Chapter 12 Pt. 2

Guaranty Associations

All insurance companies licensed to write life and health insurance are required to be members of the association. If an insurance company should fail, the maximum amount of protection provided by the association is as follows: Life insurance death benefit: $500,000 per insured life Life insurance cash surrender: $100,000 per insured life Health insurance benefit: $100,000 per insured person Annuity benefits (Present Value): $500,000 per contract owner Annuity Benefits (Cash Surrender Value): $100,000 In addition, no individual may receive in total benefits of more than $500,000 with respect to any one life.

HIPAA Penalties

For a knowing violation of the information privacy rules - issue a cease and desist order - impose a monetary policy of no more than $500 per violation • Any person who violates a cease and desist order may be subject to a monetary fine of $10,000 per violation, a fine of $50,000 for violations that have occurred as a frequent business practice, and suspension or revocation of license.

Boycott

Form of intimidation in which an individual or group refuses to do business with a company or individual, either to drive them out of business or to force them to act in a certain way

Admin Penalties

If a producer violates any New Jersey standards for conductThe producer may file a request for a hearing within 20 days of receipt of the notice. The Department must then schedule a hearing within 60 days of receiving the written request. If a producer does not request a hearing, he must pay the fine within 20 days of receiving notice of the administrative penalty.

Revocation

If a producer's license is revoked, he must wait 5 years before applying for reinstatement - 10 years before he may own a share of an insurance organization

Unfair Discrimination

It is illegal to • refuse to insure or to limit the amount of coverage offered to an individual solely because of the individual's sex, marital status, race, religion, or national origin. o refuse to insure solely because another insurer has refused to write a policy or has cancelled an existing policy on that person; or • terminate or modify coverage or refuse to renew coverage solely because the applicant or insured is mentally or physically impaired. o Making to any person, or placing before the public, any false statement of financial condition of an insurer with intent to deceive.

HIPAA

No insurance institution, agent or insurance-support organization may prepare or request an investigative consumer report about an individual in connection with an insurance transaction involving an application for insurance, a policy renewal, a policy reinstatement or a change in insurance benefits unless the insurance institution or agent informs the individual

Branch Offices

The licensee will advise the Department in writing by hard copy or electronic means of the closing of any branch office within 30 calendar days of the closing. A branch office will be open to the public during such hours and days of the week as to provide the public reasonable access to the branch office. The branch office will post the hours and days of operation in a manner reasonably calculated to inform the public. No branch office may engage in insurance related conduct unless at least one licensed individual insurance producer is present. - Failure to notify the Dept. of the opening or closing f a branch location is subject to a $500 penalty

Sam Agent has received a notice that his license will expire unless he takes action. Sam must do which of the following in order to maintain his license. • A: All of the above • 1. Pay the renewal fee in a timely manner • 2. Satisfy all requirements for continuing education • 3. Have no outstanding unsettled disciplinary action

Whenever an insurance producer applicant has not demonstrated the qualifications required of him by law, the Department must: • A: All of the Above • 1. Tell the applicant in writing that the license request is denied • 2. Explain why the license request has been denied • 3. Advise the applicant of the right to request a hearing

A producer sat down with a prospective client to discuss a long-term care policy. He used a computer program to outline and emphasize his remarks. The visual presentation contained the principal benefits of the policy he was trying to sell. Although he mentioned that it also had "the usual" conditions, he did not include those in his visual presentation or specify what they were. The producer was

engaging in misrepresentation - Statements are deemed to be misrepresentations if, when taken in the context of the whole presentation, they may tend to mislead or deceive a person. By detailing only the benefits, the producer was not giving a fair representation of the policy.

Coercion

generally manipulates through the prospect of something desirable. An agent's subtly suggested offer to recommend the prospective client for membership in a selective club if the person purchases a particular policy is coercive, for instance.

Intimidation

manipulates through the threat of a negative result - loss of business or denial of coverage

The HITECH Act is a federal law that is similar to HIPAA. It requires state regulators to impose more stringent requirements for handling patient privacy. When there is a breach of personal information, individuals must be aware of the breach. Breach does not include unintentional acquisition if -

o 1. Acquisition, access, or use was made in good faith and within the course and scope of the employment o 2. Information is not further acquired, accessed, used, or disclosed by any person o 3. Inadvertent disclosure from an individual who is otherwise authorized to access protected health information at a facility operated by a covered entity

Lapse less then 1 year

o evidence of completion of continuing education credits, o provide a certification that the applicant did not contract insurance business during the unlicensed period, o has paid the late renewal fee.

Rebating

If a buyer of an insurance policy is given anything of significant value as an inducement to purchase or renew a policy

HIPAA

No insurance institution, agent or insurance-support organization shall use or authorize the use of pretext interviews to obtain information in connection with an insurance transaction

Maintenance of Records

Records must be maintained for a period of 5 years after termination of coverage - Electronic records must be printed at least once every 30 days

Twisting

Unethical act of persuading a policy owner to drop a policy for the purpose of selling another policy without regard to possible disadvantages to the policy owner

Maintenance and Duration or License

- Individual producer licenses expire every 2 years on the last day of the licensee's birth month - Before the expiration of the current license term: must submit a completed renewal application and pay the required renewal fees - RENEWALS MUST BE SUBMITTED WITHIN AT LEAST 10 DAYS BEFORE A PRODUCER'S LICENSE EXPIRES

Fraud Prevention

Fraudulent insurance acts include acts committed by any person knowingly and with intent t injure, defraud, or deceive. • Presents or causes to be presented any written or oral statement as part of, or in support of or opposition to, a claim for payment or other benefit knowing that the statement contains any false or misleading information concerning any fact or thing material to the claim • Conceals or knowingly fails to disclose the occurrence of an event which affects any person's initial or continued right or entitlement to (a) any insurance benefit or payment or (b) the amount of any benefit or payment to which the person is entitled; • Knowingly assists, conspires with, or urges any person or practitioner to violate any of the provisions of this act.

HITECH Act

It requires state regulators to impose more stringent requirements for handling patient privacy. When there is a breach of personal information, individuals must be aware of the breach. • The term ''breach'' means the unauthorized acquisition, access, use, or disclosure of protected health information which compromises the security or privacy of such information, except where an unauthorized person to whom such information is disclosed would not reasonably have been able to retain such information.

Commissions

Only a producer rating as a broker or constant may charge a fee to a policy holder for his services - If the producer is acting as an agent he may not charger a fee

Premiums

The producer is required to witness an applicants signing of the application - All funds must be remitted to the insurer within 5 business days of receipt - Any return premiums that are due must be paid to the insured within 5 business days

Defamation

• Defamation is any false, maliciously critical, or derogatory communication - written or oral - that injures another's reputation, fame, or character

Fraud Prevention

• If a person is found to have violated the act, the Commissioner may either bring a civil action for a penalty of not more than $5,000 for the first violation, $10,000 for the second and $15,000 for each subsequent violation

HIPAA

• Individuals may request access to recorded personal information and must receive it within 30 days of the request. Individuals may request correction, amendment, or deletion of personal information.

Commissions

An individual may be paid a commission if he is not licensed only if he held a license at the time of the original sales transaction.

Unfair Methods of Competition: Misrepresentation

• A misrepresentation is simply a lie. o Any statement representing a health discount plan (HMO) as a form of insurance is a misrepresentation. • Relating only the benefits and not including a description of conditions or limitations is misrepresenting the policy. o Suggesting a policy is better suited for a prospective applicant than the facts would indicate to a reasonable person is misrepresentation. • Statements are deemed to be misrepresentations if they may tend to mislead or deceive a person. It is illegal to make any misleading representations or comparisons of companies or policies to insured persons to induce them to forfeit, change or surrender their present insurance.

Denial/ Revocation/ Suspension

• Providing incorrect, misleading, incomplete or materially untrue information in the license application; o Violating any insurance laws, or violating any regulation, subpoena or order of the Commissioner or of another state's insurance regulator; • Improperly withholding, misappropriating or converting any monies or properties received in the course of doing insurance business; o Intentionally misrepresenting the terms of an actual or proposed insurance contract; • Having been convicted of a felony or crime of 4th degree or higher; o Committing an unfair trade practice; • Using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of insurance business; o Having an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory; • Knowingly accepting insurance business from an unlicensed insurance producer o Failing to comply with an administrative or court order imposing a child support obligation; • Failing to pay income tax o Intentionally withholding material information or making a material misstatement in an application for a license; • Committing any fraudulent act; o Knowingly facilitating or assisting another person in violating any insurance laws; • Failing to notify the Commissioner within 30 days of his conviction of any crime, indictment or the filing of any formal criminal charges, or the suspension or revocation of any insurance license or authority by a state, other than New Jersey, or the initiation of formal disciplinary proceedings in a state, other than this State, affecting the producer's insurance license.

Cancelation/ Reinstatement

• the Department must advise the applicant in writing that the license requested is denied, specify the reason for the denial, and advise the applicant of the right to request a hearing. • the Department must find that the matter is a contested case and transmit it to the Office of Administrative Law for hearing.