Insurance Regulation

Nonpublic Information

Any business-related information that is not publicly available information that is missed could jeopardize a covered entity's security and operations

To qualify for an insurance license:

- Be a resident of NYS - At least 18 years of age - Submit a standard application for licensing on a form approved by the Superintendent - Fulfill the relicensing education requirement of at least 20 hours or 40 hours - Pay the applicable fees - Pass the applicable examination for each line of authority

Maintenance and Duration of an insurance license:

- Remain in effect unless suspended or revoked - Must be renewed every 2 years - The licenses of agents or brokers born in odd-numbered years will expire on their birthdays in odd-numbered years and the same for even-numbered birth years - Must file for renewal of license with the Superintendent at least 60 days before the license expires, or pay a $10 late filing fee if after that - 15 hours of Continuing Education (CE) instruction

Department of Financial Services Regulations

5 years: Examination of domestic insurers other than property and casualty (3 years) 10 days: Notice given for hearing 10 days: For applicant or license to demand hearing after action

Insurance Producer

An insurance agent, title insurance agent, insurance broker, reinsurance intermediary, excess lines broker, or any other person required to be licensed under the laws of this state to sell, solicit, or negotiate insurance

Statute

A formal written law enacted by legislature; insurance statutes can be found in the state Insurance Code

Sharing Commissions

An insurer or fraternal benefit society may not pay commission to any person or organization that is not licensed in New York.

Which of the following would NOT be considered an insurance producer?

A) A reinsurance intermediary B) An insurance agent C) An insurer's officer * - Insurance producer means any person required to be licensed to sell, solicit, or negotiate insurance, including agents, brokers and intermediaries. Officers are not required to be licensed. D) An insurance broker

The requirement that agents must account for all insurance funds collected and are not permitted to commingle those funds with their own funds without the express consent of the insurance company is known as

A) Accepted accounting principal B) Fiduciary responsibility * - Money collected with respect to an insurance transaction must be held in a position of trust by the agent or broker. C) Premium accountability D) Fiscal responsibility

Inducement

An offer that attempts to influence the other party

Which of the following is NOT a qualification for licensing as an insurance producer in this state?

A) Have a letter of recommendation attesting to the applicant's trustworthiness * - The appointing insurers are required to evaluate the qualifications of their agents. B) Complete the required minimum hours of relicensing training C) Be at least 18 years of age D) Be a state resident at the date of application

How long does a licensee have to notify the Superintendent of a change of address?

A) Immediately B) 30 days * - The Superintendent must be notified within 30 days upon any change of primary residence or business address. C) 60 days D) 90 days

Which of the following entities has the authority to revoke a producer's license?

A) The NAIC B) The Guaranty Association C) The appointing insurer D) The Department of Financial Services * - Through its superintendent, has the authority to refuse to renew, revoke, or suspend the license of any insurance producer, insurance consultant or adjuster if, after notice and hearing, it is determined that the license has violated nay insurance law or regulation.

Controlled Business

Any coverage written on a producer's own life, healthy or property, and/or that of the producer's immediate family or business associates - A licensee is not allowed to collect commissions on controlled business above the state-specified limits

Cybersecurity Event

Any effort to obtain unapproved access to an Information System (a system that collected, maintains and transmits electronic Nonpublic Information), whether successful or unsuccessful

Covered Entity

Any persons operating under a license, registration, certificate or similar authorization under the Banking Law, the Insurance Law, or the Financial Services Law

Home State

Any state, district, or territory of the United States in which an insurance producer maintains his/her principal place of residence or principal place of business, and is licensed to act as an insurance producer

Solicit (or solicitation)

Attempting to sell insurance or asking or urging to apply for a particular kind of insurance from a particular licensed insurer, fraternal benefit society, or health maintenance organization

Company Regulation

Certificate of Authority - No person, firm, association, corporation, or joint-stock company may conduct insurance business unless authorized this, issued by the state - $1,000 penalty for the first violation - $2,500 penalty for each subsequent violation Every license must contain: - The name of the licensee - The home office address - The state or country under whose laws it was organized - The kinds of insurance business it will provide and term of license

Moral Turpitude

Conduct that is contrary to community standards of justice, honesty, or good morals

Disclosure of Producer Compensation

Must include: - A description of the producer's role in the transaction - Whether or not the producer will receive compensation from the sale - An explanation of factors that affect the amount of producer compensation - The purchaser's right to request and obtain information about the producer's compensation * Producers MUST keep a copy of all written disclosures provided to the purchaser for at least 3 years

Exempt

Not subject to an obligation

Promulgate

To make public, to put into action (e.g. laws, court decrees, and similar)

Cease and Desist

To stop or to discontinue

Insolvent

Unable to meet financial obligations

Ethics

An agents 4 primary ethical responsibilities are to the following: 1. Insurer > Agent owes to their insurer the duties of honesty, good faith, and loyalty 2. Policyowners 3. General Public 4. State

State Regulation

Superintendent's General Duties & Powers: - Superintendent is appointed by the Governor - In office until the end of the Governor's term

Commission

Payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium

Important Dollar Amounts

$500: Penalty for each offense in violation of state insurance laws $2,500: Maximum aggregate penalty for all offense in violation of state insurance laws $10: Late fee for license renewal $25: Maximum value of any merchandise given by an insurer, agent or broker to avoid rebating $2,000: Fine PER DAY without appropriate Fraud Prevention Plan $2,500: Fine for willful noncompliance with the Fair Credit Reporting Act $5,000: Fine for violation for cease and desist order

Rebating

- Any inducement offered in the sale of insurance products that is not specified in the policy - It is illegal to offer an inducement to a person to encourage the purchase of an insurance policy - Rebates include: money, sharing of commissions, promises, inducements, and personal services

Licensing and Appointment Requirements

18: Age to apply for license 2 years: Producer license is valid 60 days: Before license expiration, agent must file an application for renewal 5 days: License expires after renewal license is denied 90 days: Length of one-term temporary license 15 months: Maximum length of a temporary license 15 days: For insurer to file agent's appointment with the Superintendent 30 days: For insurer to notify the Superintendent of termination of producer's appointment 15 days: Send a notice of appointment termination to producer

Miscellaneous Producer Regulations

20 hours: Prelicensing education for Life only or Accident and Health only agent or broker 40 hours: Prelicensing education for a Life, Accident and Health agent or broker, Personal Lines agent or broker and Public Adjuster 90 hours: Prelicensing education for Property/Casualty agent or broker 15 hours: CE required every 2 years 15 days: Provide requested information to the Superintendent 30 days: To inform Superintendent about changes of address 20 days: To pay penalty for licensing law violations without further action 30 days: To pay penalty for violation provisions of the Insurance Code 30 days: To report any fraudulent insurance transactions to the Superintendent 6 years: Keep records of insurance transactions 10%: Maximum allowed amount of commissions from controlled business in one year

What are the continuing education requirements for licensed insurance agents in the state of New York?

A) 30 hours of any insurance-related courses every 4 years B) 20 hours of life and health agents and 25 hours for property and casualty brokers every 2 years C) 15 hours of approved instruction every 2 years * - To renew a license, any resident or nonresident agent must complete 15 hours of instruction by an approved provider of continuing education biennially (every 2 years). D) 25 hours of instruction annually

Every insurance company in the state of New York must file annually with the office of the Superintendent to show that it is

A) Admitted B) Certified C) Authorized D) Solvent * - Every insurance company in the state of New York must file annually with the office of the Superintendent to show that it is solvent.

Which of the following is true regarding licensing in the state of New York?

A) Applicants must be at least 18 years old * - To qualify for an insurance license in NY, an individual must be at least 18 years old, be a New York resident, must meet relicensing education requirements, and be found competent and trustworthy. B) Applicants must submit fingerprints C) Applicants must have a bachelor's or associate's degree D) Applicants do not have to take a prelicensing education course

An agent in another state wants to become an agent in New York. The other state gives the same privileges to New York agents wanting to be licensed in that state as it does its own agents. New York, therefore, extends the privilege of its agents to the prospective agent of the other state. What is this called?

A) Fair exchange B) Equanimity C) Reciprocity * - This occurs when the state in which the person resides across the same privilege to residents of New York. D) Equality

Which of the following is NOT true concerning the purpose of the Insurance Fraud Prevention Act?

A) It permits the Department to receive assistance from federal and state law enforcement agencies B) It permits the Superintendent and Department to investigate insurance fraud C) It helps stop fraudulent acts more effectively D) It helps insurers to not sell policies to those applicants who are high risks * - The Insurance Fraud Prevention Act is intended to permit the Superintendent and the department to utilize their expertise to investigate and discover insurance fraud, halt fraudulent activities more effectively, and receive assistance from federal and state law enforcement agencies.

An insurance agent was born in 1983. He obtained his New York insurance license in 2014. When will the agent's license expire?

A) January 1st every even-numbered year B) Every year on the license issue date C) Every 2 years on the license issue date D) On the agent's Birthday every odd-numbered year * - Agent licenses last for 2 years. The licenses of all insurance agents born in odd-numbered years will expire on their birthdays in odd-numbered years. The licenses of all insurance agents born in even-numbered years will expire on their birthdays in even-numbered years.

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act

A) Legal, provided that the other insurers are paid royalties for the usage of their names B) Illegal under any circumstances * - When a company criticizes the financial situation of another company with the intention of injuring that company, it has committed an illegal trade practice called defamation. C) Legal, provided that the information can be verified D) Illegal until endorsed by the Guaranty Association

Treatment of nonpublic personal financial information about individuals requires the insurer to do which of the following?

A) Provide notice to individuals about its privacy policies and practices, no later than at the time an insurance policy is delivered, and annually thereafter B) Describe the conditions under which a licensee may disclose nonpublic personal financial information about individuals to affiliates and nonaffiliated third parties C) Provide methods for individuals to prevent a licensee from disclosing that information. An opt out notice must be provided to allow the consumer a choice to limit disclosure of personal information D) All of the above * - Under the Insurance Frauds Prevention act, the insurer must do each of the above.

For which of the following reasons can a temporary license be issued?

A) To negotiate new insurance contracts B) To provide temporary help to a license producer C) To service the existing business * - It may only be used to service existing business, not to solicit, negotiate, or procure new business. D) To solicit new business

Implied Authority

Authority that is not expressly granted, but which the agent is assumed to have in order to transact the business of the principal

Credit Report

Is ordered when there is reason to question the applicant's ability to pay the premiums and to determine whether he or she may be a poor credit risk

Fair Credit Reporting Act

Established producers that consumer-reporting agencies must follow in order to ensure that records are 1) confidential, 2) accurate, 3) relevant, and 4) properly used *If denied, the consumer has the right to know what was in the report. - They also have the right to know who received a copy of the report during the past year

Immunity

Exemption from a duty or legal obligation, or protection against a liability

Guaranty Association

Formed to protect policyowners, insured, beneficiaries, and anyone entitled to payment under an insurance policy from the incompetence and insolvency of insurers *The insurers CANNOT advertise protection by the Insurance Guaranty Association

Discrimination

In rates, premiums, or policy benefits for persons with the same class or with the same life expectancy is illegal

Insurance Frauds Prevention Act

Is intended to permit the Superintendent and the department to utilize their expertises to investigate and discover insurance frauds, halt fraudulent activities more effectively, and receive assistance from federal and state law enforcement agencies

Defamation

Occurs when an oral or written statement is made that is intended to injure a person engaged in the insurance business. - This also applies to statements that are maliciously critical of the financial condition of any person or a company

Inspection Report

Provides details on an applicant's lifestyle, finances, and exposure to abnormal hazards

Medical Information Bureau (MIB)

Serves as a clearinghouse of medical information concerning applicants and helps to disclose cases where an applicant conceals or submits misleading medical information

Change of Information

The Department of Financial Services must be notified within 30 days of any change of: - Address - Residence - Business - Email

Negotiate (or negotiation)

The act of directly conferring with or offering advice to a purchaser or prospective purchaser of a particular insurance contract concerning any of the substantive benefits, terms, or conditions of the contact, provided that the person engaged in that act either sells insurance or obtains insurance from licensed insurers, fraternal benefit society, or health maintenance organizations for purchasers

Apparent Authority

The appearance of, or assumption of, authority based on the actions, words, or deeds of the principal or because of the circumstances that the principal created

Expressed Authority

The authority that a principal intends, actually does, in fact, give to its agent, either orally or in writing.

Coercion

The forceful act or threat aimed to influence a person to act against his or her will

Superintendent of Financial Services (Superintendent)

The head of the New York State Department of Financial Services

Sell (or sale)

To exchange a contract of insurance by any means, for money or its equivalent, on behalf of a licensed insurer, fraternal benefit society, or health maintenance organization