Ideally, everyone working in insurance would operate with perfect honesty at all times. In practice, life — and careers — don’t always unfold that neatly. When someone has a felony conviction tied to fraud, dishonesty, or a violation of trust, federal law creates significant barriers to entering or reentering the insurance industry.
That’s where 18 U.S. Code § 1033 comes into play. And for individuals impacted by it, the key to moving forward is often something called a 1033 waiver.
Understanding the 1033 Waiver
Within the insurance world, 18 U.S.C. § 1033 is rarely referenced by its full legal title. Instead, it’s best known for the exception it allows.
A 1033 waiver is written permission granted by a state insurance regulator that allows an individual with a qualifying felony conviction to participate in the business of insurance. Without this consent, federal law prohibits anyone convicted of certain crimes from working in insurance-related roles that affect interstate commerce.
If someone with a disqualifying conviction attempts to apply for licensing or undergoes a background check without securing a waiver first, the process usually ends quickly — and not favorably.
Important note: This article is informational, not legal advice. Insurance regulation varies by jurisdiction, and individuals and organizations are responsible for understanding and complying with all applicable laws.
How Federal Law Entered a State-Regulated Industry
Insurance regulation primarily happens at the state level, which raises a fair question: why does a federal statute apply at all?
The answer lies in the crime legislation of the 1990s. In 1994, Congress passed the Violent Crime Control and Law Enforcement Act, a sweeping law aimed at cracking down on both violent offenses and large-scale financial misconduct. Tucked within that legislation were provisions targeting white-collar crimes — including fraud committed within the insurance sector.
Because insurance often crosses state lines, Congress asserted federal authority over individuals whose misconduct affected interstate commerce. The result was Section 1033, which established automatic prohibitions for certain criminal convictions — along with a path to seek regulatory forgiveness through a waiver.
What Section 1033 Prohibits
In simple terms, Section 1033 bars individuals from participating in insurance if they’ve been convicted of a felony involving dishonesty or a breach of trust and their work affects interstate commerce.
Examples of prohibited conduct include:
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Misrepresenting property or financial values to secure excessive coverage
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Theft, embezzlement, or misappropriation of funds
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Providing false information about an insurer’s financial health
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Interfering with regulatory oversight through coercion or deception
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Knowingly allowing a prohibited individual to operate in insurance
Unless written consent is granted by an authorized insurance regulator, individuals meeting these criteria are legally blocked from working in insurance — regardless of job title or position in the distribution chain.
What This Means in Practice
The reach of Section 1033 is intentionally broad. According to regulatory guidance, nearly all insurance-related activities can fall under its scope if they involve interstate commerce.
For insurers, MGAs, agencies, and hiring managers, this means asking critical questions during onboarding:
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Has the individual been convicted of a felony?
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Did that conviction involve fraud or a breach of trust?
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Does the individual’s role affect insurance operations across state lines?
If the answer to all three is yes, a 1033 waiver is required — not optional.
It’s also important to remember that federal approval doesn’t override state law. Even with a waiver in hand, an individual may still face state-specific restrictions or additional licensing hurdles.
NAIC Guidance on 1033 Waivers
The National Association of Insurance Commissioners (NAIC) provides clarity where federal law leaves ambiguity. One of its most important contributions is defining who has authority to grant a waiver.
Generally:
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Producers and license holders should apply through their resident state insurance department
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Carrier, MGA, or agency employees, including executives and board members, should apply in the state where they primarily work and the entity’s domiciliary state
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Consultants or unlicensed professionals may need approvals from multiple jurisdictions, including their home state and the state tied to their conviction
To prevent “forum shopping,” the NAIC encourages states to share waiver applications with other commissioners. If any jurisdiction denies a request, other states must acknowledge that denial before reconsidering the application.
In short, a denial in one state makes approval elsewhere far more difficult.
What the 1033 Waiver Application Involves
While many states publish applications online, the process itself is detailed and demanding. The responsibility rests entirely with the applicant to demonstrate rehabilitation and trustworthiness.
A typical waiver application includes:
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Personal and identifying information
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Background checks and disclosure statements
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Education and employment history
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Financial disclosures and net worth statements
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Full explanations of criminal convictions
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Documentation of prior waiver applications
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Character references
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Additional materials requested by regulators
Regulators evaluate each application based on two core considerations:
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The likelihood of repeat misconduct
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Whether approval would serve the best interest of the insurance-buying public
If granted, the waiver must be issued in writing and explicitly reference Section 1033.
Why State Rules Still Matter
Not all states treat 1033 waivers the same way. Some require lengthy standalone applications, others integrate the process into producer licensing, and a few — such as Florida — do not grant waivers at all.
Because requirements vary widely, both individuals and organizations must consult the relevant state insurance departments before assuming eligibility or approval.
Prevention Is Still the Best Policy
A 1033 waiver can provide a second chance, but it’s a complicated, time-consuming, and uncertain process. For carriers and agencies, strong compliance practices and thorough onboarding are far easier than navigating remediation after the fact.
Understanding how Section 1033 works — and when it applies — helps protect both consumers and the industry as a whole. In insurance, trust isn’t just a value. It’s a legal requirement.
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