INSURANCE EXAM
Commissioners duties
- adopt rules and regulations - examine insurance companies $ - take care of complaints against licensee - approving and monitoring insurance rates - annual report to governor
Orders (punishment)
- cease and desist - civil soot Civil penalty (100-1000) -suspend, non-renew or revoke license (CANNOT pay restitution, jury trial, jail)
Fiduciary responsibilities
- financial risk, suitability, explaining coverage, collecting premium, delivering policy
Commissioners responsibilities
-examine insurance companies - adopt rules and regulations - complaints against anyone, engaged in the insurance business
Hearings notification 1st
-licensee shall respond IMMEDIATELY to hearing notification - OID must give 5 days WRITTEN notice -when, where, why - OID office, not court
Exempt from license
-not engaged in solicitation, negotiation or selling effectuating insurance, - no commissions
Commissioner does not
-recruit producers - enact laws - develop rates
2nd conduct the hearing
-violation was committed - OID must summarize the findings and written notice within 30 days of hearing -open to public
Fraud is a felony
10,000 Up to 10 years prison Combination of both
Appointment
12 months
Temporary producer
180 days -surviving spouse -chose employee Person designated by licensed person who is entering armed forces ******* Serve public interest (NO EXAM NO CE)
Law of agency
3 parties involved principal, producer, 3rd party
Preliminary negotiation (quoting)
Act of conferring with buyer -discussing benefits of an insurance contract
OK file and use state
After rating is filed they are effective within 30 days unless disapproved. No approval needed
Producer
Agent authorized by insurer, can bind insurance coverage
OID examinations
As often as necessary - must ever 5 years all types - insurance company pays for all examinations
Soliciting insurance (prospecting)
Attempting to sell insurance
Insolvency
Bankruptcy
Insurance license
Biennial term period Perpetual with CE
Contract
Both offer and acceptance
Conditional contract
Certain rules required both parties
SPECULATIVE RISK
Chance of Financial loss or gain
Pure risk
Chance of Financial loss, no gain
examination reports
Chief examiner must file report within 30 days of exam
Selling (effectuate)
Completing app, making policy changes, collecting premiums
rate
Cost of insurance per unit of exposure
4 risk management techniques 3. Avoid
Do not engage in the activity
Insurance commissioner
Elected 4 year term 25 YO 5 year in OK 5 year in insurance No financial interest in agency
Unilateral contract NOT BILATERAL
Enforceable by one party -insurer has duty to perform -contract enforceable by insured -insured can sue
Aleatory contract
Equal value not given by both parties, money exchange not =
Annual reports
Every insurer must file an annual report exhibiting the financial performance for the previous year
Insurable interest
Financial loss a person suffers when property is destroyed
Examinations
Financial solvency, LOOKS at - financial statements w adequate capital and surplus - changed in mgmt. - reports from actuaries and independent financial examiners
Federal government insureres
Flood, crop, crime, terrorism, nuclear, SS, Medicare, cadicade FDIC insurance CANNOT WRITE WORKERS COMP
Domestic insurere
Home office in Oklahoma
Alien insurer
Home office in another country
Foreign insurer
Home office in another state
Morale hazard
Human carelessness or irresponsibility (cell phones, garage doors)
hazard
Increases likelihood or severity of loss
Legally binding contract
Insurance policy
Principal
Insurer
rate Penalties
Insurer 100-5000 fine
rate hearing
Insurer can request hearing with OID OID gives 10 days notice
Appointment
Insurer must appoint a producer within 15 days of the acceptance of business
Terminating producer
Insurer must notify OID within 30days of termination of a producer appointment (quit/fire)
Certificate of authority
Insurers license to do business in OK Perpetual (automatically renew)
Oklahoma insurance commissioner
John Doak
fraud
Knowing misrepresentation, concealment of material fats
concealment
Leaving out info on purpose
Customer service representative (CSR)
Licensed and appointed by instance agency PASS EXAM AND CE
Insurance producer license
Licensed and appointed by insurer Personal lines - property and casualty Commercial lines - property and casualty Life, health, title PASS EXAM AND CE
Limited insurance producer
Licensed w limited insurance and appointed by insurer -credit, trawl, prepaid legal, car rental, crop, vending machine NO EXAM NO CE
Right to appeal
Licensee can appeal within 30 days (judge and jury)
4 risk management techniques 1. reduce
Lowering hazard
indemnity
Makes insured financially whole, not allowing gain -reimbursed without overpaying -original financial standing
representations
Material facts on an app, insured believes to be true
Physical hazard
Material or structural ( oily rag, icy road )
Actuary
Mathematician irks for the insurer, Develops rates
Moral hazard
Morality or ethics (intentional, fraud, arson)
contract
Must be legal
Self-regulation
NAIC - voluntary non profit, promote uniformity, proposes laws and recommendations, no legal authority
Unauthorized insurer (non-admitted)
NO ok certificate authority -surplus lines insurer -conducts insurance that an authorize insurer won't insure (KD)
Private rating services
NOT OID - financial strength, creditworthiness, investment vehicles and adequacy of reserves. -issue ratings
War or nuclear damage
Never covered
First dollar coverage
No deductible
Fraternal
Non- profit Cole benefit of members
loss
Not sentimental
OID
Not set rates
State regulation
OID enforces provisions of the insurance code insurance, department does not enact law
Authorized insurer (admitted insurer)
Ok certificate of authority
commission
Only if producer is licensed in the line of insurance and appointed by the insurer
Mutual company
Owned by plcyowners (insured's) Policy holders paid in dividends
Stock companies
Owned by shareholders Shareholders entitled to profit and elect board of directors
Fiduciary
Person held in trust and must place other party before their own
Third party
Policy owner
producer
Practices insurance (transacting insurance) - appropriate line of insurance
Law of large numbers
Predicts total future losses, no individual losses
State regulation
Primary source, statutes, the insurance code, OS title 36, state legislature
Conflict of interest
Producer influenced by personal interests
Prospective loss cost (loss ratio)
Projection of the rate that is projected to be paid out w benefits Insurance benefits = claims Expenses - pay operating $
4 risk management techniques 4. transfer
Purchase insurance so the company is at risk not you
underrwiter
Selects risks for the insured
4 risk management techniques 2. Retain
Self-insure or deductible
producer
Sell only insurance they are licensed and appointed to
Managing general agent
Supervises business of an insurer Appoint and terminate insurance producers NO EXAM NO CE
insurance
Transfer of financial risk
loss
Unintended unforeseen/ financial
Federal regulation
Watchdog, not covered by state regulation, state jurisdictions are in conflct
Examination rebuttal
Within 20 days of report, rebuttal - right to disagree
Adhesion
Written by one party (insurer), insured must adhere to contract without negotiation (courts will interpret ambiguity to favor insured)
warranties
Written statements guaranteeing something to be true, breach of warranty voids insurance contract
adjuster
claims, losses, negotiates claim settlements
Contract
competent parties - not intoxicated, minor or legally insane
contract
consideration - trade of value (act, promise, money)
Speculative risk
gambling
actuary
mathmetitcial who develops the rates for the insurer
oklah9oma insurance rating act
rate can't be excessive, inadequate or unfairly discriminatory - OID approves rates
peril
reason loss occured
binder
temp insurance contract 90 days, written or verbal
ambiguity
unclear
