Chapter 10 - Florida Laws and Rules Pertinent to Insurance

A person is required to be AT LEAST how old before he or she is licensed as an agent in most states?

18 years old

Within how many days must a licensee notify the Department of Financial Services of a change in address?

30 Days

Insurance agents must notify the Commissioner (or Director) of a change of home address within a MAXIMUM of how many days?

30 days

A group plan was recently terminated. In Florida, how many days are covered individuals guaranteed coverage after a group plan's termination?

31 days (In Florida, a covered employee is guaranteed coverage for an additional 31 days after their group plan is terminated.)

Florida requires that an insurance agent must complete __ hours of continuing education on the subject of law and ethics every two years.

5 hours

According to Florida law, an additional lapse notice must be issued after the standard grace period has expired for policyowners age...

64 years and older (According to Florida law, an additional lapse notice must be issued after the standard grace period has expired for policyowners age 64 and older.)

An insurance company that is incorporated in New Hampshire and does business in Florida is defined in Florida as...

A foreign insurer

Deceptive advertising is considered to be...

A form of misrepresentation

Which of the following individuals MUST be licensed as an agent?

A person who places insurance on behalf of anyone seeing insurance.

State insurance laws specifically allow the Commissioner (or Director) to issue a temporary license to which of the following individuals?

A surviving spouse of a deceased agent (State insurance laws specifically allow the Commissioner (or Director) to issue a temporary license to a surviving spouse of a deceased agent. This is designed to give the surviving spouse time to take over or dissolve their deceased spouse's insurance business.)

All of the following will result in the suspension of an agent's license EXCEPT...

Acting with fiduciary responsibility (- Intentionally misrepresenting the provisions of a policy - Forging a name on a insurance application - Being convicted of a felony Will result in the suspension of an agent's license)

Insurance companies that are organized in countries outside the United States are referred to as...

Alien Insurance companies

An example of an unfair trade practice is...

An agent making a material misrepresentation to the insured

All of the following entries are classified under the four principals areas of Florida insurance law EXCEPT...

An agent's commission (Policyowner's rights, policy provisions, and agent's licensing requirements are all classified under the four principal areas of Florida insurance law.)

An agent may legally share commissions only with...

Another agent who is licensed in the same line of insurance (An agent may legally share commissions only with another agent who is licensed in the same line of insurance.)

All of the following constitute an unfair trade practice under the State law EXCEPT...

Attempting to replace coverage written by another agent within one year of its issue date (Does not constitute an unfair trade practice under state law.)

Which of the following acts is an agent NOT authorized to do on behalf of an insurer?

Authorize claim payments

The insurer must provide a prospective buyer with...

Buyer's Guide and Policy Summary

Which of the following can an agent provide to help a prospective client understand and purchase the most appropriate product?

Buyer's guide

An example of sliding would be...

Charging for an additional product without the applicant's consent

As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?

Coercion

J is an agent who recently told a claimant that his rights might be impaired if he does not complete a release form within a specified time. What could this agent be found guilty of?

Coercion (Unfair trade or marketing practice in which an agent makes untrue threats to a customer to motivate a customer. For example, telling a claimant that his rights might be impaired if he does not complete a release form within a specified time.)

The Commissioner (or Director) of Insurance has the power to...

Conduct examinations of insurance companies

Before approving an application for a business entity acting as an agent, the Commissioner (or Director) must find that the business entity has...

Designated an agent to be responsible for compliance with insurance laws

The Insurance Commissioner (or Director) may examine the records of an insurance company in order to...

Determine the solvency of the company (The Insurance Commissioner (or Director) may examine the records of an insurance company in order to determine the solvency or financial strength of the company.)

In Florida, an insurer domiciled and incorporated in this state is called...

Domestic company

The Commissioner (or Director) of Insurance is empowered to...

Enforce state laws relating to insurance

T is an agent and when hired, is reminded that he has a responsibility to handle clients' funds in an honest and ethical manner. This responsibility is referred to as

Fiduciary responsibility

Which of the following is NOT a consequence for placing business with an unauthorized insurer?

First degree misdemeanor (Consequences for placing business with an unauthorized insurer: - Third degree felony - Having your insurance license revoked - Being held responsible for unpaid claims)

In Florida, when agents recommend changes be made for existing coverage, the agent must follow established procedures. The name of this rule is called the...

Florida Replacement Rule (The Florida Replacement Rule establishes the procedures agents must follow if the recommended changes be made to existing coverage.)

The Financial Services Commission may hold hearings...

For any reason deemed necessary (Specific for Florida, changes per state)

According to Florida law, which of the following statements accurately describes an admitted mail order insurance company?

It may solicit insurance business by mail without the assistance of a licensed agent.

An insurance company may compensate all of the following people EXCEPT...

Licensed agent not appointed by the company (The following can be compensated: - Retired insurance agency owner - Managing general agent of the company - Salaried employee of the company)

What is the main reason for regulating the insurance industry?

Maintain the solvency of insurance companies

Convincing a prospective insured to buy an insurance policy based on exaggerations is called

Misrepresentation

Which action could result in a hearing being ordered by the Department of Financial Services?

Performing insurance transactions without a license

A certificate of authority does which of the following?

Permits an insurance company to transact business in that state

The Bureau of Unclaimed Property is overseen by...

The Chief Financial Officer

If an insured sustains a loss on a policy sold by an agent through an insurance company that is not authorized to do business in Texas, which of the following would be liable?

The agent and the company (If an insured sustains a loss on a policy sold by an agent through an insurance company that is not authorized to do business in that particular state, both the agent and the company would be held liable.)

Which of the following statements regarding a nonresident insurance agent is CORRECT?

The agent must hold a similar license in their state of residence (If you are licensed in Florida to sell life and health insurance, you would would be able to get your nonresident license in South Carolina to sell life and health insurance as it is a similar license for the same lines of business.)

Which of the following factors is NOT considered when the Department of Financials Services determines if an agent's home is an insurance agency?

The amount of premium is collected at this location (The Department of Financial Services will not use the amount of premium collected at this location as factor in determining if an agent's home is an insurance agency. - Listing the address on the agent's business cards - Business solicitation is done at this location - Clients are met at this location Determines if an agent's home is an insurance agency)

An insurance broker is a representative of...

The insured

According to State insurance law, while transacting insurance business, agents act as representatives of...

The insurer (Agents act as representatives of the insurer.)

In order for a domestic, foreign, or alien insurance company to conduct business, it must be authorized by whom?

The state where they are conducting business

A foreign insurance company is one that is incorporated...

Under the laws of another state

Which of the following activities will NOT result in the suspension of an agent's license?

Working for a foreign worker (- Making malicious and false statements about an insurer - Replacing an insurance policy from one insurer to another based on misrepresentation - Misrepresenting any fact about an insurance policy These activities will result in the suspension of an agent's license)

A licensed agent must be appointed by an insurance company to solicit insurance in Florida. The agent's license will terminate if a certain period of time elapses without being appointed. How long is this period of time? *12 months *24 months *36 months *48 months

48 months (A licensed agent must be appointed by an insurance company to solicit insurance in Florida. The agent's license will terminate if 48 months elapse without being appointed.)

An insurance company may be judged guilty of false advertising if...

Exaggerates its dividends in a newspaper advertisement

Which Unfair Trade Practice involves making a false statement on an insurance application in order to receive money from an insurer?

Misrepresentation

An agent who tells a client that dividends are guaranteed may be guilty of...

Misrepresentation (Dividends are never a guarantee, thus the agent told a misrepresentation.)

Which Unfair Trade Practice involves an agent suggesting that an insurance policy is like a share of stock?

Misrepresentation (If you suggest to a client that an insurance policy is like a share of stock, you would be guilty of misrepresentation.)

During the course of an insurance transaction, if an agent makes a false or incomplete statement, he or she could be found guilty of

Misrepresentation (Making false or incomplete statements during the course of an insurance transaction = Misrepresentation)

An agent who makes misleading statements that lead to the termination of an existing insurance policy so that a new policy with another insurer can be taken out has committed...

Twisting

Inducing or attempting to induce any insured person through misrepresentation to lapse, forfeit, or surrender insurance is...

Twisting

Agents that have been licensed for less than six years must complete ____ hours of continuing education every two years.

24 hours

What is the maximum percentage of controlled business an agent may produce?

50%

If an insurance company is organized under the laws of New Jersey and licensed to do business here, it is considered which of the following in Texas?

A foreign company (If an insurance company is organized under the laws of NJ and licensed to do business in Texas, it is considered a foreign company in Texas.)

An insurance company incorporated under the laws of the state in which its home office is located is called a ____ company

Domestic company (A company under Florida law and located in Florida is called a domestic company.)

The act of an insurance company publishing misleading information about its policy's provisions is called

False Advertising

An insurance company that promises lower insurance rates than any other company in the country may be charged with...

False advertising

The Commissioner (or Director) of insurance may suspend, revoke or refuse to renew the license of an agent who...

Is found guilty of misrepresentation or fraud in obtaining the insurance license

In Florida, an element of an insurance transaction would be...

Issuing an insurance contract (Ordering an MIB report, setting up the sales appointment, and determining how much coverage is needed are NOT considered part of an insurance transaction.)

Which of the following professional organizations has its code of ethics incorporated into Florida law?

National Association of Insurance and Financial Advisors (NAIFA)

In Florida, agents are allowed to engage in rebating if

Offered to all insured in the same actuarial class

Which entity approves the insurance policy forms used in Florida?

Office of Insurance Regulation (OIR)

All of the following are defined as doing insurance business EXCEPT...

Selling mutual funds (- Taking or Receiving Insurance Applications - Delivering an insurance contract to a client - Indirectly acting as an insurance agent All activities defines as doing insurance business)

Which of the following is considered an accurate statement of an unfair trade practice?

Twisting involves an agent using misrepresentation to convince a policyowner to cancel their current policy so that they can purchase a new life insurance policy with another company (This is an example of an unfair trade practice specifically regarding replacement.)

An agent's license can be suspended or revoked by...

Writing primarily controlled business