State RegulationsPA specificDifficulty 2/5
The Pennsylvania Insurance Department schedules an examination of an agency's transaction records, and the agency's owner refuses to make the books available. What is the consequence?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under 40 P.S. § 323.3-4, the Insurance Commissioner's examination authority over producer books and records is mandatory in nature: licensees must make their records available to the Pennsylvania Insurance Department. Refusing an examination is not a neutral act of privacy; it is a separate failure to comply with the producer's statutory obligations and exposes the licensee to disciplinary action in its own right.
Why the other options are wrong
- A) The records are the agency's property, but the statutory right of examination under 40 P.S. § 323.3-4 means ownership does not block access.
- B) The department examines the licensee's own books; it is not required to reconstruct them from client copies because of the producer's refusal.
- C) Private mediation with insurers has no place in a statutory examination; the obligation runs to the Pennsylvania Insurance Department.
Memory hook
Saying 'no' to the examiner is its own violation — cooperate or compound.