The Unlicensed Office Manager

Conduct	Problem
Nadia quotes limits, says "that's covered," and binds by text	Unlicensed activity. Soliciting, negotiating, or binding insurance requires a license. Unlicensed staff may do clerical, administrative, and referral work only.
Greg pays Nadia $200 per policy	Sharing commissions with an unlicensed person. Compensation tied to the sale is the classic indicator of unlicensed transacting; salary for clerical work is fine, per-policy bonuses are not.
No notice of the Nevada revocation	Failure to report an administrative action. Licensees must notify the Utah Insurance Department of administrative actions and criminal prosecutions taken against them in other jurisdictions, within the timeframe the statute and rules prescribe.
$4,800 premium in the operating account, spent on payroll	Breach of fiduciary duty / commingling and misappropriation. Premiums held on behalf of insurers or clients are trust funds. They must be segregated and remitted per the agency agreement; using them as working capital converts a bookkeeping lapse into grounds for license revocation and potential criminal exposure.

Underlying principle: licensing exists so that the public deals with someone who has demonstrated competence and who is accountable to the Department. Layering unlicensed people into the sales process defeats that, and paying them per policy creates the incentive to do it again.

Immediate corrective steps:

1. Stop the unlicensed activity today - Nadia may not quote, bind, or advise on coverage. Reassign her to genuinely clerical duties, remove the per-policy bonus, and retrain her and any other staff on where the line falls.
2. Notify the Utah Insurance Department of the Nevada revocation, in writing, with full disclosure and explanation. Voluntary disclosure is treated far differently than discovery during an examination or a consumer complaint.
3. Restore the trust funds - deposit $4,800 into the premium trust account (or remit immediately) and reconcile all pending premium. Adopt written procedures for premium handling and segregation.
4. Notify the affected carriers as their agency agreements require, and confirm the bound commercial policy was actually placed with an authorized insurer.
5. Review every file Nadia touched to determine whether coverage was bound that the insurer never accepted.

Exposure:

• License suspension, revocation, or conditional licensure; monetary penalties per violation.
• Possible restitution to clients and carriers.
• Civil liability to any client who relied on an unlicensed statement of coverage.
• If the agency is a business entity, the designated licensed responsible person is also answerable for the agency's conduct.
• Misappropriation of premium can support criminal referral, independent of the Department's administrative action.

Answer carefully - validity and discipline are separate questions.

• The license status of the person who took the request does not, by itself, void a policy issued by an authorized insurer. If coverage was actually bound and the insurer accepted the risk and the premium, the policy typically stands, and the insurer remains responsible for its terms.
• The real risk is whether a binding was ever effected. Apparent authority and reliance matter: if the client reasonably believed coverage was in place and the agency held itself out, a court may hold the agency or insurer to the coverage even where internal authority was lacking.
• Never tell the client "it's fine" before verifying in writing with the insurer that the policy was issued, the effective date, and the exact limits. If there is a gap, the agency must place coverage now and disclose the gap.
• Errors-and-omissions implications: a coverage gap created by unlicensed staff is a textbook E&O claim. Notify the E&O carrier promptly and document the file, because late notice is itself a coverage defense.
• Do not speculate in writing about the Department's investigation in client-facing communications; answer the coverage question and let counsel handle the rest.