Insurance License Exam- Ch. 12 Common to Life and Accident and Health Insurance Regulation (STATE PORTION)

Penalties

Anyone who willfully fails to attend, answer or provide evidence requested by the Commissioner, or who gives false information may be convicted of a misdemeanor, and fined up to $1000 and/or imprisioned for 6 months

Commissioner

Appointed by Governor of Maryland for a term of 4 years, with the advice and consent of the Senate -Advises and counsels the Governor on all matters relating to the Maryland Insurance Administration -May not hold any financial interest in an insurer, insurance agency, or be involved in an insurance transaction unless he or she is a policyholder

License Fee and Application

License fee is 454 and you must submit a completed application to the Commissioner

Vatical Settlement Broker

Must be licensed as a Life Insurance producer (agent), renew their license very other year by filling the appropriate application, and pay a fee to the Commissioner

Examination

Must pass a closed book examination within 1 year of completing their pre-licensing education

Cease and Desist Order

A sworn document requiring an agent to stop conducting business

Termination of Appointment/ Notice to Producer

An insurer is required by law to update its producer register within 30 days of the termination of a producers appointment -If the termination of an appointment is because the producer had engaged in misconduct, an insurer must send written notification of the termination to the Commissioner, and to the producer within 15 days from the date that the notice was sent to the commissioner

Advertising

Cannot include any untrue or deceptive statements that apply to the business of insurance or anyone who conducts it -Need to be truthful, clearly defined and understandable -Must be kept on file for 3 years

Producers appointment with Insurer

Each insurer must appoint and pay an appointment fee for each producer that is going to represent them -A producer must be appointed by one authorized Insurance Company. -A Business Entity must file an application with the Commissioner and have atleast one licensed agent working for the Business Entity

Defamation

It is illegal for any producer or insurer to make any oral or written statements, or to circulate literature that is false. -This also includes maliciously critical or derogatory statements about the financial condition of any insurer, insurance business, agent, producer, principal or employee

Insurance Business

Transaction of al matters pertaining to, and arising from an insurance contract, either before or after it has taken effect

Not Require to be Licensed

-Officers, employees, producer or other reps -Producers acting on behalf of their clients -Attorneys acting within the course of their occupation -Licensed Public Adjusters acting within the scope of their license -Those selling travel, credit life, or credit health

Record Retention

Agents are required to keep all of their records for 3 years

Forms

All forms must be approved by the Commissioner, and submitted in writing in duplicate, unless electronically filed

Examination of Books and Records

The Maryland Commissioner of Insurance must, once every 5 years, examine the affairs, transactions, accounts, records and assets of each domestic insurer -Within 60 days of the Commissioners Examination conducted under State Law, the examiner will prepare a final report of the results of the examination -Within 30 days before filing the report with he office of the Commissioner, the Commissioner will give a copy of the report to the party that was examined

Fiduciary Capacity

The agent is a fiduciary that handles funds in a trust capacity

Unfair Claims Practices Act

To assure that insurance claims are handled in the best interest of the customer and fairly

Nonresidents

To obtain a license: 1) Nonresident is licensed in their home state 2) non residents home state grants nonresident applicants from Maryland the same waiver 3) The non-resident has provided the Commissioner with a copy of the license application from their home state, or a uniform application -The applicant pays the $54 Licensing Fee

Initial License Qualification

To receive a Certificate of Qualification: -Be 18 years old - Be trustworthy and of good character -Meet the education and experience requirements for a producer -File an application with the Commissioner -Submit any other information required by the commissioner -Complete 20 Pre-licensing Course Hours for Each Line of authority

Maintenace

Address and/or name change: Insurance producer must notify the insurance Commissioner within 30 days by mail or electronically of any resident, business or mailing address name change Assumed Names/ trade Names: State Law requires the insurance producer to notify the insurance commissioner of any fictitious or assumed names the agent may use when conducting business Requirement to Report Felony Convictions: State law requires licensed producers to report all felony convictions within 30 days to the commissioners office

Disclosure of Fees

All fees for insurance must be stated in an insureds premium. TO charge administrative fees an agent must post the fee schedule in their office, disclose the fees in writing to their customer and have their customer sign a disclosure form

Notice of Appointment

An insurer needs to file a notice of appointment within 30 days from the date the agency contract is executed, or the first application is submitted

Advisors

Clients are given advice about insurance exposures, coverage and insurance recommendations by insurance advisors -To obtain an insurance advisor license: 1) Be a member in good standing of the Society of Actuaries, the Casualty Actuarial Society or the Conference of Actuaries in Public Practice 2) Hold a Charted Property and Casualty Underwriter, Charted Life underwriter, Certified Employee Benefit Specialist or a Certified Financial Planner designation 3) Successfully complete a course of study equivalent to a course required for any of these societies or designations, and hod a Certified Insurance Counselor Designation A surety bond of $1000 must be posted by insurance advisors

Transacting Insurance

Insurance is the transfer of the possibility of a loss (risk) to an insurance company, which in turn spreads the costs of unexpected losses to many individuals -An insurance transaction is any means of negotiating, soliciting, and inducing a customer to make a contract sale effective

Certificate of Authority

Issued by the state insurance administration and it admits and approves an insurer to write contracts of insurance and perform certain business within the state

Business Entities

Legal structures of an organization that are required to be licensed before they are allowed to accept compensation for acting as an insurance producer Types of Business Entities: -Limited Liability Company: a permitted form of an unincorporated business organization -A partnership exists when two or more people are engaged in a common enterprise -Corporation is a business entity that is formed according to state law. The organization is comprised of a Board of Directors and executive officers such as a President, VP, etc. Business Entities must meet these qualifications: 1) have atlas 1 licensed individual working for them 2) Be licensed for the type of insurance they will be selling 3) Be appointed by atlas one insurer

Complaint Record

The insurance administration keeps an ongoing account of all complaints filed against agents by both consumers and insurance companies -If there is a internal appeal regarding a case it must be completed within 30 days for a pre-service claim and within 60 days for services already received

Renewal

-Duration and Termination: A producers license is valid for two years. The license will expire on the last day of the producers birth month. In order for the agent to renew their license, they must complete 24 continuing education credits every 2 years. Three of the credits must include an ethics course The agent must also file renewal application, pay a $54 license fee and a $15 anti-fraud fee

Commissioners Powers and Duties

-Head Maryland Insurance Administration -Conduct investigations and examinations -Advise and counsel the governor on all matters relating to the MD Insurance Administration - To make and enforce reasonable ole and regulation -To hire employees and examiners and delegate any power, duty or functions to such employees or examiners - The Commissioner must prepare an annual report, as early int he fiscal year as possible***

Fraud

A producer who is convicted of Insurance Fraud in the state, valued at $300 or more, is guilty of a felony. -The producer is also subject to a fine and/or imprisonment of up to 15 years. -If the producer is guilty of fraud valued at less than $300, they are guilty of a misdemeanor, and must restore to the victim the property taken to the value of the property taken. -The producer is also subject to a fine and/or imprisonment for up to 18 months -The max fine for willfully violating any Insurance Law if $100,000

Probation, Denial, Suspension, Revocation or Refusal to Review

A producers license may be put on on probation for any of the following reasons: -Provided incorrect, misleading, incomplete, or materially untrue information on the license application -Violated any insurance laws, regulations or orders of the commissioner -Obtained or attempted to obtain a license through misrepresentation or fraud -Improperly withheld property received in the course of doing Insurance business -Committed a felony -Admitted or was found to have omitted any insurance practices or feud -Used fraudulent, coercive or dishonest practices or demonstrated incompetence ***knowingly employed an individual who has been convicted of a felony or crime of moral turpitude within the last 10 years to act in a fiduciary responsibility

Rates

An insurer must wait 30 days or any required time from the Insurance Administration from the date a new rate increase is filed until it can be put into effect -The administration amy also extend or delay the 30 day waiting period -The commissioner regulates and approves all rate changes to the extent that they are not: Excessive, Inadequate, unfairly documented

Producers

Anyone who performs activities of an insurance agent. -These activités include selling, soliciting, and negotiating insurance contracts for compensation -Produers are required to obtain a Certificate of Qualification for the various types of insurance they intend to sell -Must be appointed by a least one authorized Insurance Company

Commingling of Funds

Insurance producers do not have the express written consent of the principals to commingle their personal funds with premiums, and must gold the premium money separate from other funds -A letter of consent is required on the producers stationary to authorize the commingling of funds. The consent remains in effect until canceled, and requires at least 30 days of written notice

Unfair Trade Practices (Title 27)

States that coverage may not be limited to someone legally, totally, or partially blind. Unfair and misleading marketing practices lead to class action lawsuits against insurance companies -Boycott, coercion and Intimidation -Prohibited Inducements- illegal to pay or offer someone an inducement to purchase insurance -Unfair discrimination; the Human Resource Commission -Rebating: Any inducement valued at more than $25 that is offered in the sale of an insurance policy, and is not specified in the policy itself -Twisting: Involves a misrepresentation that persuades a policyholder to cancel, lapse or surrender a present policy to one that is not in their best interest -Blank Forms: Illegal under Insurance Law to allow a client to sign a blank, or incomplete application for insurance -Controlled Business: When an agent obtains a license for the sole purpose of writing business for one's own self, family and employees

Temporary Producers License

Will be granted under the following situations: 1) Upon death of an agent, a surviving family member, legal representative or employee may receive a temporary license 2) IF a producer is unable to perform their duties because of injury, disability, or mental incapacity, a temporary license may be granted to a surviving family member, legal rep or employee -The representative must submit to the Commissioner an appropriate application, and the Commissioner will, within 30 days, issue a temporary License or reject an application. -The temporary license will be valid for 15 months