7. General insurance Georgia general insurance laws-marketing practice

When comparing her insurance company's policies to those of Zenith Insurance, Melanie makes a misleading statement to convince an insurance prospect to terminate a policy with Zenith and buy one from Melanie's company. Melanie has engaged in Rebating Unfair discrimination Twisting Defamation

Twisting A person cannot make a false or misleading statement or comparison about an insurance policy in order to induce someone to lapse, surrender, terminate, retain, or convert an insurance policy or buy a policy with another insurer.

explain the unfair practice known as twisting.

A person cannot make a false or misleading statement or comparison about an insurance policy in order to induce someone to lapse, surrender, terminate, retain, or convert an insurance policy or buy a policy with another insurer

Which of the following has not committed an unfair trade or marketing practice? Able Co. and Baker Co., who agree to artificially lower their premiums to reduce competition. Melanie, whose majority of insurance sales are to her business associates Stephanie, who refers all applicants of a particular income level to another producer. Chip, who offers a free lunch to prospective customers who attend his insurance seminars

Chip, who offers a free lunch to prospective customers who attend his insurance seminars Offering a free meal or refreshments to prospective customers at a group sales presentation or seminar is not a prohibited rebate. The other cases describe controlled business, an attempt to monopolize the insurance business, and unfair discrimination.

explain the unfair practice known as Churning

Churning involves convincing a policyholder to buy another policy without having a reasonable basis for believing that the new policy is in the best interests of the policyholder. This unlawful activity generally increases the amount of commission a producer will receive. Churning is illegal and is a violation of the fiduciary responsibility a producer has to act in a client's best interest.

Conrad obtained a life insurance agent's license primarily to write insurance for his family members and friends. Which unfair trade practice has Conrad engaged in? Coercion Misrepresentation Rebating Controlled business

Controlled business The Commissioner will not grant or continue a license if he or she believes that an agent will use the license primarily to engage in controlled business. Controlled business is insurance that is written primarily on the lives, property, or risks of the producer or of the producer's family members, employer, or business associates.

Maureen, who received her producer's license within the last year, soon afterward found work as a teacher. She has rarely used her producer's license since then, but when she does, it is to place insurance for her colleagues and family. What unfair trade practice, if any, is she committing? Twisting Controlled business Replacement Churning

Controlled business The Commissioner will not grant or continue a license if the license is used primarily to engage in controlled business. Controlled business is insurance that is written primarily on the property or risks of the producer or of the producer's family members, employer, or business associates.

When meeting with a prospect to discuss life insurance, Tyler makes disparaging comments about the financial stability and reputation of a competitor to dissuade the prospect from purchasing its policies. Which unfair trade practice has Agent Tyler committed? Defamation Coercion Unfair discrimination Rebating

Defamation It is considered defamation to publish or circulate a false, deceptive, or misleading statement about-or a statement that is maliciously critical of or derogatory to-the financial condition of an insurer, when such a statement is designed to injure anyone in the insurance business.

Smith received $20,000 in premiums from his clients and used half of the funds to buy a new entertainment system for his office. Which of the following penalties may be imposed for this misconduct? Restitution Fine of up to $50,000 Felony conviction License suspension for up to six months

Felony conviction An agent may not commingle premiums with his or her personal funds and must promptly pay all funds to the insurer or insured. A willful violation is considered a misdemeanor or a felony if the amount involved is more than $500.

When holding insurance premiums and other funds, producers act in which of the following capacities? Fiduciary Guarantor Principal Trustee

Fiduciary Licensed producers hold insurance premiums and other funds in a fiduciary capacity. A willful violation of the duties imposed upon a fiduciary is considered a misdemeanor.

Malloy received $10,000 in premiums from clients on June 1. Which statement best describes his responsibilities with regard to these funds? He must promptly pay all premiums to the insurer and may not commingle them with his personal funds. He must deliver the premiums to the insurer within 5 days. He must immediately deposit the premiums in a trust account and remit them to the insurer within 10 days. He must deposit the premiums in a trust account and deliver them to the insurer within 21 days.

He must promptly pay all premiums to the insurer and may not commingle them with his personal funds. An agent may not commingle insurance premiums with personal funds and must promptly pay all funds to the insurer or insured. However, agents are not required to maintain a separate bank deposit for the funds of each principal, if the funds are readily ascertainable from the agent's accounts and records.

Which penalty can the Commissioner impose if an agent commingles premiums with his or her personal funds? License suspension or revocation Up to one year imprisonment Bond forfeiture Restitution

License suspension or revocation The Commissioner may impose a fine and place on probation, suspend, or revoke a person's license for violating the commingling rules. A willful violation is considered a misdemeanor or a felony if the amount involved is more than $500.

Maloney is eager to sell a new policy to a small business. When asked about the payment of claims by the firm's owner, Maloney states that policy claims are routinely paid upon proof of loss, even though he knows they are not. Which unfair trade practice has the agent committed? Coercion Twisting Misrepresentation Unfair discrimination

Misrepresentation It is considered misrepresentation to provide misleading information about an insurance contract.

can a producer receive a commission for soliciting an insurance contract if they had a temporary license at the time? Yes No ;and why

No, no one can sell, solicit, or negotiate an insurance contract while under a temporary license

Zelda, a producer selling property and casualty insurance, assures a prospective applicant that the insurance company she represents is backed by the protections of the Georgia Fair Access to Insurance Requirements (FAIR) Plan. This kind of assurance is most likely Prohibited at all times Recommended when selling property and casualty insurance Required when selling to certain individuals Highly regulated by the Insurance Department

Prohibited at all times It is an unfair trade practice to use the existence of the Georgia FAIR Plan for the purpose of selling property insurance.

To boost her insurance sales at the end of the year, Trudy offered potential clients a $250 cash gift card in exchange for purchasing a life insurance policy. Which ethical sales practice has Trudy violated? Churning Rebating Twisting False information

Rebating Agents cannot offer anything of value to induce someone to buy insurance, including a rebate of the premium, dividends, stocks or bonds, or paid employment. They also cannot pay or offer to pay anything of value that is not specified in the insurance contract. This unfair trade practice is known as rebating.

John, a producer, started offering potential clients courtside tickets to a professional basketball game in exchange for purchasing a life insurance policy. Which ethical sales practice has John violated? rebating churning replacement controlled business

rebating Offering anything of value that is not specified in the contract as an inducement to purchase insurance is considered rebating and is illegal.

Acme Insurance and Apogee Insurance agree to offer different premium rates for persons of equal risk within a particular class. They also agree to limit benefits paid to insureds within this class if the insureds live in certain towns in Georgia. Acme and Apogee are engaging in unfair and prohibited business practices false advertising insurance fraud acceptable marketing and underwriting practices

unfair and prohibited business practices Acme and Apogee are agreeing to an unreasonable restraint of trade in the insurance business of Georgia. Furthermore, they are engaging in unfair discrimination by charging persons of the same class and substantially equal risk different premium rates, and by paying different benefits to persons in this class.