. This can have far-reaching professional consequences.
Requesting a Formal Hearing
If you decide not to accept a voluntary settlement or the informal conference doesn’t resolve the complaint, you have the right to request a formal hearing. This is your opportunity to fully defend yourself before a hearing officer.
At the hearing stage, you can:
- Engage in formal discovery, including requesting documents and submitting interrogatories
- Subpoena witnesses to support your case
- Present evidence and testimony to challenge the Department’s claims
Hearings often provide a better chance to negotiate or reduce penalties. For example, a hearing officer may decide a lengthy suspension is unwarranted and instead impose a fine or other lesser penalty while allowing you to keep your license.
Special Considerations for Criminal Investigations
Cases involving criminal investigations are often complex and may take longer to resolve. Since these involve sworn law enforcement officers and possible criminal charges, protecting your rights is paramount. Always consult with a criminal defense attorney who also understands professional licensing issues to ensure your freedom and career are both protected.
Final Thoughts
Dealing with an insurance license complaint in North Carolina can be stressful. But if you understand the process, you can respond with confidence and take the right steps. Whether dealing with informal conferences, voluntary settlements, or formal hearings, your goal is to safeguard your license and reputation while demonstrating professionalism and compliance.
Remember to:
- Carefully review all communications from the Department
- Know your rights, especially during criminal investigations
- Prepare thoroughly for informal conferences and hearings
- Consider legal counsel to help guide you through the process
- Document any corrective actions and mitigation efforts clearly
By taking these steps, you can protect your license and continue serving your clients effectively in North Carolina’s insurance industry.
*Nothing in this blog establishes an attorney-client relationship. Nothing in this blog is legal advice. If you have any questions, please check out our other blogs and our Youtube channel. You can also call us at 919-521-8810 with questions.