California Life-Only & Accident and Health AgentCalifornia Law - GeneralMedium
The Insurance Commissioner has the power to issue a 'cease and desist' order. What is the primary purpose of such an order?
- ATo initiate a criminal prosecution against an insurance company.
- BTo compel an individual or entity to stop engaging in a specific illegal or prohibited activity.
- CTo impose a monetary penalty without any prior investigation.
- DTo immediately revoke an agent's license permanently.
Show answer & explanationAnswer & explanation
Correct answer: B. To compel an individual or entity to stop engaging in a specific illegal or prohibited activity.
A 'cease and desist' order is a formal directive from the Insurance Commissioner compelling an individual or entity to immediately stop engaging in an unlawful or prohibited practice. It's a tool for swift enforcement to prevent further harm.
Why the other options are wrong
- A. The Commissioner can refer for criminal prosecution, but a C&D order is an administrative action.
- C. While monetary penalties can follow, a C&D order's primary purpose is to stop the activity, and it usually follows some investigation.
- D. License revocation typically requires a hearing and is a more severe, often final, penalty.
Cease and Desist Order
A legally binding order issued by the Insurance Commissioner requiring an individual or entity to immediately stop engaging in a specific illegal or prohibited activity.
- Issued to halt unlawful practices.
- Can be temporary or permanent.
- Violation can lead to severe penalties (fines, license suspension).
Memory trick: Cease & Desist: Stop It Now, Or Face the Commissioner's Brow.