ProSchools Quiz OR P&C Code/Core
The Director may issue a temporary license if an insurance producer dies or becomes disabled, for up to A. 180 days. B. 60 days. C. 30 days. D. 2 years.
* A. 180 days.* When an insurance producer dies, is disabled, or is inducted into the U.S. armed forces, and there is no one else in the agency appointed to represent an insurer he had been appointed by, the insurer may appoint another person who is qualified but has not passed the required exam and the Director may issue a temporary license to him, valid for up to 180 days.
Which of the following terms means that an insurance contract is dependent upon chance or uncertainty? A. Aleatory B. Adhesion C. Unilateral D. Utmost good faith
* A. Aleatory * An "aleatory" contract is one depending on chance, resulting in an unequal exchange of values. "Adhesion" refers to take-it or leave-it. "Unilateral" involves one promise. "Utmost good faith" involves honesty and fair dealing.
Which of these involves an interchange of reciprocal agreements of indemnity? A. Reciprocal insurer B. Mutual insurer C. Stock insurer D. All of these
* A. Reciprocal insurer * A "reciprocal insurer" is an unincorporated group of persons known as "subscribers". They operate through an attorney-in-fact, exchanging reciprocal agreements of indemnity.
Which of the following is true with regard to hearings held on cease and desist orders? A. The person requesting the hearing must be given written notice of the hearing date at least seven days before that date. B. The Director must be able to justify to the person requesting the hearing that the order is appropriate. C. The hearing is not subject to judicial review. D. A hearing must be held before a cease and desist order can become final.
* A. The person requesting the hearing must be given written notice of the hearing date at least seven days before that date.* A hearing would be held only if the person affected by the order requests one. The Director must provide written notice seven days prior to the hearing date. At the hearing, the person requesting the hearing would have to convince the Director that the order is not necessary, otherwise, the order would go into effect. The order would be subject to review, including judicial review.
Generally, an insurance producer not licensed as an insurance consultant may receive A. commissions. B. fees. C. salary only D. only production bonuses but no commissions.
* A. commissions.* Unless licensed as a consultant, a producer usually must earn only commissions, and cannot charge clients any fees. Certain property and casualty fees may be charged without having a consultant's license, such as for motor vehicle records, etc.
Generally, an insurance producer not licensed as an insurance consultant may receive A. commissions. B. fees. C. salary only D. only production bonuses but no commissions.
* A. commissions.* Unless licensed as a consultant, a producer usually must earn only commissions, and cannot charge clients any fees. Certain property and casualty fees may be charged without having a consultant's license, such as for motor vehicle records, etc.
An insurer must treat members of the public A. fairly and equally, considering the insurer's exposure to risk. B. discriminatorily, as long as the insurer can prove the need due to loss activity. C. according to the insurer’s state approved discrimination list. D. fairly, but only if the insurance company is a domestic carrier.
* A. fairly and equally, considering the insurer's exposure to risk. * State laws require that an insurer treat members of the public "fairly, considering their exposure to risk." The other answers would be considered discrimination.
An insurer must treat members of the public A. fairly and equally, considering the insurer's exposure to risk. B. discriminatorily, as long as the insurer can prove the need due to loss activity. C. according to the insurer’s state approved discrimination list. D. fairly, but only if the insurance company is a domestic carrier.
* A. fairly and equally, considering the insurer's exposure to risk.* State laws require that an insurer treat members of the public "fairly, considering their exposure to risk." The other answers would be considered discrimination.
The voluntary abandonment of a legal right or advantage is a(n) A. waiver. B. concealment. C. representation. D. estoppel.
* A. waiver. * A waiver is voluntarily giving up a right. For example, if an insurer requires premiums to be paid by the first of the month and allows a grace period of 30 days for late payment, it does not have to accept payments after that grace period. If it does accept a payment after the grace period, it waives its right to cancel the policy for nonpayment.
An individual insurance producer who violates the Code may be fined up to $_____ per offense. A. 500 B. 1,000 C. 2,000 D. 10,000
* B. 1,000* A person who violates the Insurance Code is subject to a civil penalty of $10,000 per offense. However, an individual insurance producer violating the Code is subject to a civil penalty of $1,000 per offense.
If the Director believes an insurer is unfairly discriminating, he will give the insurer how many days to correct the situation? A. 30 days notice. B. 10 days notice. C. 15 days notice. D. 20 days notice.
* B. 10 days notice.* If the Director believes that an insurer is unfairly discriminating, the insurer is given 10 days to correct the situation.
The premiums on controlled life or health insurance transacted in one calendar year by an producer were $200,000. To avoid receiving an unlawful rebate the producer must transact a minimum of $_____ of premiums for uncontrolled life and health insurance. A. 50,000 B. 100,000 C. 200,000 D. 300,000
* B. 100,000* Premiums for controlled life and health insurance transacted in a calendar year cannot exceed twice the premiums for uncontrolled insurance. Therefore, if controlled premiums are $200,000, uncontrolled premiums must be at least $100,000.
An insurance producer's license is subject to renewal every A. year. B. 2 years. C. 3 years. D. 4 years
* B. 2 years.* A producer's first license expires on the last day of the second birthmonth after licensure. After that, renewal is every two years on the last day of his birthmonth.
If after mailing a cease and desist order the Director receives a request for a hearing, he must schedule the hearing to be held within _____ days. A. 20 B. 30 C. 50 D. 60
* B. 30* Upon receipt of a request for a hearing regarding a cease and desist order, the Director must set a date for a hearing to be held within 30 days after the receipt of the request.
A person whose birthday is February 19, gets his insurance producer license on March 1, 2009. He must complete 24 hours of continuing education by A. February 19, 2012. B. February 29, 2012. C. March 1, 2011. D. March 31, 2011.
* B. February 29, 2012.* A producer's license expires every two years on the last day of his birthmonth. For the initial license, the two-year period starts with the first birthmonth following licensure. The producer needs 24 hours of continuing education for each renewal, which must include 3 hours of professional ethics and 3 hours of statutes and regulations continuing education.
Which of the following is a charge made by a producer, with respect to an insurance transaction to a party other than the insurer, which is not a part of the insurer's rate filing? A. Rebate B. Service fee C. Consultation fee D. Premium
* B. Service fee* A service fee is a charge made by a producer, with respect to an insurance transaction to a party other than the insurer, which is not a part of the insurer' rate filing.
With regard to probation, A. a license may be placed on probation only when initially issued. B. a license can be suspended while on probation. C. no hearing is available when a license is placed on probation. D. all of the above.
* B. a license can be suspended while on probation.* A license may be suspended or revoked while it is on probation. The license may be placed on probation when it is issued, when it is renewed, or at any time during its effective period. A person has a right to a hearing to contest the order of probation, just as in any other action against his license.
An insurer's retention limit is the maximum amount of insurance it may write A. in any state. B. covering any one subject of insurance. C. covering any one class of insurance. D. through any one agent.
* B. covering any one subject of insurance. * The "retention limit" is the maximum amount of insurance an insurer can have at risk on one subject of insurance. The subject of insurance could mean one policy, or could involve a number of policies which could all be affected by one occurrence (e.g., one fire).
When an insurance producer terminates an agency appointment, he must A. give 90 days' advance notice. B. give written notice to the Director within 30 days, and to the insurer. C. specify the reasons for the termination. D. forfeit all contract rights.
* B. give written notice to the Director within 30 days, and to the insurer.* An insurance producer may terminate an appointment at any time, without forfeiting his contract rights. He must give written notice to the insurer, and within 30 days after the effective date, to the Director. This notice need not be 90 days in advance.
When an insurer terminates a producer's appointment A. all contract rights of the agent are terminated. B. the Director must be notified within 30 days, if the termination is due to a Code violation. C. the producer must be given 180 days' notice. D. the producer will receive at least a 90-day period of time in which to complete any current business.
* B. the Director must be notified within 30 days, if the termination is due to a Code violation.* An insurer may terminate an appointment at any time. When he does so he must notify the Director in writing within 30 days after the termination date if termination was due to a Code violation. In most cases, the insurer must notify the agent 90 days before the termination date. Termination of an appointment does not terminate the producer's contract rights (i.e., commissions, renewals, etc.).
Generally, to qualify for authority to transact insurance in Oregon an insurer must have and maintain capital and/or surplus of at least A. $500,000.00 B. $2,000,000.00 C. $2,500,000.00 D. $5,000,000.00
* C. $2,500,000.00* In general, an insurer must maintain capital or surplus, or any combination of capital and surplus of not less than $2,500,000. Initially an additional $500,000 is needed, as well. Workers' compensation insurers need $3,000,000 and mortgage insurers need $4,000,000.
A person receiving a cease and desist order has how many days from the date of its mailing in which to request a hearing? A. 5 B. 10 C. 20 D. 30
* C. 20* A person who receives a cease and desist order may request a hearing within 20 days of the date of the mailing of the order.
A firm or corporate insurance producer must notify the Director of the termination of the authority of an individual licensee to act for the company within A. 10 days B. 20 days C. 30 days D. 60 days
* C. 30 days* A firm or corporate insurance producer must notify the Director of the termination of the authority of an individual licensee to act for the company within 30 days.
An insurer must generally complete an investigation within how many days after receipt of claim notification? A. 20 B. 30 C. 45 D. 60
* C. 45* An insurer must complete an investigation within 45 days after receipt of claim notification, unless that time is unreasonable.
For a violation of the Insurance Code, the Director may do all of the following EXCEPT A. Suspend a violator's license B. Revoke a violator's license C. Impose a jail term not to exceed one year D. Refuse to issue or renew a producer's license
* C. Impose a jail term not to exceed one year* The Insurance Director does not have the authority to sentence a violator to a jail term. Criminal prosecution will be referred to the state of Oregon Attorney General's office for their consideration. The Director does have the authority to suspend, revoke or refuse to issue or renew a license, and the licensee will always have a right to a hearing on the matter.
A person who obtained his license in order to sell only to his relatives would be selling what type of insurance? A. Limited class insurance B. Preferred business C. Personal/Controlled business D. Single-line insurance
* C. Personal/Controlled business* Personal, or controlled insurance business is business sold to those who could be controlled by the insurance producer. Commissions received by the producer on excessive personal or controlled business are considered illegal rebates.
Personal or controlled insurance is insurance sold A. by nonresident insurance producers . B. to replace existing policies issued by the same insurer. C. by a producer to himself, his family, his employers or his employees. D. to persons solicited by a producer's employees.
* C. by a producer to himself, his family, his employers or his employees. * "Personal or controlled insurance" is defined as insurance covering the producer, his spouse, his employer, his employer's spouse, a group of employees under a group policy issued to the insurance producer's employer, relatives of the producer, his spouse or his employer or employer's spouse, or other persons owning an interest in the producer's partnership or association, or stock in the producer's corporation, etc.
Controlled insurance includes coverage on A. the producer's neighbor. B. a former employer of the producer. C. the producer's brother. D. the producer's best friend.
* C. the producer's brother.* Personal or controlled insurance includes insurance sold by an insurance producer: to himself, his spouse or persons related to him or his spouse by blood or marriage to the second degree; his employer, his employer's spouse or relatives by blood or marriage; employees under a group policy issued to his employer; to any person controlling a majority of the voting stock in his employer (if a corporation), or owning any interest in his employer (if a partnership or association); any person controlling a majority of the voting stock in the agency and any corporation controlled by such a person and any corporation making consolidated income tax returns with such a corporation (if the producer is a corporation). Therefore, the brother of the producer would be the correct answer.
Which of the following persons must obtain a consultant license to give insurance advice for a fee? A. An attorney-at-law acting as an attorney B. A financial institution or consumer finance licensee C. A person who provides consultant services only to a producer or insurer D. An insurance producer
* D. An insurance producer* The following persons are exempt for the need to obtain a consultant license to give insurance advice for a fee: an attorney-at-law acting as an attorney, a CPA or public accountant acting as an accountant, a financial institution or consumer finance licensee, a person who gives advice in the course of conducting an educational seminar, a professional actuary and a person who provides consultant services only to a producer or insurer. A producer would need a consultant license to be able to charge a fee for advice.
An insurer advertised interest rates on a Universal Life insurance policy that were not actually given in the contract for insurance. The insurer might be accused of which of the following? A. Rebating B. Defamation C. Twisting D. Misrepresentation
* D. Misrepresentation* Overstating or misstating interest rates payable within a life insurance policy would be considered misrepresentation, which if used in marketing a product would be illegal.
An insurer advertised interest rates on a Universal Life insurance policy that were not actually given in the contract for insurance. The insurer might be accused of which of the following? A. Rebating B. Defamation C. Twisting D. Misrepresentation
* D. Misrepresentation* Overstating or misstating interest rates payable within a life insurance policy would be considered misrepresentation, which if used in marketing a product would be illegal.
With regard to premium rates, an insurer may A. charge higher rates for homeowners' insurance to persons over age 65. B. charge higher rates for homeowners' insurance to deaf persons. C. authorize agents to offer lower rates to potential insureds in order to make a sale. D. charge higher rates for life insurance based on a person's age
* D. charge higher rates for life insurance based on a person's age * An insurer cannot unfairly discriminate between individuals of the same class and life expectancy or between risks of the same degree of hazard in any respect. Therefore, it cannot charge different rates to make a sale. It cannot discriminate based on physical handicap or the fact a person is over 65 unless based on sound actuarial principles or actual or reasonably anticipated experience. Since people have a shorter remaining life expectancy as they get older, it would be sound practice to charge older persons higher rates for life insurance.
All of the following would be rebating by a producer EXCEPT A. paying expenses for a new policyowner's vacation. B. sharing his commission with a policyholder. C. offering the applicant a share of the bonus he will receive for production. D. giving greeting cards to clients at holidays.
* D. giving greeting cards to clients at holidays. * When a producer offers or gives anything of value as an inducement to purchase insurance, which was not specified in the policy, to an insured or prospective insured, or the insured or prospect takes such a thing of value, it is considered rebating and is illegal. The producer may be fined for giving the rebate, and the person receiving it may be fined for receiving it. Choices "A", "B" and "C" are rebates. Choice "D" is promotion and not considered rebating or an inducement to purchase insurance.
If an individual insurance producer transacts insurance after his license has been suspended, he can face a penalty of any of the following EXCEPT A. revocation of license. B. up to a $1,000 fine per transaction. C. forfeiture of his profit from the transactions. D. up to a $10,000 fine per transaction.
* D. up to a $10,000 fine per transaction.* Transaction of insurance with a suspended license is a violation of the Code, so an individual insurance producer is subject to revocation of his license, forfeiture of the profits resulting from the transactions and a civil penalty of up to $1,000 for each offense. Each violation is a separate offense. An individual licensee is not subject to the $10,000 fine.
Except for title insurance, an insurer cannot retain risk on any one subject of insurance in excess of _____% of its surplus to policyholders unless it reinsures the excess. A. 10 B. 20 C. 50 D. 100
*A. 10 * An insurer cannot retain a risk on any one subject of insurance, whether a domestic risk or not, in an amount exceeding 10% of its surplus to policyholders. In order to stay within the limits, an insurer must reinsure the excess on any line of insurance that exceeds the 10% retention maximum.
Except for title insurance, an insurer cannot retain risk on any one subject of insurance in excess of _____% of its surplus to policyholders unless it reinsures the excess. A. 10 B. 20 C. 50 D. 100
*A. 10* An insurer cannot retain a risk on any one subject of insurance, whether a domestic risk or not, in an amount exceeding 10% of its surplus to policyholders. In order to stay within the limits, an insurer must reinsure the excess on any line of insurance that exceeds the 10% retention maximum.
A producer requesting a hearing on a cease and desist order will be given at least how many days advance notice of the time and place the hearing will be held? A. 7 days B. 10 days C. 20 days D. 30 days
*A. 7 days* A producer that has requested a hearing on a cease and desist order must be given at least seven (7) days advance notice as to where and when the hearing will take place.
A licensed adjuster A. may adjust losses on policies placed under a surplus line insurance license. B. may adjust losses only for an insurer. C. may adjust losses only for an insured. D. may only adjust losses for or against authorized insurers
*A. may adjust losses on policies placed under a surplus line insurance license.* A person may act as an adjuster of losses claimed under insurance policies, for an insurer or an insured, if he holds a license authorizing him to act as an adjuster. With the license, the adjuster may adjust losses for or against authorized insurers or insurers with which policies were placed under a surplus line insurance license.
The minimum combined paid-up capital and surplus required of a stock insurer, or the minimum surplus required of an insurer without capital stock is A. required capitalization. B. retention limit. C. insolvency. D. impairment
*A. required capitalization. * "Required capitalization" is the money in excess of liabilities, needed to start and maintain the business. "Impairment" exists when an insurer has assets which total less than its liabilities plus required capitalization. "Insolvency" is when an insurer cannot pay its debts. A "retention limit" is the percentage of assets that may be subjected to any one loss.
The minimum combined paid-up capital and surplus required of a stock insurer, or the minimum surplus required of an insurer without capital stock is A. required capitalization. B. retention limit. C. insolvency. D. impairment
*A. required capitalization.* "Required capitalization" is the money in excess of liabilities, needed to start and maintain the business. "Impairment" exists when an insurer has assets which total less than its liabilities plus required capitalization. "Insolvency" is when an insurer cannot pay its debts. A "retention limit" is the percentage of assets that may be subjected to any one loss.
The penalty for filing any false information, e.g., a false application for a license or a false course certification, with the Director is A. up to 1 year in jail or a fine up to $1,000 for an individual. B. a fine up to $10,000 for a corporation. C. No more than $500 per violation for an individual producer. D. $10,000 fine per violation for an individual agent.
*A. up to 1 year in jail or a fine up to $1,000 for an individual.* Violation of 731.260 (false or misleading filings with the Director) is a criminal violation punishable by imprisonment in the county jail for not more than 1 year or by a fine not exceeding $1,000 for an individual; or by a fine not exceeding $10,000 for a corporation.
If the Director believes an insurer is unfairly discriminating, he will give the insurer how many days to correct the situation? A. 30 days notice. B. 10 days notice. C. 15 days notice. D. 20 days notice.
*B. 10 days notice.* If the Director believes that an insurer is unfairly discriminating, the insurer is given 10 days to correct the situation.
The maximum fine for an insurance company which violates the Insurance Code is $_____ for each offense. A. 1,000 B. 10,000 C. 100 D. 200
*B. 10,000* The maximum fine for a Code violation by an individual insurance producer is $1,000. The maximum fine for anyone else, e.g., an insurance company or an insurance producer that is a firm or corporation, is $10,000 per violation.
Unless a hearing is requested, a cease and desist order becomes final within how many days after mailing to a Code violator? A. 10 B. 20 C. 30 D. 40
*B. 20* The cease and desist order becomes final 20 days after the date of mailing unless, within that 20-day period, the person to whom it is directed files a written request for a hearing.
A producer convicted of a Code violation may be penalized in which of the following ways? A. A fine of up to $10,000 per violation plus forfeiture of any profit gained B. A fine of up to $1,000 per violation plus forfeiture of any profit gained, plus sanction on the license C. A fine of up to $2,500 per violation plus a jail term of up to one year D. A fine of $1,000 per violation plus a jail term of up to one year
*B. A fine of up to $1,000 per violation plus forfeiture of any profit gained, plus sanction on the license* Code violations are punishable by a fine of up to $1,000 per offense, forfeiture of any profit gained through the violation (an additional fine), as well as potential sanctions on the insurance license(s).
An insurer or producer may legally pay which of the following to an unlicensed person? A. A service fee for soliciting insurance in Oregon. B. A renewal commission to a person who was a licensed producer at the time he sold the insurance. C. Valuable consideration to a person as a rebate. D. Valuable consideration to an unlicensed person who solicited insurance for a producer.
*B. A renewal commission to a person who was a licensed producer at the time he sold the insurance. * An insurer or producer may pay renewal and other deferred commissions to a person who was a licensed producer at the time he sold, solicited or negotiated the insurance, and may pay or assign commissions, service fees, brokerage, or other valuable consideration to an insurance agency or to persons who do not sell, solicit, or negotiate insurance in Oregon, except when it would be a rebate.
All fines paid by insurance producers are paid to the A. respective Guaranty Association the insurer is a member of. B. General Fund of the State Treasury. C. office of the Attorney General. D. Oregon State Compliance Division.
*B. General Fund of the State Treasury.* Fines levied by the Insurance Division are to be paid to the General Fund of the State Treasury, within 10 days of the levy. Failure to pay levied fines may result in the state taking action in court in any Oregon jurisdiction, and the end result could be a lien on any property owned by the violator in Oregon.
Which of the following are the necessary elements of any valid contract? A. Counteroffer, consideration, acceptance, competent parties B. Offer and acceptance, consideration, legal purpose, competent parties C. Offer and acceptance, consideration, legal purpose, written agreement D. Declarations, premium, competent parties, legal purpose
*B. Offer and acceptance, consideration, legal purpose, competent parties* Every contract must have at least four elements: offer and acceptance (agreement), legal purpose, consideration and competent parties.
Insurance trust account funds may be commingled with which of the following? A. Operating funds B. Reserves to pay return premiums C. Payroll accounts D. Agency overhead and expense accounts
*B. Reserves to pay return premiums* Insurance trust account funds must be maintained and accounted for in an account separate from all other personal and business funds. They cannot be commingled (mixed) with any other agency funds, except funds to advance premiums, establish reserves to return premiums or cover contingencies arising in the course of handling premium or return premium funds. NO OTHER FUNDS may be in this account, including (but not limited to) payroll and operating funds.
Because an insurance policy is a personal contract A. the policy can insure only a natural person. B. an automobile insurance policy insures the policyowner, rather than the auto. C. an automobile insurance policy can insure any person designated by the owner. D. an automobile insurance policy is the personal property of the policyowner, and may be freely transferred to new owners of the auto.
*B. an automobile insurance policy insures the policyowner, rather than the auto. * The nature of a personal contract is that the contract is insuring the person, rather than the object of the policy. Therefore, property insurance policies are not assignable without the permission of the insurance company, and they insure the interest only of the persons named in the declarations as insureds.
In general, an insurance company may terminate an agent's appointment A. at any time, without notice. B. at any time, after giving 90 days advance notice to the agent. C. only with prior approval from the Insurance Department. D. only on an anniversary of the original appointment.
*B. at any time, after giving 90 days advance notice to the agent.* Termination can be at any time, provided notice and reasons are given 90 days in advance of the effective date. Notice need not be given 90 days in advance if the agent's license is terminated, his business is sold, he is insolvent, he engages in intentional misconduct, the insurer discontinues the line of insurance or ceases selling insurance in Oregon, or the insurer and agent mutually agree to terminate.
A producer may charge a service fee for service additional to usual and customary service on A. personal lines insurance. B. commercial insurance. C. workers' compensation insurance. D. bonding and surety coverage
*B. commercial insurance. * Service fees may be charged only on commercial lines business, and only if the producer provides service beyond that normally provided by an producer. However, such fees cannot be charged for personal lines insurance, workers' compensation insurance or bonding and surety coverage.
With regard to personal information about a client obtained by a licensee, the client has the right to opt out. The right to "opt out" means the client can refuse to allow the licensee to A. obtain any personal information. B. disclose personal information among affiliates. C. use any personal information in its business. D. disclose nonpersonal information to affiliates.
*B. disclose personal information among affiliates. * A licensee must provide a clear and conspicuous notice of personal information practices to a consumer who becomes a customer of the licensee. It must include the following items of personal information the categories of personal information the licensee collects, categories of personal information the licensee discloses and categories of affiliates and nonaffiliated third parties to whom the licensee discloses personal information. It must also contain an explanation of the individual's right to authorize disclosure of personal information and how he may exercise that right, a disclosure regarding the ability to opt out of disclosures of personal information among affiliates and a disclosure of the licensee's policies and practices with respect to protecting the confidentiality and security of personal information.
Once his license expires, an insurance producer may A. not renew the license. B. renew the license within 12 months without taking a license exam, provided he pays twice the regular renewal fee and satisfies the continuing education requirement. C. renew the license no later than two years after expiration. D. continue to sell insurance during a 30-day grace period.
*B. renew the license within 12 months without taking a license exam, provided he pays twice the regular renewal fee and satisfies the continuing education requirement.* After a license has expired, the licensee still has 12 months to renew it. To renew, the licensee must pay twice the amount of the regular license fee and satisfy all continuing education requirements for renewal. After the 12 months he must qualify as a new applicant (courses, exams, fees).
A licensed insurance producer is an agent of A. the policyholder. B. the insurer issuing the policy in all matters relating to the insurance application and policy. C. the insured. D. only one insurer under one license.
*B. the insurer issuing the policy in all matters relating to the insurance application and policy.* A licensed insurance producer is regarded as the agent of the insurer issuing the policy in all matters relating to the insurance application and policy. A producer may act as an agent and represent any number of insurers under one license.
A resident or nonresident insurance producer must keep all customary business records at his business office for A. three years after the signing of a policy. B. three years after expiration of the policy. C. seven years after he closes his business. D. five years after expiration of the policy.
*B. three years after expiration of the policy.* An insurance producer must keep transaction records at a place of business open to the inspection of the Director for three years following the expiration of the policy.
When an insurance producer properly requests a hearing on a cease and desist order, the order will become final A. 20 days after the cease and desist order is mailed. B. when the right to further hearing or review has expired or been exhausted. C. at the conclusion of the hearing. D. at the Director's discretion.
*B. when the right to further hearing or review has expired or been exhausted.* When a hearing has been requested, the Director's order will be final when the right to further hearing or review has expired or been exhausted.
Generally, to qualify for authority to transact insurance in Oregon an insurer must have and maintain capital and/or surplus of at least A. $500,000.00 B. $2,000,000.00 C. $2,500,000.00 D. $5,000,000.00
*C. $2,500,000.00* In general, an insurer must maintain capital or surplus, or any combination of capital and surplus of not less than $2,500,000. Initially an additional $500,000 is needed, as well. Workers' compensation insurers need $3,000,000 and mortgage insurers need $4,000,000.
What is the maximum period of time for which a temporary license may be effective? A. 90 days B. 120 days C. 180 days D. 210 days
*C. 180 days* When an agent dies, is disabled, refuses to act or is inducted into the armed forces, and there is no one else in the agency appointed to represent an insurer he had been appointed by, the insurer may appoint another person who is qualified but has not passed the required exam and the Director may issue a temporary license to him, valid for up to 90 days (it may be extended another 90 days).
An insurance producer has how many days from the date on a cease and desist order from the Commissioner to request a hearing on the matter? A. 5 B. 10 C. 20 D. 30
*C. 20* Upon receiving a cease and desist order, a producer would have 20 days from the date on the order to request a hearing on the matter. If a hearing is not requested within the 20-day time frame, the order is final and the producer has no further recourse.
An insurer must adequately respond to the Director within how many days after receipt of an inquiry about a claim? A. 10 B. 15 C. 21 D. 30
*C. 21* An insurer must adequately respond to the Director within 21 days after receipt of an inquiry about a claim.
A resident producer who has been licensed for four years needs how many hours of continuing education to renew his license for another two years? A. 44 B. 36 C. 24 D. 12
*C. 24* 24 hours of education are required for each two-year renewal. Each license expires every two years on the last day of the licensee's birthmonth.
A firm or corporate insurance producer must notify the Director of the commencement of the authority of an individual licensee to act for the company within A. 10 days. B. 15 days. C. 30 days. D. 60 days.
*C. 30 days.* A firm or corporate agent must give the Director notice of affiliation within 30 days of the commencement of the authority of an individual licensee to act for the company.
A licensee must notify the Director of a change of residence or business address or phone number within _____ days after the change. A. 10 B. 20 C. 30 D. 60
*C. 30* Any change of business or residence address or phone number must be reported to the Director within 30 days.
A person licensed as both a producer and a consultant may receive which of the following as compensation for the sale of life insurance? A. A commission ONLY B. A fee ONLY C. A commission and/or a fee D. Salary only and no commission or fee
*C. A commission and/or a fee* A person licensed as both a producer and a consultant may charge commissions and/or fees in an insurance transaction. A person licensed ONLY as a producer may only accept commissions.
A person licensed as both a producer and a consultant may receive which of the following as compensation for the sale of life insurance? A. A commission ONLY B. A fee ONLY C. A commission and/or a fee D. Salary only and no commission or fee
*C. A commission and/or a fee* A person licensed as both a producer and a consultant may charge commissions and/or fees in an insurance transaction. A person licensed ONLY as a producer may only accept commissions.
How often must a licensee provide a notice to a customer that reflects its privacy policies and practices? A. Once B. Every six months C. Annually D. Only when its policies change
*C. Annually * A customer is a consumer with whom the licensee has a continuing relationship. A licensee must provide a clear and conspicuous notice to a customer that accurately reflects the privacy policies and practices at least annually during the continuation of the relationship. A notice is given annually if it is given at least once in any period of 12 consecutive months during which the relationship exists. A licensee may define the period of 12 consecutive months, but the licensee must apply the period to the customer on a consistent basis.
When may an insurer write insurance in excess of its retention limits? A. If it is a reciprocal insurer. B. When its annual premium volume has exceeded the amount specified by the Insurance Director. C. If it insures the excess with other insurers through a reinsurance agreement or treaty. D. Never.
*C. If it insures the excess with other insurers through a reinsurance agreement or treaty.* An insurer cannot retain a risk exceeding 10% of its surplus to policyholders. However, it may write insurance on a risk exceeding this amount if it enters into a reinsurance agreement or treaty with another insurer who agrees to insure the portion of the risk exceeding the retention limit. In the event of a total loss, the insurer would pay the portion of the claim up to its limit and the reinsurer would pay the rest.
A person who obtained his license in order to sell only to his relatives would be selling what type of insurance? A. Limited class insurance B. Preferred business C. Personal/Controlled business D. Single-line insurance
*C. Personal/Controlled business * Personal, or controlled insurance business is business sold to those who could be controlled by the insurance producer. Commissions received by the producer on excessive personal or controlled business are considered illegal rebates.
Commissions paid on excessive personal or controlled business are considered which of the following? A. Twisting violations B. Breach-of-trust incidents C. Rebates D. Carve-out violations
*C. Rebates * Commissions received on excessive personal or controlled business are considered rebates. Personal, or controlled insurance business is business sold to those who meet the state's definition of those prospects who could be "controlled" by the insurance producer. Oregon has specific rules regarding the sale of insurance business to those who meet that definition, and commissions that are received by the producer on "excessive personal or controlled" business are considered illegal rebates.
A licensee must provide a clear and conspicuous notice of personal information practices A. When he negotiates with a consumer B. When he provides any insurance products or services to a customer C. When he provides insurance products or services to be used primarily for personal, family or household purposes to a customer D. Within 30 days after providing insurance products or services to a customer
*C. When he provides insurance products or services to be used primarily for personal, family or household purposes to a customer * A customer is a consumer with whom the licensee has established an ongoing relationship. He must generally be given a notice of personal information practices by the time insurance products or services to be used primarily for personal, family or household purposes are provided.
A licensee must provide a clear and conspicuous notice of personal information practices A. When he negotiates with a consumer B. When he provides any insurance products or services to a customer C. When he provides insurance products or services to be used primarily for personal, family or household purposes to a customer D. Within 30 days after providing insurance products or services to a customer
*C. When he provides insurance products or services to be used primarily for personal, family or household purposes to a customer* A customer is a consumer with whom the licensee has established an ongoing relationship. He must generally be given a notice of personal information practices by the time insurance products or services to be used primarily for personal, family or household purposes are provided.
If a licensee fails to pay a civil penalty within 10 days after the order assessing the penalty becomes final, A. the license is automatically revoked. B. the license is automatically suspended. C. a lien may be recorded against the licensee's property. D. the penalty is doubled.
*C. a lien may be recorded against the licensee's property.* If a licensee fails to pay the penalty within 10 days, the Commissioner may obtain a judgment, which will become a recorded lien against the licensee's property. Note, the license would not be suspended or revoked without a hearing.
All of the following would be considered discrimination in insurance EXCEPT A. discrimination between individuals of the same class and expectation of life. B. an insurer applying different underwriting standards to those age 65 and older. C. an insurer offering higher premiums to older life insureds. D. treating victims of domestic violence differently than other applicants for insurance.
*C. an insurer offering higher premiums to older life insureds. * An insurer may not: discriminate between individuals of the same class and life expectancy, apply different standards to those 65 years of age or older, or treat domestic violence victims differently. An insurer may charge higher life insurance premiums to older people as statistics show a higher risk to the insurer.
A producer may terminate an appointment with an insurer A. at any time, with at least 30 days notice to the insurer. B. only with the insurer's written authority. C. at any time, and the producer has 30 days to notify the insurer and the state in writing. D. never; only the insurer has the legal authority to terminate appointments.
*C. at any time, and the producer has 30 days to notify the insurer and the state in writing.* Producers may terminate appointments with insurers at any time without advance notice or reason. If a producer terminates an appointment, the producer is required to notify both the state and insurer within 30 days of the effective date of the termination.
The purpose of a cease and desist order from the Director is to have a person A. stop all insurance business. B. turn in his license immediately. C. discontinue acts which do or threaten to violate the Insurance Code. D. attend a hearing.
*C. discontinue acts which do or threaten to violate the Insurance Code.* A cease and desist order is an order only to discontinue or desist from the acts causing the violation cited in the order.
A termination notice is required to terminate a producer appointment on the basis that the producer A. is insolvent. B. failed to send balances to the insurer as agreed. C. failed to meet sales quotas agreed to with the insurer. D. engaged in intentional misconduct.
*C. failed to meet sales quotas agreed to with the insurer.* No termination notice is required if termination is based on mutual agreement to terminate the appointment; the insurer discontinues a class of insurance or ceases selling insurance in Oregon; the producer's insurance license is denied, restricted, revoked, suspended, or canceled; the producer's business is sold, transferred, or merged and the insurer has not appointed the successor; or the producer is insolvent, fails to send balances to the insurer as agreed, commits fraud, or engages in intentional misconduct.
A consultant can act as a consultant for A. for life insurance only B. for all lines of insurance, without any endorsements. C. for lines of insurance endorsed on his license only. D. for property and casualty insurance only.
*C. for lines of insurance endorsed on his license only.* A consultant can act as a consultant for any lines of insurance indorsed on his license (whether life, health or property and casualty).
Premiums for controlled property and casualty business transacted by an producer in a calendar year were $150,000. Premiums for his noncontrolled property and casualty business were $140,000. As a result, A. he has not transacted an excessive amount of controlled insurance. B. he has received an unlawful rebate of $10,000. C. he has received an unlawful rebate equal to the commissions on $10,000 of excessive controlled insurance. D. he is subject to a fine, but not license suspension or revocation for selling excessive controlled insurance.
*C. he has received an unlawful rebate equal to the commissions on $10,000 of excessive controlled insurance. * For property and casualty insurance, controlled premiums cannot exceed uncontrolled premiums. In this case, there is an illegal rebate since the controlled premiums exceeded uncontrolled premiums. The amount considered to be the illegal rebate is the commission earned on the $10,000 excess, not the excess itself. The Director can suspend or revoke the license for excessive controlled business, and fine a person for any Code violation.
The license of a producer can be suspended or revoked for any of the following reasons EXCEPT A. he was convicted of a felony or of a misdemeanor involving breach of trust. B. he was guilty of fraud in a real estate transaction. C. he obtained a waiver of the prelicense education requirements. D. the Director made an error in issuing the license.
*C. he obtained a waiver of the prelicense education requirements.* The Code cites conviction of a misdemeanor involving dishonesty or breach of trust or of a felony, dishonesty related or not related to the insurance business and error in issuing the license as grounds for suspending or revoking the license. Obtaining a waiver of education requirements is not grounds for action against a license.
A person licensed to give advice, counsel, opinion or service on benefits, advantages or disadvantages of insurance offered in Oregon for compensation other than commission from the sale of insurance is a(n) A. insurance producer. B. adjuster. C. insurance consultant. D. insurer.
*C. insurance consultant.* A consultant is a person licensed to do, attempt to or offer to act as a consultant regarding insurance; give advice, counsel, opinion or service on benefits, advantages or disadvantages of insurance offered in Oregon, or in any other manner provide information about insurance, for compensation other than commission from the sale of insurance; or purport or offer to engage in consulting by using the title "insurance planner," consultant," "adviser" or "counselor" or any similar title.
An insurer may allow A. its auto policies to be offered without a separate charge to customers of an auto rental agency. B. its agents to personally guarantee that the prospect's auto policy would be renewed regardless of his driving record during the policy period. C. its agents to offer prospects cash value accumulation as shown in the life insurance policy sold. D. its agents to offer prospects benefits not shown in its policies.
*C. its agents to offer prospects cash value accumulation as shown in the life insurance policy sold.* No one can offer anything not specified in the policy as inducements to insurance. Since the accumulation would be shown in the policy and would be considered part of the policy, it may be offered. In addition, except for certain types of insurance (i.e., home protection, credit life or credit health, title insurance) an insurer cannot participate in any plan to offer "free" insurance as an inducement to buy or rent a service or product. The insurance could be offered only with a separate premium charge.
If an insurance producer does not renew his license within 12 months after the expiration date and wishes to obtain a license, he must A. complete 24 hours of education. B. pay a late fee. C. qualify for a license as if he were initially applying for a license. D. satisfy all renewal requirements.
*C. qualify for a license as if he were initially applying for a license.* After a license has expired, the licensee still has 12 months to renew it. To renew, the licensee must pay twice the amount of the regular license fee and satisfy all continuing education requirements for renewal. After the 12 months he must qualify as a new applicant (courses, exams, fees).
When the Director issues a cease and desist order to an insurance producer violating the Code, A. the insurance producer is not liable under any other state laws for the violation. B. the insurance producer could not be fined. C. the insurance producer could be fined and/or have his license suspended or revoked. D. the insurance producer's license will automatically be suspended.
*C. the insurance producer could be fined and/or have his license suspended or revoked.* The cease and desist order does not affect the insurance producer's liability under other state laws, and does not take away the Director's right to suspend or revoke the license and impose fines.
An insurer must acknowledge notification of a claim or pay the claim within how many days after receipt? A. 10 B. 15 C. 20 D. 30
*D. 30* An insurer must acknowledge notification of a claim or pay the claim within 30 days after receipt, and include an appropriate and dated notation of the acknowledgment in the claim file.
Which of the following is true of a producer appointment? A. The contract may be written or oral. B. The appointment may not be terminated prior to its expiration date. C. The insurer must file notice of each appointment with the Director within 45 days after the effective date of the appointment. D. A producer may represent as many insurers under one license as may appoint her.
*D. A producer may represent as many insurers under one license as may appoint her.* An insurance producer may represent any number of insurers as long as he receives an appointment from each. The appointment must be under a written contract. The appointment is effective until the insurance producer license is terminated, or the appointment is terminated or not renewed. The insurer need not notify the Director of appointments.
Which of the following is rebating? A. Inducing an individual to lapse a policy with one insurer to buy one with another insurer B. Failing to remit premiums to the insurer C. Misrepresenting a policy to an insured D. Giving an insurance buyer a portion of the agent's commission as an inducement to buy insurance
*D. Giving an insurance buyer a portion of the agent's commission as an inducement to buy insurance* Rebating involves giving or offering to give an insurance applicant or policyowner anything that is not clearly offered in the policy. It is illegal to give or take a rebate.
All of the following are true of a person with an Oregon nonresident insurance producer license EXCEPT A. He must be licensed in his home state. B. The Director will be his attorney-in-fact upon whom all legal process in any action or proceeding against him may be served. C. Within 30 days after moving from one state to another state, he must file with the Director a change of address and certification from the new resident state. D. He can only be licensed to transact life and health insurance.
*D. He can only be licensed to transact life and health insurance.* A person with an Oregon nonresident insurance producer license must be licensed in his home state. The Director will be his attorney-in-fact upon whom all legal process in any action or proceeding against him may be served. Within 30 days after moving from one state to another state, he must file with the Director a change of address and certification from the new resident state. He can be licensed to transact any insurance, including surplus lines and limited classes, but not title insurance.
An individual insurance producer who violates a rule or final order of the Director, or a final judgment of a court, or a provision of the Insurance Code may suffer which penalty? A. Nothing greater than a fine of up to $1,000. B. License revocation or suspension, in which case he cannot be fined. C. Forfeit of the profit resulting from the violation, in which case he cannot also be fined $1,000 for the offense. D. License suspension or revocation, plus a fine of up to $1,000 plus forfeiture of the profit from the violation.
*D. License suspension or revocation, plus a fine of up to $1,000 plus forfeiture of the profit from the violation.* In the event of a violation, an individual licensee is subject to all penalties - the $1,000 fine, loss of profits and loss of license. All penalties are in addition to the other penalties available.
A producer may have how many appointments? A. One B. Two C. Five D. No limit.
*D. No limit.* A licensee may represent under one license as many insurers as may appoint him.
The license of a firm or corporation licensed as an agent may be suspended or revoked if A. an individual licensee employed by the company violates the Code. B. a director of the company violates the Code. C. an officer of the company violates the Code. D. any of the above.
*D. any of the above.* The license of a firm or corporation might be suspended or revoked if an individual license employed by or under contract with the company, or a director or officer of the company violates the Code.
Making false or maliciously critical public statements about an insurer's financial condition in the offer or sale of any insurance, with the intent to injure the insurer, is called A. twisting. B. conversion. C. inducement. D. defamation.
*D. defamation.* Defamation is the use of misrepresentations or maliciously critical public statements regarding the insurer's financial condition with the intent to injure the insurer. It is illegal.
If the Director finds that a licensee or applicant for a license has violated the Insurance Code, the Director may do ALL of the following EXCEPT A. refuse to renew or refuse to issue a license. B. suspend or revoke a license. C. revoke or refuse to grant authority under a license to engage in a category of business or class of insurance. D. impose a jail term of up to one year.
*D. impose a jail term of up to one year.* When a person violates the Code, the Director may refuse to issue or renew a license to him, or suspend or revoke his license or suspend or revoke authority under his license to engage in certain categories of insurance business or classes of insurance. This power is in addition to the authority to levy fines. The Director does not have the authority to sentence a person to prison.
The fact that an insured must be in a position to lose money or something of value represents the principle of A. subrogation. B. adhesion. C. indemnity. D. insurable interest.
*D. insurable interest.* An insurable interest is the existence of a potential financial loss resulting from the loss of the subject of the insurance, including a person's interest in his own life.
All of the following are reasons a temporary insurance producer license may be granted to a qualified person to enable that person to represent an insurer as an agent when the insurance producer appointed by the insurer EXCEPT A. is disabled. B. has died. C. is inducted into the armed forces. D. is on an extended vacation.
*D. is on an extended vacation.* When an insurance producer dies, is disabled, or is inducted into the armed forces, and there is no one else in the agency appointed to represent an insurer he had been appointed by, the insurer may appoint another person who is qualified but has not passed the required exam and the Director may issue a temporary license to him, valid for up to 180 days.
A person is guilty of rebating if he does any of the following EXCEPT A. gives an insurance applicant $50 of his commission as an inducement to buy a policy. B. takes $50 from the agent in return for buying an insurance policy. C. offers a prospect any inducement to purchase insurance which is not specified or provided for in the policy. D. makes a false statement on an application in order to get money from an insurer.
*D. makes a false statement on an application in order to get money from an insurer* When an producer offers or gives anything of value as an inducement to purchase insurance, which was not specified in the policy, to an insured or prospective insured, or the insured or prospect takes such a thing of value, it is considered rebating and is illegal. The producer may be fined for giving the rebate, and the person receiving it may be fined for receiving it. A false statement on an application is illegal, but it is not rebating.
A person is guilty of rebating if he does any of the following EXCEPT A. gives an insurance applicant $50 of his commission as an inducement to buy a policy. B. takes $50 from the agent in return for buying an insurance policy. C. offers a prospect any inducement to purchase insurance which is not specified or provided for in the policy. D. makes a false statement on an application in order to get money from an insurer.
*D. makes a false statement on an application in order to get money from an insurer.* When an producer offers or gives anything of value as an inducement to purchase insurance, which was not specified in the policy, to an insured or prospective insured, or the insured or prospect takes such a thing of value, it is considered rebating and is illegal. The producer may be fined for giving the rebate, and the person receiving it may be fined for receiving it. A false statement on an application is illegal, but it is not rebating.
The Director may NOT suspend or revoke a license because the licensee A. is incompetent or untrustworthy. B. falsified the license application. C. converted funds of the insurer to his own use. D. received a citation for a minor traffic violation.
*D. received a citation for a minor traffic violation.* A minor traffic violation is not cause for license revocation or suspension.
An insurer's notice of termination of an appointment must A. be delivered in person. B. be delivered by mail. C. be provided at least 30 days prior to the effective date of termination. D. specify the termination date and reasons for the termination.
*D. specify the termination date and reasons for the termination.* The termination notice must be delivered in person or by mail at the address last provided by the producer at least 90 days prior to the effective date of termination, and specify the termination date and reasons for the termination.
An insurer wanting to terminate an appointment must give written notice to do so if A. the insurer discontinues a class of insurance or ceases selling insurance in Oregon. B. the producer's insurance license is denied, restricted, revoked, suspended, or canceled. C. the producer's business is sold, transferred, or merged and the insurer has not appointed the successor. D. the insurer has received numerous complaints about the producer's failure to follow up on matters in a timely manner.
*D. the insurer has received numerous complaints about the producer's failure to follow up on matters in a timely manner.* An insurer must give written notice to terminate an agency appointment unless the insurer discontinues a class of insurance or ceases selling insurance in Oregon; the producer's insurance license is denied, restricted, revoked, suspended, or canceled; the producer's business is sold, transferred, or merged and the insurer has not appointed the successor; the insurer and producer mutually agree to terminate the appointment; or the producer is insolvent, fails to send balances to the insurer as agreed, commits fraud, or engages in intentional misconduct.
