Oklahoma Insurance Ethics & Consumer Protection

Oklahoma Insurance Code (Title 36) establishes strict ethical standards for insurance producers and companies to protect consumers.

Unfair Trade Practices Act

Purpose

Oklahoma's Unfair Trade Practices Act (Title 36, Chapter 12) prohibits deceptive and unethical insurance practices.

Prohibited Practices

Misrepresentation and False Advertising

Prohibited Actions:

• Making false statements about policy terms, benefits, or dividends
• Misrepresenting the financial condition of an insurer
• Making misleading comparisons between policies
• Using misleading names or titles to imply government or official connection
• False statements about competitor products

Examples of Misrepresentation:

• Telling customer policy covers flood when it doesn't
• Claiming insurer is rated higher than actual rating
• Stating premiums are lower than filed rates
• Implying you work for state insurance department

Penalties:

• Fines up to $10,000 per violation
• License suspension or revocation
• Cease and desist orders
• Restitution to harmed consumers

Rebating

Definition: Offering or providing valuable consideration not specified in the policy as an inducement to purchase insurance.

Prohibited Rebate Examples:

• Giving cash back to policyholder
• Sharing commissions with non-licensed persons
• Providing gifts of substantial value
• Offering services not specified in policy
• Reducing premium below filed rate

Permitted Activities:

• Providing promotional items of nominal value (pens, calendars)
• Offering discounts specified in filed rates
• Group discounts approved by insurer
• Educational materials and information

Why Rebating is Prohibited:

• Creates unfair competition
• Undermines rate filings
• May indicate insurer financial instability
• Discriminates between policyholders paying same premium

Exam Tip: Oklahoma strictly prohibits rebating. Remember: You cannot give anything of value beyond what's in the filed policy and rates.

Twisting

Definition: Inducing a policyholder to replace existing coverage by misrepresenting facts about the current or proposed policy.

Examples of Twisting:

• Falsely claiming current policy will be cancelled
• Misrepresenting benefits of new policy
• Concealing disadvantages of replacement
• Exaggerating problems with existing coverage
• Pressuring client with false urgency

Proper Policy Replacement:

• Provide accurate comparison of coverage
• Disclose all relevant facts
• Explain costs and benefits truthfully
• Document reason for replacement
• Complete replacement forms required by insurer

Churning

Definition: Frequent replacement of policies primarily to generate commissions without benefit to policyholder.

Red Flags:

• Multiple replacements in short period
• Replacements benefit producer more than client
• Lack of legitimate reason for changes
• Pattern of unnecessary transactions

Penalties:

• License revocation
• Fines and restitution
• Criminal charges for fraud

Unfair Claims Practices

Oklahoma prohibits unfair claim settlement practices:

Prompt Claim Handling Requirements:

• Acknowledge claim within 10 business days
• Begin investigation promptly
• Request all information at once (no piecemeal requests)
• Pay or deny within 90 days of receipt of proof of loss
• Provide explanation for denials

Exam Tip: Oklahoma requires insurers to acknowledge claims within 10 days and settle within 90 days of receiving proof of loss. Unreasonable delays are prohibited.

Producer Responsibilities and Ethics

Fiduciary Duty

Insurance producers owe fiduciary duties to clients:

Duty of Care:

• Exercise reasonable skill and knowledge
• Conduct thorough needs analysis
• Recommend appropriate coverage
• Explain policy terms and limitations

Duty of Loyalty:

• Act in client's best interest
• Disclose conflicts of interest
• Avoid self-dealing
• Place client interest ahead of commission

Duty of Disclosure:

• Reveal material information affecting coverage
• Explain policy exclusions and limitations
• Disclose producer compensation
• Inform of changes in coverage or carrier

Duty of Confidentiality:

• Protect client personal information
• Maintain privacy of financial data
• Secure records and documents
• Follow data protection laws

Competence and Continuing Education

Oklahoma CE Requirements:

• 24 hours every 2 years for P&C producers
• Must include 3 hours of ethics
• Approved courses from DOI-recognized providers
• Completion by license renewal date

Ethical Obligation:

• Stay current on laws and regulations
• Understand products being sold
• Know policy coverage and limitations
• Maintain professional knowledge

Conflict of Interest Disclosure

Producers must disclose:

Material Conflicts:

• Ownership interest in recommended companies
• Bonus arrangements or volume incentives
• Relationships with affiliated companies
• Compensation from multiple sources

Best Practices:

• Written disclosure of compensation
• Explanation of how producer is paid
• Option for client to seek other quotes
• Documentation of disclosure

Oklahoma Privacy Laws

Consumer Information Protection

Oklahoma follows the NAIC Insurance Information and Privacy Protection Model Act:

Requirements for Insurers and Producers:

1. Notice Requirements

   • Provide privacy notice at application
   • Annual privacy notice to policyholders
   • Explain information collection and use
   • Disclose information sharing practices

2. Information Security

   • Protect personal and financial information
   • Secure electronic and paper records
   • Properly dispose of confidential information
   • Limit employee access to need-to-know

3. Consumer Rights

   • Access to personal information
   • Right to correct inaccurate information
   • Opt-out of information sharing
   • Notice of data breaches

Protected Information

Personal Information includes:

• Social Security numbers
• Driver's license numbers
• Financial account information
• Credit information
• Health information
• Any other non-public personal information

Sharing Restrictions:

• Cannot share with non-affiliated parties without consent
• Must honor consumer opt-out requests
• Can share with affiliates (with disclosure)
• Can share for business purposes (underwriting, claims)

Exam Tip: Oklahoma requires privacy notices and protects consumer information. Know that consumers have the right to opt out of information sharing with non-affiliated parties.

Advertising and Marketing Ethics

Oklahoma Advertising Requirements

Truth in Advertising:

• All advertisements must be truthful and not misleading
• Material facts cannot be omitted
• Must clearly identify as insurance advertisement
• Must identify insurance company

Required Disclosures:

• Producer name and license number on marketing materials
• Company name and contact information
• Premium rates must be as filed
• Coverage limitations must be disclosed

Prohibited Advertising:

• False or misleading statements
• Unfair comparisons to competitors
• Bait-and-switch tactics
• Unauthorized use of government seals or emblems

Social Media and Electronic Marketing

Special Considerations:

• Same advertising rules apply online
• Must maintain records of electronic communications
• Cannot use fake testimonials or reviews
• Must include proper disclosures even in limited space

Best Practices:

• Include disclaimer in social media bio
• Screenshot advertisements for records
• Monitor comments for regulatory concerns
• Comply with platform terms of service

Replacement Regulations

Notice to Applicant

When replacing existing coverage, producers must:

1. Complete Replacement Form

   • Document reason for replacement
   • Compare existing and proposed coverage
   • Explain advantages and disadvantages

2. Provide Comparison

   • Side-by-side coverage comparison
   • Premium comparison
   • Benefit comparison
   • Explain any waiting periods or exclusions

3. Obtain Signature

   • Client acknowledges replacement
   • Client understands consequences
   • Client affirms suitability

Insurer Responsibilities

Replacing Insurer Must:

• Obtain signed replacement form
• Send notice to existing insurer within 5 business days
• Provide copy of proposal to existing insurer
• Maintain replacement records for 5 years

Existing Insurer May:

• Contact policyholder to discuss replacement
• Provide conservation materials
• Offer to modify existing coverage
• Cannot threaten or coerce policyholder

Free Look Period

Oklahoma requires free look period for certain policies:

Individual Life and Annuities:

• Minimum 10-day free look
• Begins when policy delivered
• Full premium refund if returned

Long-Term Care:

• Minimum 30-day free look
• Protects consumers on complex products

Property & Casualty:

• No statutory free look requirement
• Some insurers voluntarily provide
• Cancellation provisions apply per policy terms

Disciplinary Actions and Penalties

Oklahoma Insurance Department Authority

The Oklahoma Insurance Commissioner can take action against producers who violate laws or regulations:

Administrative Actions:

• Issue cease and desist orders
• Impose fines and penalties
• Require restitution to consumers
• Order corrective action

License Actions:

• Suspend producer license (temporary)
• Revoke producer license (permanent)
• Deny license application
• Refuse license renewal

Criminal Referrals:

• Refer cases to district attorney
• Fraud prosecutions
• Felony charges for serious violations

Grounds for Disciplinary Action

Appeals Process

Producers have due process rights:

Procedure:

1. Notice: Written notice of charges
2. Hearing: Right to administrative hearing
3. Evidence: Present evidence and witnesses
4. Representation: Right to attorney
5. Decision: Written decision with findings
6. Appeal: Appeal to district court if dissatisfied

Timeline:

• Must request hearing within 30 days of notice
• Hearing scheduled within 60-90 days
• Decision issued within 30 days of hearing
• Appeal to court within 30 days of decision

Best Practices for Ethical Conduct

Client-First Approach

Always:

• Put client interests first
• Recommend coverage based on needs, not commission
• Disclose all relevant information
• Explain coverage gaps and limitations
• Document recommendations and advice

Never:

• Pressure clients into purchases
• Conceal material facts
• Exaggerate coverage benefits
• Minimize policy exclusions
• Prioritize commission over suitability

Documentation Standards

Maintain Records of:

• Client needs analysis
• Coverage recommendations
• Policy comparisons
• Client decisions and declinations
• All written communications
• Complaint resolutions

Retention Period:

• Minimum 5 years for P&C records
• Longer for potential liability claims
• Follow insurer requirements
• Comply with state and federal laws

Complaint Handling

When Client Complaint Arises:

1. Listen: Understand the complaint fully
2. Document: Write down all details
3. Investigate: Review policy and circumstances
4. Respond: Provide timely, honest response
5. Escalate: Involve insurer or management if needed
6. Resolve: Work toward fair resolution
7. Follow Up: Ensure client satisfaction

Reportable Complaints:

• Notify insurer of formal complaints
• Report to DOI if required
• Maintain complaint files
• Track patterns for improvement

Oklahoma Insurance Fraud

Definition

Insurance Fraud includes:

• Making false statements to obtain coverage
• Staging accidents or losses
• Inflating claim amounts
• Concealing information in applications
• Submitting fraudulent claims

Types of Fraud

Application Fraud:

• Lying on insurance application
• Concealing material facts
• Misrepresenting vehicle use or drivers
• Falsifying credit or claims history

Claims Fraud:

• Staging accidents
• Inflating losses
• False police reports
• Exaggerating injuries
• Claiming for losses that didn't occur

Premium Fraud:

• Misclassifying employees (workers' comp)
• Underreporting payroll
• Misrepresenting business operations

Consequences

Criminal Penalties:

• Felony charges possible
• Prison sentences up to 7 years
• Fines up to $25,000
• Restitution to victims

Civil Penalties:

• Policy cancellation or voiding
• Claim denial
• Repayment of benefits
• Treble damages (3× actual damages)
• Litigation costs

Producer Involvement:

• License revocation
• Criminal prosecution
• Civil liability
• Industry ban

Fraud Prevention and Reporting

Producer Responsibilities:

• Know your client (verify information)
• Question suspicious circumstances
• Document all interactions
• Report suspected fraud to insurer
• Cooperate with investigations

Oklahoma Insurance Fraud Unit:

• Part of Oklahoma Insurance Department
• Investigates insurance fraud
• Works with law enforcement
• Prosecutes fraud cases

Reporting:

• Insurers must report suspected fraud
• Producers should report to insurers
• Anonymous tips accepted
• Whistleblower protections apply

Exam Tip: Insurance fraud is a serious crime in Oklahoma. Producers have a duty to report suspected fraud and can face license revocation for participating in or concealing fraudulent activities.