Insurance departments ascertain that insurance producers, agents and brokers are competent and of good moral character before issuing them licenses to provide insurance products.

Sometimes when a state department refuses to issue a license, the proposed licensee attempts to force the state to give him or her a license by litigation. A seasoned and competent insurance department will keep the bad apples out of the business.

In Lagueux v. Leonardi, Thomas B. Leonardi, Connecticut's insurance commissioner, refused to issue an insurance producer's license to the plaintiff Michael J. Lagueux. On appeal, Lagueux claimed the court erred in not holding that the plaintiff was entitled to such a license under general statutes.

CASE HISTORY

The plaintiff applied for a Connecticut resident insurance producer license through the Department of Insurance (DOI) on June 30, 2011. Lagueux, as required by statute, recounted on his application facts surrounding certain previous criminal convictions. These included four counts of harassment in the second degree in 1996; another two counts of harassment in the second degree in 1996; criminal trespass in the second degree in 1998; and one count of harassment in the second degree in 1999.

The plaintiff also disclosed a probation violation from 1999. As part of his probation he was sentenced to psychiatric treatment. He violated probation by refusing to sit with the psychiatrist.

After reviewing the plaintiff's application, the DOI denied his request for an insurance producer license. Amy Stegall, program manager for the fraud and investigations unit, testified before the hearing officer about the department's decision. She stated that insurance producers are in contact with members of the public in their businesses and homes, and have access to consumers' personal information. She further testified that the nature of the plaintiff's offenses and the language used in the letter accompanying his application “caused concern because of [his] hostile tone, [the fact that he] did not comply with court ordered actions and willingly violated his probation.”

Lagueux appealed, and the trial court reversed and remanded the plaintiff's appeal to the department, finding that the commissioner committed an error of law by not explaining in detail the reason for denial.

CASE ANALYSIS

It is the obligation of the licensing body to only allow people of high moral character to enter the business of insurance and deal with the insurance-buying public.

Although the court of appeals concluded that the commissioner had discretion beyond the statutes to deny a license, it could not do so with impunity. Law requires the DOI to determine whether the trial court properly remanded the case to the department. In this case, the hearing officer found that the commissioner properly denied the plaintiff's application.

The hearing officer, however, never made complete factual findings as a trial court would have done. As a result, the appellate court sent the case back to the hearing officer to determine whether the DOI's decision to deny the plaintiff an insurance producer license was appropriate.