Insurance Regulation
Violation of acting in a fiduciary responsibility is a misdemeanor subject to a fine of _____ for each violation or ____ of imprisonment.
$5,000; 6 months
It is illegal to be involved in any activity of ____, ____, or ____ that is intended to restrict fair trade or to create a monopoly.
boycott, coercion, or intimidation
The civil penalty for violation the PA Insurance Fraud Prevention Act is up to ______ for first violation, up to ____ for second violation, and up to ____ for each subsequent violation.
$5,000; $10,000: $15,000
The exclusive general agent must either directly or indirectly produce and underwrite in any _____ an amount of gross direct written premium equal to or more than ____ of the surplus.
1 year; 25%
If licensee is charged with criminal conduct, the licensee must provide the department with all of the following documents within 30 days of their availability:
1. A copy of the criminal complaint, information, or indictment 2. A copy of the order resulting from a pretrial hearing 3. A report of the final disposition of the charges
What three things must a producer provide in order to be considered for a nonresident license?
1. An application to the Department 2. Proof of the individual's current home state license 3. Pay the required license fee
After advertisements are approved by the Department, they may be used for _____.
2 years
All insurance producers must successfully complete a minimum of ______ of continuing education every ______.
24 credit hours; 2 years
Rating organization licenses will remain in effect for ____ and the fee for the license is ____.
3 years and $25
Statue
a formal written law enacted by legislature
When reinstating a lapsed license, a ______ will be charged in addition to the renewal fee.
a lapsed license fee of $165
The Commissioner must be a _____ of the state of Pennsylvania.
citizen
Failure to submit funds appropriately could constitute _____.
embezzlement
The Department may verify an individual's licensing status through the ______ maintained by the NAIC.
Producer Database
Manager
a person that negotiates and binds ceding reinsurance contracts on behalf of a domestic insurer or manages all or part of the insurance business of an insurer
Whenever it appears that a person has violated an insurance law of PA or any rule or regulation made by the Commissioner, the Commissioner may issue a _____.
cease or desist order
The Fair Credit Reporting Act also protects ______ against the circulation of inaccurate or obsolete personal or financial information.
consumers
The Insurance Fraud Protection Act of 1994 is applicable to any employee convicted of a felony involving _______ or _______.
dishonesty or breach of trust
The agreement to be a representative of the insurer must outline and describe the services provided by the producer, and provide _____.
full and complete disclosure of the fee
If the Commissioner disapproves of a premium rate filing, a _____ may be held _____ after the insurer is notified of that disapproval.
hearing; 10 days
If the request for reinstatement is beyond 60 days from the date of lapse, the license will be reinstated ______, with reinstatement effective the date that the license is reinstated.
prospectively
If a producer or adjuster is suspected of acting in violation of the Insurance Code, the Commissioner may request a _____, and give written notice of the time and place within _____.
legal hearing; 10 days before the hearing
Insurance professionals must be properly licenses for a specific ______ in order to transact insurance.
line of authority
If a producer is unable to comply with the license renewal requirement due to _____ or other _____, the producer may request the Department to waive the _______ and permit the producer to request a renewal.
military service and or other extenuating circumstance; the continuing education requirement
Anyone who violates PA statues regarding rebates and inducements commits a _____.
misdemeanor of the 3rd degree
Whenever any life insurance company does NOT have on hand the _____, the Commissioner will notify the company and its agents that it cannot issue any new policies until such funds become available.
net value of all policies in force
An insurer that appoints an insurance producer must file with the department a ______, stating for which companies within the insurer's holding company system the appointment is made.
notice of appointment
Corporations, associations, partnerships, and individuals may apply to the Commissioner for ____ organization licenses, and the Commissioner will make decisions on these applications within _____.
rating; 60 days of the date of their filing
If an insurer authorizes a producer to solicit or negotiate insurance on its behalf, the insurer must certify the producer's appointment as a ______.
representative of the insurer
A producer who allows his or her license to lapse may reinstate the license within ______.
1 year
The Commissioner will examine each rating organization as often as deemed necessary, but at least once every _____.
5 years
The Department must conduct an examination of every insurer least once every ____, or as often as deemed appropriate.
5 years
Records for examinations must be kept for _____.
5 years from the last examination
If the reinstatement is within _____ of license lapse, reinstatement will occur ______ with the reinstatement effective on the date the license lapsed.
60 days; retroactively
If a licensed person is moving to PA, he or she may become licensed as a resident by submitting a completed application within ______ of establishing residence in PA.
90 days
______ was created to fund the investigation and prosecution of insurance fraud.
Insurance Fraud Prevention Trust Fund
Line of Authority
a type of insurance a producer or business entity is authorized to transact
If the insurer feels that it was ______ in connection with a filing, it may apply for a hearing with the Commissioner, which will be held _____.
aggrieved; 30 days after receiving the application
Nonresident Producers
an individual or business entity currently licensed as a resident producer in another state, may apply to the Department for a nonresident license
Inducement
an offer that attempts to influence the other party
Rebating
any inducement offered to the insured in the sale of insurance products that is not specified in the policy
A licensee may carry forward any ______ from one licensing period to the next--- up to a maximum of ______.
excess credit hours; 24 credit hours
The purpose of a temporary license is
for the continuation of business in the event of the producer's death or disability
Commission
payment to the agent by the insurance company for placing insurance (Usually a percentage of policy premium)
A producer license will remain in effect unless suspended or revoked, as long as it is properly _____.
renewed
Commissioner
the head of the state Department of Insurance
Cease or Desist
to stop or discontinue
A penalty of up to _____ may be leveled for each violation of the Commissioner's cease and desist order.
$10,000
Failure to correct such a violation will result in an administrative fine of _____ per day per violation.
$100
A fee of ____ must be billed to the insurer annually for each producer appointed during the previous year and must be paid within _____.
$12.50 and 30 days
For each intentional act of engaging in an unfair method of competition or practice, a penalty of up to _____ for each violation.
$5,000
Temporary producer licenses may be granted for up to ______.
180 days
Before an insurance company can legally transact insurance, it must first obtain a ______ from the Commissioner.
Certificate of Authority States commissioner found the company: 1. Financially stable 2. Organized in accordance with the Insurance Code
________ is known as the misrepresentation or incomplete or fraudulent comparison of insurance policies that persuades an insured/owner, to his or her detriment, to cancel, lapse, switch policies, or take out a policy with *another insurer*.
Twisting (twisting is prohibited!)
The violation of advertisements including any untrue, deceptive, or misleading statements that apply to the business of insurance or anyone who conducts it is known as _____.
false advertising
Coercion
forceful act or threat aimed to influence a person to act against his or her will
Aggrieved
injured party; someone entitled to begin a lawsuit or request a hearing
Both the ____ and ____ of a rebate are illegal.
offer and acceptance
Insurance producers who do NOT have company appointments are considered ______.
representatives of the consumer (formerly referred to as brokers)
The Department may immediately and without notice _____ if it is in public interest.
revoke a temporary license
If an insurance company violates the laws of the Commonwealth, the Commissioner may ____ or ____ the insurance company's certificate of authority, refuse to issue a new certificate of authority for a period of _____, and/or impose a penalty between ____ and ____ for each violation.
suspend or revoke; up to 1 year; $5,000 and $25,000
If an insurer ______, the Commissioner must be notified within 30 days after the effective date of the termination.
terminates a producer's appointment
Insolvent
unable to meet financial obligations
Violations for premium rates may result in fines of _____ for each violation, not to exceed _____.
$50; $500
What are the 3 types of licenses?
1. Individuals (resident and nonresident) 2. Business entities 3. Temporary license
________ was established to develop and sponsor the implementation of statewide plans, programs and strategies to combat insurance fraud, improve the administration of insurance fraud laws, and provide a forum for identification of critical problems for those persons dealing with insurance fraud.
Insurance Fraud Prevention Authority
A Consumer Report differs from a Investigate Consumer Report by:
Investigate Consumer Reports: 1. obtains information through interviews with friends, families, neighbors, and associates 2. Consumer is advised in writing about the report within 3 days of the date the report was requested
A license may be renewed _____.
biennially (every 2 years)
Statutory
enacted or regulated by a statue
______ is when the accused does not admit or deny the charges, but agrees to pay a fine.
Consent agreement (does not prevent criminal prosecution for violation of the Commonwealth's laws)
The PA Insurance Code requires insurers to file their ______ with the Commissioner and they are subject to a _____ before they become effective.
premium rates; 30 day waiting period
_____ include written and/or oral information regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources
Consumer Report
______ occurs when an oral or written statement is made that is intended to injure a person engaged in the business.
Defamation (This also applies to statements that are *maliciously critical* of the financial condition of any person or property)
Exclusive General Agent
a licensee which has been granted sole authority to act directly or indirectly as an insurance producer for a domestic insurer
Reciprocity/Reciprocal
a mutual interchange of rights and privileges
The following persons are not required to be licensed as managers or exclusive general agents:
1. A licensee whose authority is limited to the production of insurance business with limited underwriting authority 2. A manager or exclusive general agent operating under a management contract or exclusive general agency agreement entered into prior to December 22, 1965 3. A person subject to regulation as a managing general agent
The Licensing Process:
1. Complete pre-licensing education 2. Pass examination 3. Submit application and fees 4. Submit fingerprints
The purpose of licensing is to ensure that a producer meets these two standards:
1. Educational 2. Ethical
The Department of Insurance conducts an examination of any company authorized to transact insurance in this state for the purpose to assess the insurance company's
1. Financial Condition 2. Ability to remain Solvent 3. Compliance with state laws
The lines of authority available in Pennsylvania:
1. Life 2. Accident and Health 3. Property 4. Casualty 5. Variable Life and Variable Annuities 6. Personal Lines 7. Credit 8. Motor Vehicle Rental 9. Limited Lines
Rebates include the following:
1. Rebates of premiums payable on the policy 2. Special favors or services 3. Advantages in the dividends or other benefits 4. Stocks, bonds, securities, and their dividends or profits
In order to renew a license, producers must:
1. Submit proper renewal forms 2. Pay required fees ($55 for resident, $110 for nonresident) 3. Proof of the completion of continuing education
An insurance producer license is NOT required of any officer, director, or employee of an insurer or organization employed by insurers, provided they are NOT _______ and ______.
1. directly or indirectly involved with the actual sale of an insurance contract 2. do NOT receive any commission
The insurer then must mail a notice to the producer within _____ after the notification, regarding termination due to the producer's engagement in activity prohibited by the regulations, is sent to the Commissioner.
15 days
The insurance license is nontransferable and is issued for a maximum period of _____.
2 years
Following a ____ waiting period, the deviation filings of the insurers are effective for ____.
30 day and 1 year
Licensees must make a report of any administrative action taken against them in another jurisdiction or by another governmental agency within _____ of the final disposition of the matter.
30 days
If a licensee fails to reply to a Department's written inquiry for corrective action in a specified violation within ____ days, the Department will send a notice specifying the violation and will give the licensee ____ days to correct the violation.
30 days; 15 days
All forms must be filed with the Commissioner and he/she will approve or disapprove the form within ____. If no action is reported within this time period, the insurer can _____.
30 days; assume that the form is approved
Every producer licensed in PA must notify the Department in writing within _____ of any change of address in his or her _____ or _____.
30 days; residence address or business address
A company must maintain, at its home office, a complete file of every advertisement used, for a period of ______ or ______.
4 years or until the next regular examination (whichever is longer)
Insurance companies must notify the Commissioner within _____ if there is any material change in their ownership, control, surplus, or solvency.
5 days
_____ established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used.
Fair Credit Reporting Act
The Commissioner of Insurance is appointed by the _____ with the consent of the _____, and holds office for the term of _____.
Governor; Senate; 4 years
______ is the term used when a person in a fiduciary position has used funds in manner for which they were not intended, such as wrongful taking or use of money belonging to another.
Misappropriation of Funds (*it is considered theft!*)
______ within the Office of Attorney General is responsible for investigating and prosecuting insurance fraud.
Section of Insurance Fraud
Reciprocity License Exchange
The Department may waive all licensing requirements if a nonresident home state awards licenses to Pennsylvania's producers on the same basis
Home Office (Domicile)
a state in which an insurer is organized and has its main place of business
Anyone without proper licensing, that is caught as a manager or exclusive general agent, is guilty of a ______ and faces a fine of up to ______ for each day of their offense.
third degree misdemeanor; $1,000
The purpose of the Insurance Fraud Protection Act of 1994 is to protect consumers and insurance companies from ______.
white-collar insurance fraud