5 Worst States for Insurance Producer Fines

July 2, 2017 | By Think Advisor

Some states hit insurance producers with a lot more than others, and some are more likely to impose a fine than to get a producer to pay any ill-gotten money back to the customers.

The National Association of Insurance Commissioners gives a little information about trends in producer fines in volume one of its new 2016 Insurance Department Resources Report.

The NAIC is a Kansas City, Missouri-based group for insurance departments. It creates the resources report to show how many people and how much cash each state devote to regulating insurance, and how much insurance compliance activity each state handles.

Scammers target the mighty and the lowly, especially during tax season.

The report includes a great deal of interesting information about how insurance regulation works.

California, the state with the biggest department, has an insurance department staff of 1,392 and a 2016 budget of $204 million. Its deputy and assistant commissioners earned annual salaries ranging from $61,800 to $195,696.

Two U.S. territories, American Samoa and the U.S. Virginia Islands, had no insurance regulators in 2016. The state with the smallest insurance department staff, had 26 employees and an annual budget of $3 million. Wyoming's deputy and assistant commissioners earned annual salaries ranging from $84,960 to $127,440.

About half of state insurance departments expect to have a budget over $15 million in 2018, and about half expect to have 2018 budgets under $15 million.

Insurance agents and brokers might find the section on regulation of insurance producers interesting. The number of insurance producer fines in each state ranges from none to 4,671.

Here's a look at the number of insurance producer fines in each state. We also give the number of producer-related cases involving restitution. A low number of restitution cases might mean that producers in a state rarely harm customers, or that producers who do harm customers are unable to pay restitution, but it could also have something to do with how a state regulates producers.

New Mexico imposed no fines on producers in 2016

5. California

Number of licensed producers: 396,891

Number of fines in 2016: 158

Total value of fines: $1,176,666

Average amount per fine: $7,447

Number of producers who had to pay restitution to victims: 2

Number of fines in 2014: 124


4. Ohio

Number of licensed producers: 221,857

Number of fines in 2016: 207

Total value of fines: $60,550

Average amount per fine: $292

Number of producers who had to pay restitution to victims:

Number of fines in 2014: 0


3. Louisiana

Number of licensed producers: 127,141

Number of fines in 2016: 303

Total value of fines: $129,196

Average amount per fine: $426

Number of producers who had to pay restitution to victims: 0

Number of fines in 2014: 0


2. Massachusetts

Number of licensed producers: 130,514

Number of fines in 2016: 393

Total value of fines: $130,280

Average amount per fine: $331

Number of producers who had to pay restitution to victims: 39

Number of fines in 2014: 41


1. Delaware 

Number of licensed producers: 88,736

Number of fines in 2016: 4,671

Total value of fines: $1,260,850

Average amount per fine: $270

Number of producers who had to pay restitution to victims: 0

Number of fines in 2014: 5,671


In the technical notes for the producer fine table, the NAIC says Delaware has a large number of fines partly because late fees on license renewals are classified as fines.