Delaware State (LIFE)
What are the license requirement?
-A person cannot sell, solicit, or negotiate insurance in this state unless licensed for the appropriate line(s) of authority. -The purpose of licensing is to ensure that a producer meets educational and ethical standards required to fulfill producer's responsibilities to the insurer and to the public.
What applicants are exempt fro written examinations?
-An individual who applies for an insurance producer license in this state who previously held a license for the same line of authority in another state. -This exemption is only available is the person is currently licensed in that state or if the application is received within 90 days of the cancellation of the previous license. -A nonresident insurance producer who moves to Delaware and submits a license application within 90 days of establishing legal residence; -A license as a producer for title insurance who is an attorney; -A license as a producer for travel accident and baggage, or for an automobile club.
What are the insurance commissioners duty?
-Grant or deny applications for Certificates of Authority -Examine each insurer, rating organization, or any other organization or association authorized to transact insurance in this state -Enforce and execute the duties imposed by the Insurance Code -Adopt and promulgate rules and regulations -Have the powers and expressed authority to carry out all duties -Enforce payment of fee, charges and taxes -Have additional rights, powers and duties provided by other laws of Delaware.
What are the penalties for violating the laws of unfair practices and methods of competition?
-If the act was unintentional, penalty of not more than $1,000 for each violation, not to exceed an aggregate of $100,000; I-f the act was intentional, penalty of not more than $10,000 for each violation, not to exceed an aggregate penalty of $150,000 in any 6-month period; -Suspension or revocation of the person's license for intentional violations; -Any other relief deemed reasonable by the Commissioner.
What are some causes of an insurer being on probation, suspend, revoke or refuse to issue or renew an insurance producer's license?
-Providing incorrect, misleading, incomplete or materially untrue information in a license application; -Obtaining or attempting to obtain a license through misrepresentation or fraud; -Having been convicted of a felony; -Having admitted or been found to have committed any insurance unfair trade practice or fraud; -Having an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory;-
When must the commissioner notify an applicant for the reason of denial or nonrenewal?
-The applicant or licensee may make written demand for a hearing from the Commissioner within 10 days. The hearing must be held within 20 days.
When must the written application be filed and when is the hearing held?
-The application must be filed in the Department within 90 days after act was violated. - the hearing must be held within 30 days after filing of the application.
What must be disclosed in consumer credit insurance?
-The purchase of consumer credit insurance is optional and not a condition of obtaining credit approval; -Whenever more than one kind of consumer credit insurance is available to the debtor, an explanation whether the debtor has an option of purchasing each kind separately; -Conditions of eligibility; -Description of coverage; -Conditions for coverage cancellation: within the first 30 days the policy may be returned for a full refund of premiums; -after that, the debtor may cancel the policy at any time during the term of the loan and receive a refund of unearned premium.
What occur if failure to complete continuing education?
-Upon the Department's request or audit, each licensee will have 30 days to produce records of continuing education. -be subject to an administrative penalty up to $2,000 and suspension of license for 1 year. -Submission of false or fraudulent information will result in a $15,000 fine and permanent revocation of license.
What is consumer credit life?
-aka credit life and health insurance covers the life and disability of a debtor during the time a loan is outstanding. -will pay off the balance of a loan in the event of the death or disability of the debtor. -is usually written as decreasing term insurance, and it may be written as an individual policy or as a group plan. The creditor is the owner and the beneficiary of the policy although the premiums are generally paid by the borrower (or the debtor).
Enforcement/ Penalities of consumer credit
-may impose an administrative penalty (not to exceed $15,000 per violation for individual producers, and $50,000 for companies). -The Commissioner may also revoke or suspend the license or certificate of authority of the person or company guilty of repeated willful violations. -Before the Commissioner may impose a penalty, the producer in violation must be given notice of the violation and an opportunity for a public hearing.
Who does the commissioner regulates and what is the purpose?
-regulates insurance companies authorized to do business in this state. -ensure that the companies remain solvent and conduct business in compliance with state laws and regulations pertaining to licensing, policy forms, rates, claims, and market conduct.
How can a producer be appointing insurer?
-the appointing insurer must file a notice of appointment with the Commissioner within 15 days from the date the agency contract is executed or the first insurance application is submitted. -The Commissioner will then within 30 days verify the producer's eligibility for the appointment. -If a producer is determined ineligible for appointment, the Commissioner will notify the insurer within 5 days. -It is the insurer's responsibility to pay an appointment fee for each appointed producer.
What are the exemption from licensing?
A director or employee of an insurer whose activities are limited to executive, administrative, managerial, or clerical; The director or employee of a special agent assisting insurance producers by providing technical advice and assistance to licensed insurance producers; A person who secures and furnishes information for group insurance or performs administrative services related to mass-marketed property and casualty insurance; An employer or association engaged in the administration or operation of a program of employee benefits for the employer's or association's own employees; Employees of insurers or organizations engaging in the inspection, rating or classification of risks, or in the supervision of the training of insurance producers and who are not individually engaged in the sale of insurance; A person whose activities are limited to advertising without the intent to solicit insurance; A nonresident who sells, solicits or negotiates a contract of insurance for commercial property and casualty risks to an insured with risks located in more than one state insured under that contract; A salaried full-time employee who counsels or advises his or her employer relative to the insurance interests of the employer or subsidiaries.
Continuing education (CE)
rules are established to protect the public by maintaining high standards of professional competence in the insurance industry, and to maintain and improve the insurance skills and knowledge of licensed producers.
How is examination of foreign or alien license done?
the Commissioner may accept an examination report prepared by the insurance department for the company's domestic state so long as their insurance department was accredited under the National Association of Insurance Commissioners.
When can an appeal be made and within what period?
- can only be taken from an order on hearing or if the Commissioner has refused or failed to hold a hearing as required by the State insurance regulations. Any person involved in such hearing or whose interests were directly affected by the refusal, may appeal within 60 days after the order on hearing has been mailed or delivered, or after the Commissioner has refused or failed to make an order on hearing or to grant a hearing.
When must a licensee notify the commissioner of an address change and what can happen if they fail to do so?
- must notify the Commissioner of any change in residential or business address within 30 days. -A license may be suspended for failure to give notice of a change of address.
Participating policies
- policyowners are entitled to return of dividends (e.g. mutual company policies)
What happen if an insurer violates the cease and desist order?
-A maximum monetary penalty of $11,500 for each violation; -License suspension or revocation; -Other relief the Commissioner deems reasonable and appropriate.
Buyer's Guide
-is a consumer publication that explains life insurance in general terms to assist the applicant in making their decision. -It is a generic guide that does not address the specific policy of the insurer, but rather explains life insurance in a way the average consumer can understand.
Variable life and variable annuities
A (v.a) is just a tax-deferred annuity in which you get to choose how the value of the annuity is invested. -It's somewhat similar to a (v.l) insurance policy in that: .his is a bit different from a (v.l) insurance policy which has a lifelong death benefit. Investment gains are tax-deferred
How much credits must all resident lincensee complete?
All resident licensees must complete 24 credit hours, 3 of which must be in ethics. -If a producer holds a health license and solicits long-term care policies, the producer must also complete 3 hours in courses on long-term care insurance.
Certain types of policies are exempt from life insurance solicitation regulation:
Annuities; Credit life insurance; Group life insurance; Variable life insurance; or Life insurance policies issued in connection with pension and welfare plans.
What are the types of limited lines producers may be licensed in terms of lines of authority?
Credit insurance lines; Life insurance or annuities used only to fund a pre-arranged funeral program; Travel accident and baggage; Automobile club; Any other limited line of insurance permitted under state laws.
what are the types of authority may insurance producer qualify for?
Life insurance - Variable life and variable annuities; Health insurance - Property - Casualty Personal lines property and casualty insurance coverage - Title insurance - Fidelity and surety - Marine and transportation -
Continuing Education
Resident Adjusters must complete 12 credit hours, 3 of which must be in ethics. A total of 5 credits, none of which may be from ethics, may be carried over to the next licensing period. Ethics credits in excess of the mandatory requirement may apply to non-ethics credit requirements. An individual who has been continuously licensed for 25 years or longer, or an individual who holds a professional designation, will receive an automatic credit of 12 credits every 2 years. Each licensee must retain original course completion certificates for a period of 3 years. In certain extenuating circumstances such as disability or natural disaster, the Department may grant an extension of time for completing the CE requirements up to 12 months. Requests for extension must be in writing and received by the Department at least 30 days before the expiration of the biennium period.
Fiduciary Responsibility
The legal duty of a representative to manage property in the interest of the owner -A fiduciary is someone in a position of trust.
When must the notice of hearing be delivered?
The notice of hearing must be delivered at least 20 days prior to the date of the hearing.
Statute -
a formal written law enacted by legislature; insurance statutes can be found in the state Insurance Code
What are the penalties for violating the Insurance Code?
a greater penalty is not provided are subject to fine of up to $2,300 per violation, imprisonment for up to 1 year, or both. The maximum fine for corporations is $6,900 per violation.
Industrial life policy -
a life insurance policy written with the face amount of no more than $1,000
Reciprocity -
a mutual interchange of rights and privileges
Dividend -
a payment made by a policy (distribution of profits or return of unused funds)
Solvency -
ability to meet financial obligations (e.g. an insurance company maintains enough assets to pay claims)
Lines of authority
allow insurers and producers to transact insurance in specific fields, such as life insurance or property insurance.
Subpoena -
an order for someone to appear as a witness or submit testimony or evidence
Nonforfeiture values -
benefits in a life insurance policy that the policyowner cannot lose
What cant the commissioner do?
cannot set premium rates or establishes fines and penalties (those are defined by state law).
Policy proceeds -
in life insurance, the death benefit
When must licensee complete continuing education requirement?
licensees must fulfill specific requirements every 2 years,
Casualty -
line of authority that includes vehicle, liability, workers' compensation, burglary and theft, and other types of liability insurance;
What must a person do applying for a resident insurance license?
must make application to the Insurance Commissioner on the Uniform Application or on forms prescribed by the Commissioner for license types and lines of authority not available on the Uniform Application, and declare under penalty of refusal, suspension or revocation of the license that the statements made in the application are true, correct and complete to the best of the individual's knowledge and belief. -Uniform Application means the current version of the NAIC Uniform Application for resident and nonresident producer licensing.
Exempt -
not subject to an obligation
Commission -
payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium
Lapse -
policy termination due to nonpayment of premium
Personal lines property and casualty insurance coverage -
sold to individuals and families for noncommercial purposes;
Promulgate -
to make public, to put into action (e.g. laws, court decrees, and similar)
Cease and desist -
to stop or discontinue
unfair trade practices
trading practices which derive a gain at the expense of the competition
Endowment contract -
type of whole life insurance that matures early (before insured's age 100)
What happen if an insurance producer license lapse?
within 12 months from the due date of the renewal fee, reinstate the same license without the necessity of passing a written examination.
What are the qualification for getting a resident insurance license?
-Is at least 18 years of age; -Is competent, trustworthy, financially responsible and of good reputation; -Has not committed any act that is grounds for denial, suspension or revocation; -Has paid the appropriate fees with an application for each line of authority; -Has successfully passed the examination(s) for the line(s) of authority for which the person has applied.
Fines/ Suspencion/etc
-The Commissioner may place any individual or business entity on probation for a period of 1 year for violation of any insurance laws, rules, regulations and orders. -Producers who have had their license revoked will not be re-issued a license until they have complied with all legal requirements, including successful completion of a re-examination. -Any person who has had their license revoked or suspended on 2 occasions will not be permitted re-licensure. -In lieu of suspension, revocation or refusal to renew, the Commissioner may levy a fine to the licensee between $200 and $20,000 for each violation. -The date payment is due should be at least 30 days following the date of the Commissioner's order.
How can an agency appointment be terminated?
-The Commissioner must be notified within 30 days following the effective date of termination. -Within 15 days of notifying the Commissioner, the insurer must mail a copy of the notification to the producer.
What is the amount and term of credit life insurance?
-amount of credit life on a debtor cannot exceed the amount owed to the creditor. -begin on the date the debtor becomes obligated to the creditor. -The term will terminate on the scheduled maturity date of the debt, not to extend more than 15 days beyond maturity date.
How often can the commissioner examine an insurer?
-can conduct an examination of any insurer as often as deemed appropriate, but at least once every 5 years.
How is a Insurance Commissioner chosen and how long do they serve?
-chosen by qualified electors of the state at general elections -commissioned by the Governor for a term of 4 years.
broker
- is a licensed producer who represents his/her clients (policyholders), and is not a direct representative of any insurance company. -they negotiates insurance contracts from companies for whom the broker is not appointed, on behalf of his or her clients, for compensation.
Law of Agency
defines the relationship between the principal and the agent/producer: the acts of the agent/producer within the scope of authority are deemed to be the acts of the insurer. -An agent represents the insurer, not the insured; -Any knowledge of the agent is presumed to be knowledge of the insurer; -If the agent is working within the conditions of his/her contract, the insurer is fully responsible; -When the insured submits payment to the agent, it is the same as submitting a payment to the insurer.
Surplus -
excess of a company's net worth (extra capital remaining after all expenses are paid)
All individual or group certificates of credit life or health must include the following:
he name and address of the insurer; Identity of the debtor; The full amount of premium or total insurance charge; The amount of insurance coverage; A statement that, if the amount of insurance exceeds the unpaid indebtedness, any excess benefits must be payable to a second beneficiary, if named, or to the spouse or the debtor's estate.
How do you appeal a cease and desist order?
he/she must do so by filing a petition for review in the Chancery Court.
How can a business license be suspended, revoked or refused?
if the Commissioner finds an individual licensee's violation was known or should have been known by any of the partners, officers or managers acting on behalf of the partnership or corporation and the violation was neither reported nor corrective action taken.
Title insurance -
insurance of owners of property against loss by encumbrance or defective titles;
What happened if an insurer or agent commits a violation of unfair trade practices?
-may issue a statement of charges and hold a hearing for any purpose deemed necessary (within the scope of the Insurance Code).
Marine and transportation
insurance against any kinds of loss or damage to property with respect to navigation or transit.
Life insurance -
insurance on human lives. This line of authority also includes endowment benefits, additional benefits in the event of the insured's disability or accidental death or , and modes of settlement of proceeds;
Health insurance
insurance on persons against bodily injury, disablement or death by accident;
Property -
insurance on real or personal property (does not include title insurance);
Fidelity and surety -
insurance that includes fidelity of persons holding positions of public or private trust, guaranteeing and executing bonds, and indemnifying banks, brokers and financial corporations;
What are the agent responsibilities?
is an individual licensed to sell, solicit or negotiate insurance contracts on behalf of the principal (insurer). - is responsible to the insurer when completing applications for insurance, submitting the application to the insurer for underwriting, and when issued, delivering the policy to the policyowner and explaining the contract. - In addition, if the insured submits payment to the agent, it is the same as submitting a payment to the insurer.
Pro rata -
proportionate allocation of funds
who do insurance agents represent?
represent the insurer (principal). "Who is your pal? The principal!"
Commissioner -
the head of the State Department of Insurance
What do Delaware Life and Health Insurance Guaranty Association do?
protects policyowners, insureds, and beneficiaries from financial losses caused by insurers who become insolvent or otherwise unable to perform their contractual obligations. -maintains 2 separate accounts: the life insurance and annuity account, and the health insurance account.
Policy Summary
-is also usually required to be left with prospective insured at the time of the application. -This document provides specific information about the product or products being considered. It specifies the producer, company, policy, coverage, benefits, limitations, exclusions, costs, and terms of the proposed insurance. - include information concerning cash values and policy loan interest rates.
Life insurance solicitation
-is attempting to sell insurance or asking or urging a person to apply for a particular type of insurance. -The purpose is regulation is to require insurers to deliver to purchasers of life insurance information which will improve the buyer's ability to select the most appropriate plan of life insurance, to evaluate the relative costs of similar plans of life insurance, and to improve the buyer's understanding of the basic features of the policy which has been purchased. -Rules stipulate that a buyer's guide and policy summary be provided to prospective insureds.
What d the commissioner examine and who pays for the expenses?
-may examine the accounts, records, documents and transactions pertaining to any insurance producer, solicitor, broker, general producer, adjuster, or insurer representative. -expenses of the examination must be paid by the examinee.
Insurance producer
-means a person required to be licensed under the laws of his or her state to sell, solicit, or negotiate insurance. -aka : insurance agents, insurance brokers, and insurance consultants.