Insurance Regulations
Producers must notify the Commissioner promptly upon change of address.
(within 30 days)
Solvency
A measurement of an insurer's liabilities to policyholders is called legal reserves.
Under which of the following organizations are the practicing providers compensated on a fee-for-service basis? a) Open panel b) PPO c) HMO d) Blue Cross/Blue Shield
b) PPO
The Ownership provision entitles the policyowner to do all of the following EXCEPT a) Set premium rates. b) Receive a policy loan. c) Assign the policy. d) Designate a beneficiary.
a) Set premium rates.
False advertising
is a form of misleading advertising.
A producer must file a Report of Action with the Commissioner within ________ DAYS of the final disposition of any administrative action taken against them in this or any other jurisdiction.
30 Days
Which Universal Life option has a gradually increasing cash value and a level death benefit? a) Term insurance b) Option B c) Option A d) Juvenile life
c) Option A
The insurance company attempting to use arbitration to settle the claim is
NOT an example of an Unfair Claim Practice.
insurers are forbidden from negotiating directly with a claimant who is not represented
by an attorney
How many eligible employees must be included in a contributory plan? a) 100% b) 50% c) 75% d) 90%
c) 75%
Under most dental plans, what limitations are posed for denture replacement? a) No limitations b) Only the initial dentures are covered. c) Once every 5 years d) Once every 10 years
c) Once every 5 years
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to a) Pay back all premiums owed plus interest. b) Receive payments for a fixed amount. c) Purchase a single premium policy for a reduced face amount. d) Purchase a term rider to attach to the policy.
c) Purchase a single premium policy for a reduced face amount.
Anyone acting as an officer, director, agent or other insurance employee who is convicted of embezzling funds
faces the aforementioned fines and imprisonment. However, if the embezzlement was in an amount less than $5,000, prison time may be reduced to 1 year.
Commissions may be shared with
producers who have like licenses. Producers can only share commissions with other producers who are licensed for the same lines of insurance.
If the insurer feels that it was aggrieved in connection with a filing, it may apply for a hearing with the Commissioner. The Commissioner may hold that hearing
30 days after receiving the application.
Representatives of the consumer (formerly referred to as brokers)
Insurance producers who do not have company appointments
Exclusive general agent
a licensee which has been granted sole authority to act directly or indirectly as an insurance producer for a domestic insurer with respect to a specific portion of the insurer's business or within a specific territory, has the authority to bind coverage on behalf of the insurer and either separately or together with affiliates or subproducers, directly or indirectly produces and underwrites in any 1 year an amount of gross direct written premium equal to or more than 25% of the surplus (as regards policyholders) as reported in the last annual statement of the insurer.
Coercion
considered to be a restraint of trade and is illegal.
Even though a prospective licensee passes the state exam, he or she cannot sell insurance until
the license is actually issued.
If the request for reinstatement is beyond 60 days from the date of lapse,
the license will be reinstated prospectively, with reinstatement effective the date that the license is reinstated.
Examples of Rebates
-Rebates of premiums payable on the policy; -Special favors or services; -Advantages in the dividends or other benefits; and -Stocks, bonds, securities, and their dividends or profits.
Example of an Unfair Claim Practice
Refusing to pay claims without conducting a reasonable investigation
Twisting
a 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. This is prohibited.
An individual who unknowingly violates the Fair Credit Reporting Act
is liable in the amount equal to the loss to the consumer, as well as any reasonable attorney fees incurred in the process.
The Commissioner
is responsible for determining if an insurance company is insolvent.
If no action is reported within 30 days
the insurer can assume that the form is approved.
This notice will be given to first-party claimants
within 30 days, and to third-party claimants within 60 days.
Pennsylvania requires
24 hours of prelicensing training prior to taking an insurance exam. Of the 24 hours, at least 3 hours must be related to Ethics.
Corporations, associations, partnerships, and individuals may apply to the Commissioner for rating organization licenses.
The Commissioner will make decisions on these applications within 60 days of the date of their filing. Rating organization licenses will remain in effect for 3 years.
Disclosure Required
Licensees who are employed by or affiliated with a financial institution who sell annuities or life insurance must solicit insurance and annuity sales in a location which is distinct from the area where deposits or loans are discussed or accepted. If circumstances prevent compliance, the Commissioner may exempt the financial institution from this requirement.
Failure to report terminations or false reporting with malice may result, after a hearing,
in suspension or revocation of the insurer's certificate of authority or a fine not to exceed $5,000 for each violation.
Fiduciary
is someone in a position of trust. More specifically, it is illegal for insurance producers to commingle premiums collected from the applicants with their own personal funds.
The civil penalty for violation the Pennsylvania Insurance Fraud Prevention Act is
up to $5,000 for the first violation, $10,000 for the second violation, and $15,000 for each subsequent violation.
If a licensee fails to reply, the Department
will send a notice specifying the violation and will give the licensee 15 days to correct the violation. Failure to correct such a violation will result in an administrative fine of $100 per day per violation.
The insurer then must mail a notice to the producer
within 15 days after the notification is sent to the Commissioner.
Not a violation of the Unfair Trade Practices regulation
A producer showing competitor information to a client is
Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under a $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how much will the annuitant's spouse receive in benefits? a) $50,000 b) $62,500 c) $75,000 d) Nothing
a) $50,000
To avoid violations of unfair claims settlement regulations, insurers are required to acknowledge the receipt of a claim within how many days? a) 10 days b) 15 days c) 30 days d) 45 days
a) 10 days
HIPAA applies to groups of a) More than 2, fewer than 50. b) 2 or more. c) At least 10. d) At least 100.
b) 2 or more.
To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters? a) 4 credits b) 6 credits c) 10 credits d) 40 credits
b) 6 credits
Which of the following provisions in annuity contracts allow the owner to surrender the annuity if interest rates drop to a specified level? a) Annuitization b) Bail-out c) Surrender d) Nonforfeiture
b) Bail-out
Opt out
means a direction by the consumer that the licensee not disclose his or her nonpublic personal financial information to a third party.
All forms, including changes to previously approved forms
must be filed with the Commissioner. The Commissioner will approve or disapprove the form within 30 days.
The consent of the official
must specify that it is granted for the purpose of 18 U.S.C. 1033. Anyone convicted of a felony involving dishonesty or breach of trust, who also engages in the business of insurance, will be fined, imprisoned for up to 5 years or both.
If an insurer terminates a producer's appointment,
the Commissioner must be notified within 30 days after the effective date of the termination.
Illegal Inducement
It is unlawful to pay, offer or accept any of the following as an inducement to buy insurance: -Any special favor or advantage in dividends or benefits; -Any stocks, bonds, securities, or accrued dividends or profits; or -Anything of value not specified in the insurance contract.
Misappropriation of funds
is the term used when a person in a fiduciary position has used funds in manner for which they were not intended, such as the wrongful taking or use of money belonging to another.
Cease and Desist Order
Following the hearing, the Commissioner may issue a written order resolving the factual issues presented at the hearing and stating what remedial action, if any, is required of the person charged.
5 Days
Insurance companies must notify the Commissioner within 5 business days when there is any material change in their ownership, control, surplus or solvency.
If an insurance company violates the laws of the Commonwealth
The Commissioner may -suspend or revoke the insurance company's certificate of authority -refuse to issue a new certificate of authority for a period up to 1 year -or impose a penalty between $5,000 and $25,000 for each violation.
Anyone without proper licensing, that is caught acting as a manager or exclusive general agent
is guilty of a third degree misdemeanor and faces a fine of up to $1,000 for each day of their offense.
Before an insurance company can legally transact insurance,
it must first obtain a certificate of authority from the Commissioner. This certificate indicates that the Commissioner has examined the business and found it to be financially stable and organized in accordance with the Insurance Code.
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? a) 3 days b) 5 days c) 10 days d) 14 days
a) 3 days
Which is TRUE about the cash surrender nonforfeiture option? a) Funds exceeding the premium paid are taxable as ordinary income. b) After the cash surrender, the insured is covered for a grace period of 1 month. c) The policy remains active for some time after the policyholder opts for cash surrender. d) The policyholder receives the original cash value of the policy.
a) Funds exceeding the premium paid are taxable as ordinary income.
During partial withdrawal from a universal life policy, which portion will be taxed? a) Loan b) Interest c) Cash value d) Principal
b) Interest
An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin? a) 5 b) 3 c) 2 d) 1
d) 1
When the policy premium wasn't submitted with the application, what should the agent obtain from the insured upon policy delivery? a) A medical report b) A conditional contract c) A unilateral contract d) A statement of good health
d) A statement of good health
When must insurable interest exist in a life insurance policy? a) At the time of policy delivery b) When there is a change of the beneficiary c) At the time of loss d) At the time of application
d) At the time of application
Which of the following individuals must have insurable interest in the insured? a) Beneficiary b) Actuary c) Producer d) Policyowner
d) Policyowner
violation of Section 1033
of not more than $50,000 for each violation, or the amount of compensation the person received as a result of the prohibited conduct, whichever is greater.
Whenever any life insurance company does not have on hand the net value of all policies in force (after all other debts and claims, including 50% of the capital, have been provided for),
the Commissioner will notify the company and its agents that it cannot issue any new policies until such funds become available.
Federal law makes it illegal for any individual convicted of a crime involving dishonesty, breach of trust or a violation of the Violent Crime Control and Law Enforcement Act of 1994
to work in the business of insurance affecting interstate commerce without receiving written consent from an insurance regulatory official (Director of Insurance, or Commissioner of Insurance) — a 1033 waiver.
Complete investigations related to claims
within 30 days of notice
Rebating
Giving part of one's commission to a client as an inducement to a sale
Consumer reports cannot contain certain types of information if the report is requested in connection with a life insurance policy or credit transaction of less than $150,000
The prohibited information includes bankruptcies more than 10 years old, civil suits, records of arrest or convictions of crimes, or any other negative information that is more than 7 years old. As defined by the Act, negative information includes information regarding a customer's delinquencies, late payments, insolvency or any other form of default.
Investigative Consumer Reports
are similar to consumer reports in that they also provide information on the consumer's character, reputation, and habits. The primary difference is that the information is obtained through an investigation and interviews with associates, friends and neighbors of the consumer.
Violations of the regulations for premium rates may result in
fines of $50 for each violation, not to exceed $500.
Consent Agreement
A person who is accused of violating insurance fraud statutes of the Insurance Code may enter into a consent agreement. By so doing, the accused does not admit or deny the charges, but agrees to pay a fine.
Policy Rates and Forms
Although producers develop information for the insurer, they do not set the final rate classification. All policy modifications must be approved by a company officer. Rates may vary based upon age of the applicant.
If a licensee moved out of state, they must give up their Pennsylvania resident license.
It is not unlawful to sell insurance out of state with a nonresident license.
A place of business could also be
a residence.
A company must maintain, at its home office, a complete file of every advertisement used -
for a period of 4 years or until the next regular examination (whichever is longer).
A person who knowingly and willfully obtains information on a consumer from a consumer reporting agency under false pretenses
may also be fined and/or imprisoned for up to 2 years.
If the reason for the termination is due to the producer's engaging in activity prohibited by the regulations,
this information must be included in the termination notice.
Unfair trade practice
to knowingly commit an unfair method of competition or to engage in such actions with enough frequency that the commission of unfair marketing practices indicates a general business practice.
Insurance Fraud Prevention Trust Fund
was created to fund the investigation and prosecution of insurance fraud. As a condition of transacting insurance in Pennsylvania, each insurer must pay an annual assessment into this Fund.
Licensees are required to provide a written response to a Department's inquiry
within 30 days
A person may go to jail for
filing false financial statements with regulators, the embezzlement of insurer funds or writing threatening letters to regulators. But NOT for selling insurance out of state with a nonresident license.
A Pennsylvania nonresident license can be obtained
if the licensee passed his or her exam in their home state.
The Commissioner's main responsibilities
include licensing insurance producers and companies, and approving, administering, or contracting the administration of the prelicensing education courses, insurance producer licensing examinations, and CE programs.
The producer has a right to send comments to the Commissioner regarding the termination
within 30 days of receiving the notice.
The Commissioner must audit all license insurers at least once every
5 years.
Misrepresenting facts or policy provisions
is an example of an Unfair Claim Practice.
Respond to inquiries from the Department
within 15 working days
Anyone engaged in the business of insurance whose activities affect interstate commerce, and who knowingly makes false material statements
may be fined, imprisoned for up to 10 years or both. If the activity jeopardized the security of the accompanied insurer, the punishment can be up to 15 years.
If the reinstatement is within 60 days of license lapse,
reinstatement will occur retroactively with the reinstatement effective on the date the license lapsed.
If a producer or adjuster is suspected of acting in violation of the Insurance Code,
the Commissioner may request a legal hearing, and give written notice of the time and place of the hearing to the person in violation.
A place of business
must display the producers license and all records must be kept there.
If the investigation cannot be completed during this time period, the insurer should give the insured
notice (within 30 days of the initial notice), and provide further notice every 45 days that the investigation continues
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.
The purpose of the Insurance Fraud Protection Act of 1994 is
to protect consumers and insurance companies from white-collar insurance fraud. The act requires that a person who has been convicted of any crime involving dishonesty or breach of trust must obtain consent from an insurance regulatory official prior to engaging in the business of insurance.
An individual who willfully violates the Fair Credit Reporting Act enough to constitute a general pattern or business practice
will be subject to a penalty of up to $2,500.
In addition to a cease and desist order, Commissioner may impose any of the following disciplinary actions, or a combination
-Denial, suspension, refusal to renew or revocation of the license; -A civil penalty up to $5,000 for each violation; and/or =Any other action deemed appropriate.
After receiving notification of a claim, provide the necessary claim forms Accept or deny any claims within 15 days of their receipt. If the insurer needs more time, notice should be provided within 15 days.
within 10 working days
Insurers must file all mail-order solicitations with the Department
30 days prior to their first publication. After these advertisements are approved, they may be used for 2 years.
False Advertising
advertise or circulate any materials that are untrue, deceptive, or misleading.
Insurance Fraud Prevention Authority
was established to develop and sponsor the implementation of statewide plans, programs and strategies to combat insurance fraud, improve the administration of the insurance fraud laws, and provide a forum for identification of critical problems for those persons dealing with insurance fraud.
Acknowledge the receipt of claims or any other pertinent communication
within 10 working days
In order to become licensed to become a viatical settlement provider, an application must be made with a) The Insurance Department b) The Viatical Settlement Association c) The Governor's Office d) The NAIC
a) The Insurance Department
The Commissioner may extend this period an additional
30 days by providing written notice. The Commissioner must notify the insurer of the reasons for any disapproval within 30 days after mailing written notice of the action.
If a new individual long-term care policyholder is not satisfied with a new policy, within how many days can the insured return the policy for a full premium refund? a) 30 b) 7 c) 10 d) 90
a) 30
Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy? a) An individual who was previously covered by group health insurance for 6 months is eligible. b) An individual who has used up COBRA continuation coverage is eligible. c) An individual who doesn't qualify for Medicare may be eligible. d) The gap of coverage for eligibility is a period of 63 or less days.
a) An individual who was previously covered by group health insurance for 6 months is eligible.
According to the provisions of the Patient Protection and Affordable Care Act, all of the following are required preventive care services EXCEPT a) Cervical cancer exams for all women starting at age 40. b) Diet counseling for adults. c) Well-woman visits and counseling. d) Screenings for autism and behavioral disorders in children.
a) Cervical cancer exams for all women starting at age 40.
If an employee terminates her employment, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 31 days? a) Conversion b) Replacement c) Grace period d) Renewability
a) Conversion
Life income joint and survivor settlement option guarantees a) Income for 2 or more recipients until they die. b) Payment of interest on death proceeds. c) Payout of the entire death benefit. d) Equal payments to all recipients.
a) Income for 2 or more recipients until they die.
When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income? a) Interest only b) Both principal and interest c) Neither principal nor interest d) Principal only
a) Interest only
All of the following are unfair claims settlement practices EXCEPT a) Failing to acknowledge pertinent communication pertaining to a claim. b) Suggesting negotiations in settling the claim. c) Refusing to pay claims without conducting a reasonable investigation. d) Failing to adopt and implement reasonable standards for settling claims.
b) Suggesting negotiations in settling the claim.
If an insurer becomes insolvent, which of the following would pay benefits to policyholders? a) A federal reserve fund b) The Guaranty Association c) The NAIC fund d) The State
b) The Guaranty Association
When employees are actively at work on the date coverage can be transferred to another insurance carrier, what happens to coinsurance and deductibles? a) Deductibles carry over, but coinsurance is generally higher. b) They carry over from the old plan to the new plan. c) They have to be reevaluated. d) Coinsurance carries over, but deductibles are generally higher.
b) They carry over from the old plan to the new plan.
Regarding Medicare SELECT policies, what are restricted network provisions? a) They help avoid adverse selection. b) They condition the payment of benefits. c) They determine who can be insured. d) They determine premium rates.
b) They condition the payment of benefits.
What is the purpose of establishing the target premium for a universal life policy? a) To cover all policy expenses b) To keep the policy in force c) To accumulate cash value faster d) To pay up the policy faster
b) To keep the policy in force
What types of services may NOT be provided under the long-term care's assisted living care? a) Reminders regarding medication b) Visits by a registered nurse c) Linens and personal laundry service d) Assistance with dressing and bathing
b) Visits by a registered nurse
Following hospitalization because of an accident, Bill was confined in a skilled nursing facility. Medicare will pay full benefits in this facility for how many days? a) 80 b) 3 c) 20 d) 100
c) 20
Most scheduled plans provide first-dollar benefits without a) Copays. b) Exclusions and conditions. c) Coinsurance and deductibles. d) Premiums
c) Coinsurance and deductibles.
Combination plans are comprised of two types of plan features: basic and a) Expanded. b) Limited. c) Comprehensive. d) Scheduled.
c) Comprehensive.
Which provision allows a person to return a Medicare supplement policy within 30 days for a full premium refund? a) Grace period b) Refund of premium c) Right to examine d) Guaranteed renewability
c) Right to examine
Which of the following is an example of a peril covered in an accident and health insurance policy? a) Smoking b) Death c) Sickness d) Alcoholism
c) Sickness
Which of the following statements is correct regarding a whole life policy? a) The policy premium is based on the attained age. b) The death benefit may increase or decrease during the policy period. c) The policyowner is entitled to policy loans. d) Cash values are not guaranteed.
c) The policyowner is entitled to policy loans.
What is the purpose of the rehabilitation benefit in disability insurance? a) To refund the insured's premium paid during the disability b) To help the insured recover from a disability c) To cover the expenses of retraining the insured to return to work d) To compensate the insured for the lost income
c) To cover the expenses of retraining the insured to return to work
Which of the following best describes the difference between Pure Life and Life with Guaranteed Minimum settlement options? a) Life with Guaranteed Minimum will pay the remaining principal to the beneficiary. b) In Life with Guaranteed Minimum, payments can be made in installments. c) Pure Life guarantees to pay out all the proceeds. d) Pure Life is not a life contingency option.
a) Life with Guaranteed Minimum will pay the remaining principal to the beneficiary.
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report a) Must be informed of the source of the report. b) Are entitled to obtain a copy of the report from the party who ordered it. c) Must be advised that a copy of the report is available to anyone who requests it. d) May sue the reporting agency in order to get inaccurate data corrected.
a) Must be informed of the source of the report.
All of the following statements about equity index annuities are correct EXCEPT a) The annuitant receives a fixed amount of return. b) They have a guaranteed minimum interest rate. c) The interest rate is tied to an index such as the Standard & Poor's 500. d) They invest on a more aggressive basis aiming for higher returns.
a) The annuitant receives a fixed amount of return.
Which of the following is NOT true regarding Equity Indexed Annuities? a) They earn lower interest rates than fixed annuities. b) The insurance company keeps a percentage of the returns. c) They have guaranteed minimum interest rates. d) They are less risky than variable annuities.
a) They earn lower interest rates than fixed annuities.
While a claim is pending, an insurance company may require a) An independent examination only once every 45 days. b) An independent examination as often as reasonably required. c) The insured to be examined only within the first 30 days. d) The insured to be examined only once annually.
b) An independent examination as often as reasonably required.
In the Executive Bonus plan, who is the owner of the policy, and who pays the premium? a) Company is the owner, and the company pays the premium. b) Executive is the owner, and the executive pays the premium. c) Company is the owner, but the executive pays the premium. d) Board of directors is the owner, and the board of directors pays the premium.
b) Executive is the owner, and the executive pays the premium.
Which of the following is NOT true regarding the accumulation period of an annuity? a) It is also known as the pay-in period. b) It would not occur in a deferred annuity. c) It is the period during which the annuity payments earn interest. d) It is the period over which the owner makes payments into an annuity.
b) It would not occur in a deferred annuity
Which of the following is NOT the purpose of HIPAA? a) To prohibit discrimination against employees based on their health status b) To limit exclusions for pre-existing conditions c) To provide immediate coverage to new employees who had been previously covered for 18 months d) To guarantee the right to buy individual policies to eligible individuals
c) To provide immediate coverage to new employees who had been previously covered for 18 months
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an a) Local insurer. b) Certified insurer. c) Self-insurer. d) Authorized insurer.
d) Authorized insurer.
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? a) A legal advertising strategy b) Unfair Discrimination c) Defamation d) Illegal
d) Illegal
Producer Appointment
An insurance producer may not act on behalf of an insurer unless the insurance producer is appointed by the insurer.
All rate filings are subject to a
30-day waiting period before they become effective.
An insurer that appoints an insurance producer must
file with the department a notice of appointment, stating for which companies within the insurer's holding company system the appointment is made. Upon receipt of the notice, the department will verify if the insurance producer is eligible for appointment.
Which of the following is the most common time for errors and omissions to occur on the part of an insurer? a) Application process b) Policy delivery c) Policy renewal d) Underwriting
b) Policy delivery
If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights? a) Insured b) Policyowner c) The insured and the policyowner d) Beneficiary
b) Policyowner
What are the two components of a universal policy? a) Insurance and investments b) Mortality cost and interest c) Separate account and policy loans d) Insurance and cash account
d) Insurance and cash account
A prospective deferred annuity owner is concerned about what would happen if he surrendered the annuity before the annuitization period. The agent most likely explained which of the following? a) The owner will receive some of the money back, which will depend on the surrender value established by the insurer at the time that the contract is terminated. b) The insurance company will apply the money to another annuity or a life insurance policy, but the money cannot be returned. c) It is not possible to surrender an annuity before the annuitization period. d) Nonforfeiture option guarantees that the owner will receive a surrender value of the contract.
d) Nonforfeiture option guarantees that the owner will receive a surrender value of the contract.
Defamation
making oral or written statements that are false or maliciously critical of the financial condition of an insurer or producer.
The Gramm-Leach-Bliley Act
stipulates that in general, an insurance company may not disclose nonpublic personal information to a nonaffiliated third party except for the following reasons: -The insurance company clearly and conspicuously discloses to the consumer in writing that information may be disclosed to a third party. -The consumer is given the opportunity, before the time that information is initially disclosed, to direct that information not be disclosed to the third party. -The consumer is given an explanation of how the consumer can exercise a nondisclosure option.
To assure the public that an insurer's premium rates are neither excessive nor inadequate to meet future obligations
the Pennsylvania Insurance Code requires insurers to file their premium rates with the Commissioner.
An insured has an advanced form of dementia. Because his physician and family are concerned about his safety while unsupervised, the insured is moved to a nursing home, where he can be closely monitored and receive assistance with basic tasks. Which of the following terms best describes the insured's state of health? a) Acutely ill b) Partially ill c) Terminally ill d) Chronically ill
d) Chronically ill
Investigative Consumer Reports cannot be made unless
the consumer is advised in writing about the report within 3 days of the date the report was requested. The consumers must be advised that they have a right to request additional information concerning the report, and the insurer or reporting agency has 5 days to provide the consumer with the additional information.
If the Commissioner disapproves of a filing, a hearing may be held
10 days after the insurer is notified of that disapproval.
The notice must be given at least
10 days before the hearing, and must state the subject of the inquiry and specific charges, if any. No person will be excused from testifying or from producing any books, papers, contracts, agreements or documents at any hearing.
Manager
is 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 and does not act as an agent for that insurer.
A producer who allows his or her license to lapse may reinstate the license
within 1 year. A lapsed license fee of $165 will be charged in addition to the renewal fee.
Boycott, Coercion or Intimidation
It is illegal to be involved in any activity of boycott, coercion, or intimidation that is intended to restrict fair trade or to create a monopoly. This would include unfair behavior that influences not only clients, but competing agents and brokers.
Misrepresentation
It is illegal to issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms, the payment of dividends, etc. This also refers to oral statements.
Purpose of producer licensing
to make sure that producers have adequate knowledge of insurance when selling insurance to customers on behalf of insurers in this state.
Rebating
any inducement offered to the insured in the sale of insurance products that is not specified in the policy. Both the offer and acceptance of a rebate are illegal.
The Commissioner and the Department of Insurance
are charged with monitoring the financial strength and integrity of insurers authorized to conduct business in Pennsylvania in order to determine whether the continued operation of any insurer might be financially hazardous to policyholders, creditors, or to the public in general.
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.
The maximum fine for an individual guilty of violating the insurance code is
$5,000 per violation, plus license suspension or revocation.
In addition to any penalties imposed by the Insurance Code, in an action filed by the Commissioner, the court may impose the following civil penalties:
-For each intentional act of engaging in an unfair method of competition or practice, a penalty of up to $5,000 for each violation (not to exceed $50,000 in any 6-month period) -For each unintentional act, a penalty of up to $1,000 for each violation (not to exceed $10,000 in any 6-month period). -A penalty of up to $10,000 may be leveled for each violation of the Commissioner's cease and desist order.
Prohibited Acts A licensee or applicant for an insurance producer license is prohibited from performing any of the following activities:
-Providing incorrect, misleading, incomplete or false information to the department in a license application. -Violating the insurance laws or regulations, or a subpoena, or order of the Commissioner of this or another state. -Obtaining or attempting to obtain a license through misrepresentation or fraud. -Improperly withholding, misappropriating or converting money or property received in the course of doing business. -Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance. -Admitting to or have been found to have committed any unfair insurance practice or fraud. -Using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of transacting insurance business. -Having an insurance producer license or other financial services license denied, suspended or revoked by a governmental entity. -Forging another person's name on an application for insurance or on any document related to an insurance or financial service transaction. -Cheating on an examination for an insurance producer license. -Knowingly accepting insurance business which was sold, solicited or negotiated by a person who is not licensed as an insurance producer. -Failing to comply with an administrative or court order imposing a child support obligation. -Failing to pay state income tax or comply with any administrative or court order directing the payment of state income tax. -Committing a felony or its equivalent. -Committing a misdemeanor that involves the misuse or theft of money or property belonging to another person. -Committing fraud, forgery, dishonest acts or an act involving a breach of fiduciary duty. -Transferring insurance coverage to an insurer other than the insurer expressly chosen by the insured without the consent of the insured. -Failing to notify the department of a change of address within 30 days. -Demonstrating a lack of general fitness, competence or reliability sufficient to satisfy the department that the licensee is worthy of licensure.
Every member of a rating organization must adhere to the filings made on its behalf
except that these insurers may file a uniform percentage change to be applied to the premiums produced by the rating system. Following a 30 day waiting period, these deviation filings are effective for 1 year.
Every insurer must notify the Insurance Department of all appointments and terminations of appointments of producers
in the format and within the time frame specified by the Commissioner.
Consumer reports
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.
Under the Fair Credit Reporting Act, if a policy of insurance is declined or modified because of information contained in either a consumer or investigative report
the consumer must be advised and provided with the name and address of the reporting agency. The consumer has the right to know what was in the report.
