Chapter 6-D: Unlawful and Unfair Practices

Which of the following BEST describes a "kickback"? A. Any compensation given as a reward for favorable treatment in an insurance transaction or interaction B. Intentional trickery aimed at convincing a policyholder to cancel one policy and purchase another C. False, maliciously critical, or derogatory statements about a competitor D. Something of value that is given to someone to convince him to purchase an insurance policy

A. Any compensation given as a reward for favorable treatment in an insurance transaction or interaction

Which of the following is NOT an Unfair Claims Settlement Practice in the state of Florida? A. Denying a claim when the insured has violated a policy condition B. Failing to acknowledge claims promptly C. Denying a claim without explanation D. Denying a claim without conducting a reasonable investigation

A. Denying a claim when the insured has violated a policy condition

In which of the following situations is an insurer justified in waiting more than 90 days after receiving proof of loss forms to pay a claim? A. The claimant has been unwilling to cooperate in the settlement process. B. The claimant has made several late premium payments within the past 2 years. C. The claimant filed a Personal Injury Protection claim. D. The claimant is making a third party claim.

A. The claimant has been unwilling to cooperate in the settlement process.

Which of the following is considered an Unfair Claims Settlement Practice in Florida? A. Withholding payment on a legitimate, undisputed claim, or delaying payment beyond 90 days B. Denying a claim on the basis of a policy exclusion C. Attempting to settle claims for less than the claimant is demanding D. Requesting more information before approving or denying a claim

A. Withholding payment on a legitimate, undisputed claim, or delaying payment beyond 90 days

After an insurance claim has been filed in Florida, how soon must the insurer respond to the claim? A. Within 14 days B. Within 30 days C. Within the time period requested by the claimant D. With reasonable promptness

A. Within 14 days

Which of the following insurers is NOT engaging in an Unfair Claims Settlement Practice? A. XYZ Insurance Company owns its own auto repair shop and sends policyholders' cars there to be repaired. B. Nellis Insurance Company does not usually send an explanation of why claims are denied, unless a policyholder specifically requests one. C. Antelope Insurance Company is understaffed and generally does not respond to claims until after a couple of months have passed. D. ABC Insurance Company routinely requires additional information from claimants but does not specify what information is needed.

A. XYZ Insurance Company owns its own auto repair shop and sends policyholders' cars there to be repaired.

In Florida, an insurer may not: A. wait 60 days before paying an undisputed PIP claim. B. require an insured to submit a preliminary claim report before moving forward on the claim. C. pay undisputed settlements under one portion of a claim before the entire claim has been settled. D. consult with the insured before instructing a body shop to conduct repairs on the insured's vehicle.

A. wait 60 days before paying an undisputed PIP claim.

John works for ABC Insurance. He is paid on a commission basis and needs to meet certain sales goals in order to draw a reasonable salary. To help in this endeavor, John regularly tells potential clients that XYZ Insurance and Integritas Insurance often fail to pay claims, and that they charge unreasonably high premiums. In speaking falsely of his competition, John has indulged in which unethical practice? A. Kickbacks B. Defamation C. Boycott D. Twisting

B. Defamation

RWW Insurance creates a radio promotion where they advertise that they will insure any car for $200 a year. They don't actually offer such a plan, but they figure they will be able to sell hundreds of policies to people who show up looking for the bargain. What type of unfair insurance trade practice does this behavior exemplify? A. Unfair discrimination B. False information and advertising C. Misrepresentations D. Illegal kickbacks

B. False information and advertising

John and Lucy both apply for policies with Acme Insurance at the same time. They are exposed to similar hazards and would present essentially the same amount of risk to Acme Insurance. Acme Insurance offers Lucy a premium policy at excellent rates, but restricts John to a very limited policy with high premiums. Acme Insurance may be guilty of: A. Boycotting. B. Unfair discrimination. C. Coercion. D. Misrepresentation.

B. Unfair discrimination.

What is an insurer required to do when it needs further information to process a claim? A. Go back to the policy and check for coverage details that it might have missed the first time B. Take the claim to arbitration for review C. Notify the claimant that additional information is needed D. Send instructions to the claimant about how to start the claims process again

C. Notify the claimant that additional information is needed

Martin works as an accountant for Smith Manufacturing. Smith Manufacturing has tasked Martin with finding an insurance provider to meet the company's needs, so Martin interviews several insurers. At the end of one interview with PRO Insurance, the insurance representative hands Martin an envelope containing $5,000 in cash, on the condition that Smith Manufacturing selects PRO Insurance as its insurance provider. What would we call the $5,000 in cash? A. A commission B. A moral hazard C. A premium D. A kickback

D. A kickback

According to the Unfair Settlement Practices Act, an insurer must respond to a claim reasonably promptly after receiving it. Which of the following is NOT an acceptable way of responding to a claim? A. Mailing the claimant a letter. B. Calling the claimant and documenting the conversation. C. Speaking to the claimant in person and documenting the conversation. D. Calling the claimant and leaving a voicemail message.

D. Calling the claimant and leaving a voicemail message.

Under which circumstance would it be legal for an insurer to charge one insured more than another insured for the same coverage? A. When the insurer is running a narrow profit margin B. Never, under any circumstances C. When the insured is in the statistical minority D. When the insured is statistically more likely to experience a loss

D. When the insured is statistically more likely to experience a loss

An insurer may not: A. charge higher premiums to elderly drivers. B. expand coverage without requiring the insured to sign a new, revised policy. C. distribute pamphlets or advertisements. D. try to settle a claim using an application that was altered without the knowledge of the insured.

D. try to settle a claim using an application that was altered without the knowledge of the insured.