State RegulationsIL specificDifficulty 3/5
An unlicensed office employee regularly quotes premiums, explains policy benefits to prospects, and takes applications. The insurer pays her a fixed amount for each application she completes. Who has violated Illinois law?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Illinois law cuts both ways on unlicensed compensation. 215 ILCS 5/500-80 restricts payment of commissions and other compensation to licensed producers, and 215 ILCS 5/151 makes accepting a commission for insurance activity by an unlicensed person unlawful on the recipient's side as well. Quoting, selling, and taking applications are producer activities, so both the payer and the payee are exposed.
Why the other options are wrong
- B) The employee is not alone; the insurer's payment of compensation for unlicensed activity is independently unlawful under 215 ILCS 5/500-80.
- C) The payment is only half of the violation; 215 ILCS 5/151 makes accepting compensation for unlicensed insurance activity unlawful by the recipient too.
- D) General supervision is no defense; the activities described, including quoting and taking applications, require a producer license under Illinois law.
Memory hook
Paying and getting paid both break the rule: licensing runs through the whole commission chain.