Insurance Regulation
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? - $1,000 - $100 per violation - revocation of license - $2,500
$2,500
It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability? - age - occupation - address - sexual orientation
sexual orientation
If a telemarketer wants to make an unsolicited sales call to a potential customer, what is the earliest time the telemarketer can call the prospect's residence? - 7 am - 8 am - 9 am - noon
8 am
In life insurance, producers are permitted to share or split commissions providing - there is a written agreement between the producers - both are properly licensed for the line of the insurance - the insured knows and agrees to the arrangement - the insurance department knows of the arrangement
both are properly licensed for the line of insurance
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as - defamation - coercion - rebating - misleading advertising
coercion
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? - unfair discrimination - defamation - illegal - a legal advertising strategy
illegal
Which of the following would be considered an illegal inducement to purchase life insurance? - listing the insurance companies the agency represents in a letter - inviting prospective clients to the grand opening of the producer's new office - confirming future dividends in a life insurance proposal - mailing an agency brochure to a prospective client
confirming future dividends in a life insurance proposal
Which of the following would NOT be considered an unfair and deceptive practice? - rebating - defamation - misrepresentation - controlled business
controlled business
Which of the following will NOT be considered unfair discrimination by insurers? - discriminating in benefits and coverages based on the insured's habit and lifestyle - charging applicants with similar health histories different premiums based on their ethnicity - cancelling individual coverage based on the insured's marital status - assigning different risk classifications to applicants based on gender identity
discriminating in benefits and coverages based on the insured's habits and lifestyles
The primary purpose of licensing is to - ensure high standards to the insuring public - protect the policyowners against insolvent insurers - generate income for the insurance department - satisfy a federal requirement that all persons involved in insurance be licensed
ensure high standards to the insuring public
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company? - consumer privacy act - conditional receipt - disclosure rule - fair credit reporting act
fair credit reporting act
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of - unfair claim practice - rebating - misrepresentation - concealment
misrepresentation
Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance? - false statements about financial condition of an insurer are unlawful - statements made with the intent to deceive are unlawful - only written statements can be considered fraud - omissions of material fact on insurance application are fraud
only written statements can be considered fraud
An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of - twisting - controlled business - rebating - coercion
rebating
Which of the following does a life insurance producer have the authority to do? - transact insurance for nonadmitted insurers - modify coverage - bind coverage - receive an application
receive an application
The Federal Fair Credit Reporting Act - regulates consumer reports - protects customer privacy - regulates telemarketing - prevents money laundering
regulates consumer reports
Under the Fair Credit Reporting Act, if a consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must - defend the report if the agency feels it is accurate - change the report - send an actual certified copy of the entire report to the consumer - respond to. the consumer's complaint
respond to the consumer's complaint
All of the following are considered unfair trade practices in the business of insurance EXCEPT - sharing commissions - boycott - rebating - defamation
sharing commissions
Which of the following entities established the Do-Not-Call Registry? - the Consumer Protection Agency - the Federal Trade Commission - the Better Business Bureau - the NAIC
the Federal Trade Commission
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? - they provide information about a customer's character and reputation - the customer has no knowledge of this action - the customer's associates, friends, and neighbors provide the report's data - they provide additional information from an outside source about a particular risk
the customer's associates, friends, and neighbors provides the report's data
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? - the guaranty association - consumer privacy act - the fair credit reporting act - unfair trade practices
the fair credit reporting act
Which of the following authorities is responsible for determining whether an insurer is financially stable enough to safety conduct business? - guaranty association - commissioner - department of insurance - B&C
B&C
An insurer has filed a new rate with the Commissioner, and is waiting for a reply. The Commissioner hasn't responded yet. After how many days can the insurer apply the new rate? - 45 days - 5 days - 10 days - 60 days
10 days
Producers must complete 24 continuing education hours prior to license renewal every - 2 years - 3 years - 5 years - year
2 years
The Commissioner last examined an insurance company in 2013. When is the next date by which the Commissioner must examine the same company? - 2015 - 2016 - 2018 - 2020
2018
In a circumstance that would warrant license suspension, the Commissioner may instead decide to put the license on probation. What is the maximum number of months that the probation could last? - 6 - 12 - 18 - 24
24
A producer's license may be renewed every - year - 2 years - 3 years - 5 years
2 years
According to the telemarketing sales rules, what are the permissible calling hours for telemarketing calls? - 7am until 7pm - 7am until 9pm - 8am until 9pm - 10am until 10pm
8am until 9pm
All of the following are unfair claims settlement practices EXCEPT - failing to adopt and implement reasonable standards for settling claims - failing to acknowledge pertinent communication pertaining to a claim - suggesting negotiations in settling the claim - refusing to pay claims without conducting a reasonable investigation
suggesting negotiations in settling the claim
Which of the following reports will provide the underwriter with the information about an insurance applicant's credit? - inspection report - agent's report - any federal report - consumer report
consumer report
Who assumes control over an insurance company's funds and management if it becomes insolvent? - national association of insurance commissioners - department of insurance - the policyholders or stock owners of the company - state attorney general
department of insurance
Which of the following best describes a misrepresentation? - making a maliciously critical statement that is intended to injure another person - discriminating among individuals of the same insuring class - issuing sales material with exaggerated statements about policy benefits - making a deceptive or untrue statement about a person engaged in the insurance business
issuing sales material with exaggerated statements about policy benefits
An out-of-state producer wants to start selling insurance in this state. What type of license should the producer obtain? - temporary - broker - limited lines - nonresident
nonresident
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? - 3 days - 5 days - 10 days - 14 days
3 days
For how many years must an insurance producer be licensed prior to adding surplus lines to their repertoire? - 4 years - 2 years - 1 year - 3 years
3 years
If an insurer wants to raise its premium rates, the new rates must be submitted to the Commissioner for the review and will take how many days to go into effect? - 10 - 20 - 30 - 60
30
How many days does an insurer have to notify the Department of Insurance about the termination of an appointment? - 20 days - 30 days - 45 days - 60 days
30 days
The Commissioner is suspected being involved in fraudulent activities. Which of the following authorities could remove the Commissioner from office? - federal association of insurers - governor - guaranty association - general election of the utah insurance board
governor
An agent voluntarily surrendered her license. How soon after this surrender can her license be reinstated? - 6 months - 3 months - 1 year - 2 years
1 year
A license may be denied, suspended, or revoked if the licensee - engages in fraud - was convicted of a felony - intentionally misrepresents an insurance policy - all of the above
all of the above
When handling premium funds in the conduct of their business, insurance producers act in a(n) - special capacity - fiduciary capacity - accounting capacity - financial capacity
fiduciary capacity
Which of the following statements does NOT accurately describe an insurance broker? - a broker is not a direct representative of an insurer - a broker cannot bind coverage - brokers must have a written agreement with an insured when they receive any fees or compensation for services - none of the above. all are true
none of the above. all are true
A licensee is conducting business under an assumed name. What action must she take? - legally change her name - notify any applicants - notify the commissioner - pay a fine
notify the Commissioner
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's - habits - prior insurance - ancestry - credit history
ancestry
A producer committed a violated the insurance code. The act she committed was so uncommon that no specific penalty is attached to it. In this case, what is the maximum fine that could be leveled? - $10,000 - $25,000 - $3,000 - $5,000
$5,000
If a producer changed his or her residential address, the Commissioner must be notified of the change within how many days? - 10 - 15 - 30 - the Commissioner only needs to be notified if the address of the producer's business, not residence, changes
30
Circulating deceptive sale material to the public is what type of Unfair Trade Practice? - coercion - misrepresentation - false advertising - defamation
false advertising
All of the following violations may result in an agent's imprisonment EXCEPT - knowingly obtaining information about a consumer under false pretenses - engaging in the business of insurance after being convicted of breach of trust - failing to report to the department a criminal prosecution taken against the agent in another jurisdiction - embezzling funds from the insurer
failing to report to the department a criminal prosecution taken against the agent in another jurisdiction
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? - twisting - defamation - false advertising - unfair claims
false advertising
In which of the following situations is it legal to limit coverage based on marital status? - it is never legal to limit coverage based on marital status - excessive number of divorces, as defined by the Insurance Code - legal separation during the application process - divorce within the last six months applying for insurance
it is never legal to limit coverage based on marital status
Which of the following would NOT be considered rebating or illegal inducement? - sending $150 gift certificate to the insured's employee after the insurance has been effected, as a thank you for the referral - sharing commission with the insured - collecting a lower premium than what's specified in a policy as a token of client appreciation - giving an applicant a $100 gift certificate during the insurance application process
giving an applicant a $100 gift certificate during the insurance application process
An insurance company must notify the Commissioner whenever it terminate an agent's appointment within how many days of the termination? - 90 days - 10 days - 15 days - 30 days
30 days
A producer's license lapsed. How soon after this lapse can his license be reinstated? - 1 month - 1 year - 5 years - 3 months
1 year
A resident agent licensed in another state may obtain a nonresident license in Utah without taking the examination provided that - the agent is currently licensed in the state of domicile - the agent has obtained that license by passing a test suitable to the Utah Department - the state where the agent lives affords the same privilege to residents of Utah - all of these requirements are met
all of these requirements are met
Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called? - law of large number - misrepresentation - adverse selection - discrimination
discrimination
Which of the following is an example of a producer's fiduciary responsibilities? - a producer promptly forwarding premiums to the insurance company - a producer helping clients to file claims - a producer doing a review of their client's coverage - a producer offering additional coverages to his client
a producer promptly forwarding to the insurance company
All of the following would be considered rebating EXCEPT - an agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him - an agents offers to share his commission with a policyholder - an agent offers tickets to a baseball game as an inducement to buy insurance - an agent misrepresents policy benefits to convince a policyowner to replace policies
an agent misrepresents policy benefits to convince a policyowner to replace policies
Applicants for producer, broker, or consultant licenses must show the Commissioner they satisfy all of the following requirements EXCEPT - are a citizen of the United States of America - are competent and trustworthy - are 18 years of age or older - intend, in good faith, to engage in the type of business permitted by the license
are a citizen of the US
In life insurance, producers are permitted to share or split commissions providing - both are properly licensed for the life of insurance - the insured knows and agrees to the arrangement - the insurance department knows of the arrangement - there is a written agreement between the producers
both are properly licensed for the life of insurance
All admitted insurance companies in this state are subject to fiscal examinations by the Commissioner - biennially - every 3 years - at least every 5 years - once a year
at least every 5 years
Which of the following would NOT be considered an exception to the National Do Not Call List? - calls which are not commercial or do not include unsolicited advertisements - calls by or on behalf of tax-exempt nonprofit organizations - calls based from outside of the US - calls from which the consumer has given prior written permission
calls based from outside of the US
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases an insurance policy from the bank in the amount of the loan. This is an example of - coercion - loading - defamation - twisting
coercion
Which of the following is NOT a duty of the Commissioner? - develop insurance rates - license insurance companies and producers - enforce the insurance code - regulate insurance rates
develop insurance rates
According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT - tax delinquencies - late payments - failure to pay off a loan - disputes regarding consumer report information
disputes regarding consumer report information
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT - an offer to share in commissions generated by the sale - dividends from a mutual insurer - an offer of employment - stock, securities or bonds
dividends from a mutual insurer
An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act? - defamation - unfair discrimination - errors and omissions - fraud
fraud
What was created to keep telemarketers from calling consumers who do not wish contacted? - confidential no call act - freedom of information act - call control registry - national do not call registry
national do not call registry
The Gramm-Leach-Bliley Act was passed to - allow insurance companies access to medical information for underwriting purposes - protect private costumer information filed with a financial institution - define insurance as interstate commerce - allow consumers access to credit and private consumer reports
protect private customer information filed with a financial institution
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered - controlled business - adverse selection - discrimination - twisting
discrimination
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? - stating that the insurance policy is a share of stock - exaggerating the benefits provided in the policy - stating that the competitors will arbitrarily increase their premiums each year - making comparisons between different policies
making comparisons between different policies
The National Do Not Call Registry was created to regulate - telemarketers - field underwriters - insurers - insurance solicitors
telemarketers
Which of the following would NOT be a violation of state insurance regulations? - producer B charges his clients, in addition to the premium, a consulting fee - producer C uses her license exclusively to write business other than controlled - producer D collects premiums due on policies and deposits the funds in his own personal accounts - producer A uses her license to write only insurance for herself and her immediate family
producer C uses her license exclusively to write business other than controlled
Which of the following is an example of a producer being involved in an unfair trade practice of rebating? - making deceptive statements about a competitor - telling a client that his first premium will be waived if he purchases the insurance policy today - inducing the insured to drop a policy in favor of another one when it is not in the insured's best interest - charging a client a higher premium for the same policy as another client in the same insuring class
telling a client that his first premium will be waived if he purchases the insurance policy today
Producers will be deemed to be using their license primarily to write controlled business if, during any 12-month period - the licensees write more than 5 policies classified as controlled business - the licensees write more than two policies on themselves or their property - the total premium on controlled business equals 15% or more of the total of all premiums on business written - the total premiums on controlled business exceeds the total premiums on all other business written
the total premiums on controlled business exceeds the total premiums on all other business written
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer reported - must be informed of the source of the report - are entitled to obtain a copy of the report from the party who ordered it - must be advised that a copy of the report is available to anyone who requests it - may sue the reporting agency in order to get inaccurate data corrected
must be informed of the source of the report
Which term describes an individual who is domiciled and licensed as a resident producer in a state other than Utah? - unauthorized producer - limited lines producer - nonresident producer - foreign producer
nonresident producer
All of the following are true regarding rebates EXCEPT - rebates are only allowed if specifically stated in the policy - rebating can be anything of monetary value given as an inducement to purchase insurance - dividends are not considered to be rebates - rebates are allowed if it is in the best interest of the client
rebates are allowed if it is in the best interest of the client
Any inducement offered to the insured in the sale of an insurance policy that is not specified is an unlawful practice known as - false advertising - coercion - rebating - twisting
rebating
Which of the following would be considered an unfair claims settlement practice? - requesting the insured a submit a signed proof of loss statement, after the insured has already verbally advised the insurer of the claim - requesting the insured swear under oath concerning the facts of the claim - delaying the settlement of a claim for 30 days in order for the insured to conduct an investigation - advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered
advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered
Which of the following regulatory authorities participated in creating the National Do Not Call Registry? - SEC - NAIC - BBB - FTC
FTC
Existing and replacing life insurers are required to keep copies of all summaries, notices, and statements used in sale transaction until the conclusion of their next examination by the Insurance Department, or for the current calendar year plus - two years - three years - five years - one year
three years
How many hours of continuing education per licensing period must all licensees complete in order to renew their licenses? - 8 hours - 10 hours - 12 hours - 24 hours
24 hours
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? - 10 days - 3 days - 5 days - 7 days
5 days
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce - without receiving written consent from an insurance regulatory authority - under any circumstances - unless they have served an appropriate prison sentence - without receiving written consent from a Federal Judge
without receiving written consent from an insurance regulatory authority
Which of the following includes information regarding a person's credit, character, reputation, and habits? - insurability report - agent's report - consumer report - consumer history
consumer report
How many days does an insurer have to file a notice of appointment for a producer? - 10 days - 15 days - 30 days - 40 days
15 days
