(a)(1) An agent, broker, premium finance company, or any other person, other than the insured, responsible for the payment of a premium is obligated to pay any unpaid collected premium held by such person at the time of the declaration of insolvency, whether earned or unearned, and any unpaid earned premium, all as shown on the records of the insurer. An agent, broker, premium finance company, or any other person shall have no obligation to pay an uncollected unpaid unearned premium to the liquidator. The liquidator has the right to recover from that person any part of an unearned premium that represents that person's commission. Credits or setoffs or both are not allowed to an agent, broker, or premium finance company for any amounts advanced to the insurer by the agent, broker, or premium finance company on behalf of, but in the absence of a payment by, the insured.

(2) An insured is obligated to pay any unpaid earned premium due the insurer at the time of the declaration of insolvency, as shown on the records of the insurer.

(b) Upon satisfactory evidence of a violation of this section, the director or his designee may pursue either one or both of the following courses of action:

(1) Suspend or revoke or refuse to renew the licenses of the offending party or parties.

(2) Impose a penalty of not more than one thousand dollars for each and every act in violation of this section by the party or parties.

(c) Before the director or his designee takes any action as set forth in subsection (b), he shall give written notice to the person, company, association, or exchange accused of violating the law, stating specifically the nature of the alleged violation and advising of an opportunity of hearing to be held at least ten days thereafter. After the hearing, upon failure of the accused to appear at the hearing, or upon failure to request the hearing, the director or his designee, if he finds a violation, shall impose the penalties under subsection (b) he considers advisable.

(d) When the director or his designee takes action in any or all of the ways set out in subsection (b), the party aggrieved may appeal from the action to the Administrative Law Court as provided by law.

HISTORY: Former 1976 Code Section 38-5-2220 [1982 Act No. 384, Section 33] recodified as Section 38-27-520 by 1987 Act No. 155, Section 1; 1993 Act No. 181, Section 621; 1994 Act No. 368, Section 1.