State Laws

Which of the following actions is not considered to be misrepresentation under law? A Making a false or maliciously critical statement regarding the financial condition of a competitor B Describing a mutual life insurance policy as equivalent to a share of stock C Using a product name that hides the fact that it is an insurance policy D Making false or misleading statements about dividends previously paid by a policy

A-All of the other choices misrepresent some aspect of the policy. 'Making a false or maliciously critical statement regarding the financial condition of a competitor' describes a different violation of the law known as Defamation.

What is the maximum financial penalty the Commissioner may impose upon a licensee for failure to comply with a Cease and Desist Order? A $10,000 B $50,000 C $5,000 D $1,000

A-Failure to comply with a Cease and Desist order may result in a monetary penalty of up to $10,000, suspension or revocation of the person's or entity's license or registration, and/or injunctive relief.

All the following are unfair claims practices, except: A Making claim payments without conducting an investigation B Making claim payments that are not accompanied by statements indicating the coverage under which payments are being made C Making known to claimants a policy of appealing arbitration awards that favor claimants D Attempting to settle a claim based on an application that was altered by the agent or company without notice to, or consent of, the insured

A-Paying claims without an in-depth investigation is not a problem. Refusing to pay claims without an investigation is a problem. Making claim payments without referencing the portion of the policy under which the claim is paid also may obstruct an insured from receiving full or proper compensation.

Alexander may have committed a violation of the insurance code when he: A Paid a referral fee to an unlicensed solicitor for each life insurance appointment arranged B Paid a deferred commission to a formerly licensed producer who is now retired C Procured insurance for his client from an insurer with whom he was not appointed D Assigned some of his commissions to an out-of-state insurance agency not active in Arkansas

A-Solicitation of life insurance appointments requires the life producer license. Acting without an appointment simply means Andrew was acting as a broker. Paying commissions to a retired, formerly licensed producer is legal assuming the producer was licensed at the time of sale.

hich of the following statements regarding producer appointments is correct? A The Commissioner of Insurance must verify that an individual is eligible to be appointed within 30 days of receiving an application B An licensee may only act as an agent for an insurer without an appointment if they are working under the terms of temporary license C Producers must reapply for appointments in conjunction with their license renewal process every 2 years D An appointing insurer must file a notice of appointment at least 15 days before the first application can be submitted

A-The notice of appointment must be filed within 15 days after the first application submitted by a new agent, not before, and the appoint is always necessary in order to act as an agent. Appointments last until one's license is terminated or a notice of termination is filed with the Commissioner.

Which of the following statements regarding the temporary insurance license is correct? A A temporary license is only granted when an agent dies or is disabled B Temporary licenses may be granted without an exam C Temporary licenses are granted for a term of up to 90 days D Temporary licenses are issued on the same basis as other insurance licenses

B-

A licensed insurance consultant: A May be either a resident producer or nonresident agent B Can be a licensed attorney, actuary, or certified public accountant C Advises consumers about their insurance needs for a fee D Solicits, negotiates, effects, or binds insurance contracts

C-

All of the following statements regarding producer appointments are true, except: A Appointments remain in effect until one's license is terminated, or a notice of termination is filed with the Commissioner by the insurer or agent B The Commissioner of Insurance must verify that an individual is eligible to be appointed within 30 days of receiving an application C An appointing insurer must file a notice of appointment within 30 days of the first submitted application D An insurance producer may not act as an agent for an insurer unless he or she has an appointment

C-

or those drivers required to show proof of future financial responsibility before operating a motor vehicle, which of the following methods is not appropriate? A A bond B A certificate of self-insurance C A certificate of financial responsibility D A certificate of deposit

C-Proof of financial responsibility may be given by filing a certificate of insurance, a bond, a certificate of deposit of money or securities, or a certificate of self-insurance.

Which of the following individuals is required to pass an insurance licensing exam in order to reinstate their license due to a failure to meet CE requirements? A A nonresident producer B An individual reinstating their license after less than 12 months C An insurance adjuster D An individual licensed to sell credit property insurance

C-Reinstatement without an exam is allowed for 12 months. As for nonresident producers and insurance consultants, they are specifically exempted. Credit property licensees are exempt because they are not required to pass a licensing exam.

Licensees must complete: A 24 hours of continuing education credit, including 2 hours based on association membership B 24 hours of continuing education credit every 2 years, plus 3 hours of ethics C 12 hours of continuing education credit per year D 24 hours of continuing education credit every 2 years, including 3 hours of ethics

D-

The minimum coverage limits in Arkansas are: A 20/30/5 B 20/40/10 C 30/50/25 D 25/50/25

D-

Which of the following penalties may be applied to any person who violates a provision of the Arkansas Insurance Code? A Restitution of actual losses to anyone affected by the violation B Suspension or revocation of one's license C A $1,000 fine per violation D All of the answers listed

D-

Albert discovered that an insurer that had been soliciting him to place business with them was actually unlicensed in the state of Arkansas. According to the rules regarding fraud, Albert was required to report the insurer: A Only if the company sold health insurance through the federal PPACA exchange B Only if he received the complaint from one of his clients C If he had inadvertently placed a policy through them D If he had any reason to believe the insurer to be unlicensed

D-A producer has a duty to report any insurer which may be unlicensed.

All of the following are considered to be methods of unfair competition, except: A Twisting B Churning C Unfair Discrimination D Replacement

D-Executing a replacement of one policy with another is not illegal if it is in the client's interests. The unfair trade practice known as twisting occurs when a producer initiates a policy replacement for his or her own benefit rather than that of the client, and uses misrepresentation to make the sale.

Which of the following statements describing the fiduciary and contractual relationships between producers, clients, and insurers is accurate? A The fiduciary responsibility of the insurance agent extends to all aspects of his or her interaction with clients and insurers B A licensed agent may not act as a broker and a licensed broker may not act as an agent C A licensee appointed as an agent by one insurer is considered an agent by all insurers D All funds received by licensee must be held in trust, and any personal use is punishable as theft

D-The fiduciary duty of the producer specifically refers to the funds that they handle for their clients and insurers, which are held in trust and may not be diverted for their own use. Agents may act as brokers when dealing with firms with which they have no appointment. The reverse is equally true for brokers.

How often must an insurer notify a residential policyholder of his/her eligibility for earthquake coverage? A 3 times each 5 years B 4 times each 5 years C 3 times each 4 years D 4 times each 4 years

c