., Insurance, Definitions- insurance exam
License Continuation
On or before the last day of the month of the licensee's birthday following the 2 year anniversary of the issuance of a license and every 2 years after that. $25 fee, will receive 60 day notice of deadline. Limited Lines Credit Producers are exempt from CE.
north Dakota non-admitted and reinsurance reform act of 2010
allows surplus lines companies to write surplus lines business in the state they are domiciled. this bill recognizes domestic surplus lines insurers in north Dakota.
Rebating
Any inducement offered to the insured in the sale of insurance products that is not specified in the policy. Both offer and acceptance are illegal.
may 1st
Annual appointment renewal date, pay annual fees
Commissioner of Insurance
1) Elected by the people to a 4 year term that follows the Presidential Election Cycle 2) Must be 25 years or older 3) Must be a resident of the state for 5 years preceding to election
Insurance Fraud Department
1) Initiate independent inquiries and conduct independent investigations when the insurance fraud unit has cause to believe that a fraudulent insurance act may be, is being, or has been committed 2) Review reports or complaints of alleged fraudulent insurance activities from federal, state, and local law enforcement and regulatory agencies, persons engaged in the business of insurance, and the public to determine whether the reports require further investigation and to conduct these investigations 3) Conduct independent examinations of alleged fraudulent insurance acts and undertake independent studies to determine the extent of fraudulent insurance acts
Alien Insurer
An insurance company that is incorporated outside the United States.
2 years
CE compliance period
3 hours
CE required in ethics
24 hours
CE required per compliance period (doesn't apply to credit insurance line)
$50,000
Class A Felony
$10,001 to $50,000
Class B Felony
$1,000 to $10,000, violation of insurance code if the value of any property or services retained exceeds $5,000
Class C Felony
Stock Companies
Companies owned by the stockholders (shareholders) whose investments provide the capital necessary to establish and operate the insurance company. in return for their investments, they share in any profits or losses. officers are elected by stockholders and manage stock insurance companies. issue nonparticipating policies, in which the policy owners do not share in profits or losses arising in the operation of the business. earnings from operations may be distributed to the stockholders as taxable dividends on stock or may be kept as "retained earnings"
State Auditor or someone appointed by the State Commissioner
If the insurance commissioner is disqualified to make examination of any insurance company, due to conflict of interest
Rebating
Includes money, reductions in commissions, stock, bonds, securities, and their dividends or profits, special favors or advantages of benefits, and personal services. An insurance producer may give a gift, prize, promotional article, logo merchandise, meal, or entertainment activity, but may not give cash, a cash card, or any form of currency, or refund, or discount in premium.
insurance contract
agreement between an insured and an insurer, where the insurer agrees, for a consideration, to indemnify the insured for loss caused by specified events
Misrepresentation
It is illegal to issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms, the payment of dividends, etc. This also refers to oral statements.
Twisting (life & accident/health only)
Knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance with another insurer
compete, trustworthy, financial responsible, responsible, and of good personal and business reputation. Pass the exam, pay your taxes, and pay child support. Exam scores are valid for 1 year, must retake exam after 12 months.
License Qualifications
$50,000, ($5,000 for each act)
Maximum fine for willful violation of the insurance code
License Denial or Termination
May request a hearing within 30 days from the date of notice, commissioner must hold a hearing within 30 days, will receive 10 day notice prior to hearing. Commissioner may suspend, place on probation, or refuse to continue. Fee's are non-refundable
180 days
Temporary license valid
Not less frequently than once every 5 years
The commissioner or any of the Commissioners examiners may conduct an examination of any company whenever the Commissioner in his/her sole discretion deems appropriate. But at a minimum:
Ceding Insurer
The originating company that procures insurance on itself from another insurer
Coercion
The practice of persuading someone to do something by using force of threats. Entering into any agreement to commit any act of _____ or intimidation resulting in unreasonable restraint of, or monopoly in, the business of insurance. It is prohibited to advertise or circulate any materials that are untrue, deceptive, or misleading. False or deceptive advertising specifically includes misrepresenting any of the following: 1) terms, benefits, conditions or advantages of any policy 2) any dividends to be received from the policy or previously paid out 3) financial condition of any person or the insurance company 4) true purpose of an assignment or law against a policy.
Offer & Acceptance
There must be a definite, unqualified offer by one party, and the other party must accept this offer in its exact terms. In insurance, the applicant usually makes the offer when submitting the application. If the first premium payment accompanies the application, acceptance takes place when an insurer's underwriter approves the application and issues a policy. If the first premium does not accompany the application, acceptance by the applicant occurs when the policy is delivered and the applicant pays the first premium.
Competent Parties
Those entering into the contract must be of legal age and must be mentally competent to understand the contract, and not under the influence of drugs or alcohol
30 days
To report change of address
reinsurance treaty
When an insurer has an automatic reinsurance agreement between itself and the reinsurer in which the reinsurer is bound to accept all risks ceded to it. year or longer
18
age to apply for license
$100-$1,000
civil penalty for insurance code violation
4years
commissioners term of office
insurer/principal
company or organization who issues a policy of insurance
Legal purpose
contract must be for a lawful reason, and not against public policy
Reinsurance
contract under which one insurance company (reinsurer), in consideration of premium paid, agrees to indemnify another insurance company for part or all of its liabilities from insurance policies it has issued. used to protect against catastrophic losses
5 years
examine domestic insurers (also foreign & alien)
30 days
for insurer to file notice of appointment
30 days
for insurer to notify the Commissioner of the termination of an appointment
Defamation
occurs when an oral or written statement is made that is intended to injure a person engaged in the insurance business. This also implies to statements that are derogatory or maliciously critical of the financial condition of any person or company
Discrimination
in rates. premiums, or policy benefits for persons within the same class or with the same life expectancy is illegal. Unless the distinction is made for a business purpose or required by law you cannot base anything on marital status, race, color, national origin, creed or ancestry.
Non-admitted or unauthorized insurer
insurance company that has not applied, or has applied and been denied a certificate of authority and may not transact insurance
Admitted or Authorized Insurer
insurance company that has qualified and recieved a Certificate of Authority from the department of insurance to transact insurance in the state
domestic insurer (company)
insurance company that is incorporated in and transacts business in that state. most cases the company's home office is in the state in which it was formed -the company's domicile
foreign insurer (company)
insurance company that is incorporated in another state or territorial possession (Puerto Rico, Guam, US virgin islands, American samoa) (chartered in Minnesota would be foreign to ND)
reciprocal insurer
insurance resulting from an interchange of reciprocal agreements of indemnity among persons known as subscribers, collectively known as reciprocal insurance company or exchange. the company is put into effect and administered through an attorney in fact common to all persons. subscribers agree to become liable for their share of losses and expenses incurred among all subscribers, and they authorize the attorney in fact to manage and operate the exchange
Controlled business
insurance written on the interest of the licensee, licensee's immediate family, or licensee's employer, or insurance covering the licensee, the members of the licensees immediate family, a business entity, or the officers, partners, or employees of such a business entity of which the licensee or a member of the licensee's immediate family is an officer, partner, associate, or employee. This does not include insurance written in connection with credit transactions (title insurance). If during any 12-month period, the aggregate commissions earned on this business exceeded 35% of the aggregate commissions earned on all business written by the licensee during the same period.
Boycott and Intimidation
it is illegal to be involved in any activity that is intended to restrict fair trade or to create a monopoly
$25
license renewal fee
$10,000
maximum fine for violation of the insurance code (cease & desist order)
assuming insurer
other insurer, reinsurer
Mutual Companies
owned by policyholders. profits are returned to the policyholders as non-taxable dividends (return of premiums). dividends are an overpayment or return of excess premiums that come from a difference between the premium charged and the earnings and actual costs of providing coverage. board or trustees or board of directors chosen by the policyholders to manage the company.
insurance producer/agent
person who acts for another person or entity (principal) with regard to contractual arrangements with 3rd parties
$10,000
person who violates Title 26 (insurance) of the ND Century Code is subject, after a hearing by the Commissioner to payment of an administrative monetary penalty of up to __________ per violation. (ie: violating a cease & desist order)
consultant
serve with objectivity and complete loyalty the interest of the client alone and to render the client such information, counsel, and service as within the knowledge, understanding, and opinion, in good faith of the licensee, best serves the client's insurance needs and interests. DOES NOT SELL INSURANCE. Must prepare a written agreement on a form approved by the commissioner, must outline the nature of the work to be performed and must state the fee for the work being done (keep a copy for 2 years) Can employ, be employed by, or be in partnership with nor receive any remuneration from any license insurance producer/insurer. Cannot hold both licenses. But producers can perform these services but cannot receive remuneration.
insurance transaction
solicitation or inducement, negotiations, effectuation of a contract of insurance, advising an individual concerning coverage or claims
Consideration
something of value that each party gives to the other. Insured- payment of premium and the representations made in the application. Insurer- promise to pay in the event of loss
certificate of authority
the commissioner must be satisfied by examination and evidence that an insurance company is legally qualified to transact business in ND before granting this to the company. remains in force perpetually if: renewal fees ($100) paid by April 30th every year and required documents have been filed, statements and evidences of investment required of the company have been furnished, required capital or surplus or both securities and investments remain secure, and all other requirements of law are met.
False Financial Statements
those that are intended to deceive public officials or the general public about the financial condition of an insurer. This often occurs when an important fact about the financial status of an insurer is deliberately withheld in order to present the company in a more favorable light.
10 days
time a hearing must be held following an application
30 days
time given to request a hearing
Maximum $10,000, $1,000 for each violation
unknowing violation of the insurance code
Facultative Reinsurance
when reinsurance is purchased on a specific policy
false advertising
wide scope of communication, from publishing an ad in a newspaper or magazine, to broadcasting a commercial on television or the internet. They cannot include any untrue, deceptive, or misleading statements that apply to the business of insurance or anyone who conducts it.