The Insurance Market Quiz

If a policyholder contacts an insurance company about a claim and expects a response to the inquiry, within what span of time must the agent respond? A. 15 days B. 21 days C. 31 days D. 90 days

A. 15 days - Upon receiving any communication from a claimant (regarding a claim) that reasonably suggests that a response is expected, every licensee must furnish the claimant with a complete response within 15 days.

Company A enters into a reinsurance agreement with Company B, where Company B reinsures Company A's policies. Which of the following is true? A. Company A is the primary insurer, and Company B is the reinsurer. B. Company A is the reinsurer, and Company B is the primary insurer. C. Company A is the primary insurer, and Company B is the facultative insurer. D. Company A is the facultative insurer, and Company B is the primary insurer.

A. Company A is the primary insurer, and Company B is the reinsurer. - The company that reinsures policies is called a "reinsurer," while the company who requests for its policies to be reinsured is called the "primary insurer."

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? A. Defamation B. Undercutting C. Twisting D. Slandering

A. Defamation - Defamation is making statements that are false as to the financial condition of any insurer and which are calculated to injure any person engaged in the business of insurance.

Any person who transacts insurance without a license A. May be guilty of a misdemeanor. B. May do so as long as he/she does not get a commission. C. Is called a Life Solicitor. D. Is guilty of twisting, a misrepresentation.

A. May be guilty of a misdemeanor. - No person may transact insurance without a license, unless otherwise exempted by the Code. (CIC 1631 and CIC 1633)

An insurance agent who diverts premiums held in a trust capacity for his or her own use A. Will be considered guilty of theft and be punished to the extent of the law. B. Must report the premium as additional income to the insurer. C. Will be fined $250 and required to attend a 3-hour ethics review course. D. Must enter the transaction on a separate ledger and report such transactions.

A. Will be considered guilty of theft and be punished to the extent of the law. - This would be theft and is prosecutable in all states.

When the California Insurance Code needs to be changed, the legislature must design and pass a bill. Once the bill is passed, it is presented to the Governor and becomes law if not returned to the legislature within what time frame? A. A period of 90 days from the date of enactment B. A specified period of 12-30 days C. A period of 14 days from submission to Governor's office D. A period of 30 days or when the legislature reconvenes from a recess

B. A specified period of 12-30 days - The period is specified by the legislature and is between 12-30 days after being submitted to the Governor.

Which of the following best defines earned surplus? A. Dividends paid to policyholders. B. Insurer's unassigned funds. C. Insurer's expenses and liabilities. D. None of the above.

B. Insurer's unassigned funds. - As defined by the California Insurance Code 1152, "earned surplus is unassigned funds, as required to be reported on the insurer's annual statement."

The Department of Insurance contacts an agent about a claim that was settled two months ago. Within what timeframe must the agent issue a complete response? A. 10 days B. 15 days C. 21 days D. 31 days

C. 21 days - If the Department contacts an agent regarding a claim, the agent must respond completely within 21 days.

Anyone convicted of committing an insurance fraud may be fined up to the greater amount of double the value of the fraud or A. $50,000. B. $75,000. C. $100,000. D. $150,000.

D. $150,000 - The Insurance Code sets the maximum penalty at $150,000 or double the amount of the fraud, whichever is greater.

The Commissioner MAY deny an application for license for any applicant who A. Has been convicted of a felony. B. Is not qualified to accomplish the duties to be performed. C. Does not have a good business reputation. D. Any of these

D. Any of these - Felony conviction, lack of qualifications, and a lack of a good business reputation are all grounds for nonlicensure.

An insurer received a claim on May 1st. On May 31th, the claim was approved in its entirety. By what date can the claimant expect the payment? A. July 10th B. June 3rd C. June 10th D. June 30th

D. June 30th - Upon acceptance of the claim, insurers are required to provide payment within 30 days.

An agent is a legal person who acts on behalf of A. The applicant. B. The beneficiary. C. Himself/herself. D. The principal.

D. The principal. - An agent is a legal person who acts on behalf of the principal (insurer).