1.0 Insurance Regulation 10%
Violent Crime Control and Law Enforcement Act
An Act of Congress designed to deal with crime and law enforcement Enacted in 1994
Misrepresentation
you lied-considered an unfair trade practice
Unfair claims settlement practices rule
Unfair if performed with such frequency they indicate a general business practice For example: A P&C insurer must recognize valid claims, cannot restrict an assignment of a loss or claim after a loss has occurred.
Types of licensees-Temporary
Director may issue WITHOUT examination. May be issued to surviving spouse or personal representative of a DECEASED insurance producer; mentally or physically DISABLED producer; or the designee of a licensed producer who enters active service in the Armed Forces of the United States of America. Shall not be for a period of more than 180 days
Gender discrimination
Applies to any policy or certificate delivered or issued for delivery in this state Cannot use gender or marital status to deny any insurance policy Cannot use gender or marital status to limit the amount of coverage insured may purchase or Otherwise restricting, modifying, excluding or reducing the availability of any insurance contract, the amount of benefits payable, or any term, condition or type of coverage on account of gender or marital status in all lines of insurance.
Fair Credit Reporting Act
only those with a permissible purpose: Insurance company underwriting, when you apply for credit, collection agencies for your debt, employers - only with your permission. No friends, family, coworkers without your permission.
CAN-SPAM Act of 2003
Establishes the first national standards for sending commercial e-mail and requires the FTC (Federal Trade Commission) to enforce its provisions Regulates fraud and related activity in connection with electronic mail-provides for penalties for offenders
Cyber Security
Insurance providers digitally store health information, financial data, social security numbers and other identifying information. Establishing a set of guidelines to manage cyber-risk including strong passwords which are regularly updated; updated software and hardware; can help to maintain an acceptable level of risk, however; even the best systems can be compromised.
Signature on insurance policy
authorized insurer may not issue a policy for an in-state risk unless countersignature endorsement is attached to policy. Must be countersigned by its licensed insurance producer or bail bond agent, as applicable
Disciplinary actions-civil penalties
for each unintentional act, impose a civil penalty up to $250 with a maximum penalty of $2,500 for each intentional act, impose a civil penalty up to $2,500 with a maximum penalty of $15,000
Types of licensees-Producers
may be an individual or a business entity (Such as a partnership or corporation). Authorized by an insurer to solicit applications or to negotiate insurance on its behalf. Represents the insure(r) NOT the insure(d). NOTE: A regular salaried officer or employee of the insurer is NOT a producer if employee devotes substantially ALL their time to activities other than soliciting insurance and RECEIVES NO commission.
Types of licensees-Vending machines
must be a licensed insurance producer and authorized by the Director. May solicit applications for and issue policies though vending machines. Must supervise each machine and only issue policies through insurers authorized to transact business in Arizona. Must display on or near each vending machine evidence of producer's authority with name/address of both producer and insurer; kind of insurance/type of policy to be sold; place where machine is to be in operation and machine's identification number.
Unfair trade practices
no person shall engage in this state in any trade practice which is prohibited by this article, or defined in this article as, or determined pursuant to this article to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance. Includes: Misrepresentation False or Deceptive Advertising Defamation of Insurer Boycott, Coercion, and Intimidation False Financial Statements or Records Unfair Discrimination Gender Discrimination Blindness Rebating Prohibited Inducement
Prohibited inducements
Insurer; insurance producer; or other person shall not provide in any policy for or offer, sell, buy or offer or promise to buy, sell, give, promise or allow to the insured or prospective insured or to any other person on behalf of the insured or prospective insured in any manner: 1. Any employment. 2. Any shares of stock or other securities issued or at any time to be issued or any interest therein or rights thereto. 3. Any advisory board contract, or any similar contract, agreement or understanding, offering, providing for or promising any special profits. 4. Any prizes, goods, wares, merchandise or tangible property of an aggregate value of more than twenty-five dollars.
Surrender of license
Director may accept the voluntary surrender of the licensees authority to transact one or more lines of insurance or the entire license-must submit written request and person is not permitted to reapply for the same authority or license for a period of 1 year.
Expiration of license
expires or renews every 4 years (quadrennially) on the last day of the month of the licensee's birthday
Payment of premiums
if mailed on or before due date deemed timely If postmark on envelope is illegible, payment date is presumed to be five mail days fore receipt of payment If sent by US certified or registered mail, date of the registration or certification is deemed the date of payment Due dates on Saturday, Sunday or legal holiday considered timely if sent on the next business day.
Lines of producer license authority
if requirements for licensing have been met-Director may issue licenses for: ■ Rental car agent ■ Self-service storage agent ■ Title insurance agent ■ Limited lines license - vendors of portable electronics ■ Limited lines license - travel insurance ■ Qualification to issue variable annuities
Rebating
No such insurer, employee, insurance producer or representative shall offer, pay, allow or give, directly or indirectly, as an inducement to insurance, or after insurance has been effected, any rebate, discount, abatement, credit or reduction of the premium named in a policy of insurance, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement whatever, not specified in the policy of insurance, except to the extent provided for in an applicable filing. No insured named in a policy of insurance nor any representative or employee of the insured shall knowingly receive or accept, directly or indirectly, any such rebate, discount, abatement, credit or reduction of premium, or any such special favor or advantage or valuable consideration or inducement. Does NOT include the payment of commissions or other compensation; dividends; savings or unabsorbed premium deposits.
False or deceptive advertising
Includes both advertising of insurance or status as an insurer. If not an insurer cannot assume or use any name which deceptively infers or suggest that a person is an insurer. Shall Not: Make Publish Disseminate Circulate Or place before the public in Newspaper Magazine Other publication i.e. notice, circular, pamphlet, letter poster or over the radio or television station or in any other way any advertisement, announcement, sales material or statement Anything with respect to the business of insurance or person in the conduct of his or her insurance business that is untrue deceptive or misleading
Disciplinary actions-Cease and Desist
may be issued if Director discovers a person is transacting insurance without a license or commissions have been paid to a person who is not licensed as required or not appropriately licensed. Must be licensed to act as: □ Managing general agent □ Adjuster □ Rental car agent □ Risk manager □ Self-service storage agent □ Bail bond agent □ Surplus lines broker If the director orders a person to cease and desist, person may file a notice of appeal and may appeal any final order.
Licensing eligibility/lawful presence
must prove lawful presence in US with documentation of citizenship or alien status. If citizenship is established or a form of non-expiring work authorization issued by federal government, documentation is not required for renewal or reinstatement of license
Disciplinary actions-denial, suspension, revocation or refusal to renew
Director may deny, suspend, revoke or refuse to renew a license for Up to 12 months, however; must notify the applicant and provide applicant opportunity for a hearing. Director has the option to ■ For each unintentional act, impose a civil penalty up to $250 with a maximum penalty of $2,500 ■ For each intentional act, impose a civil penalty up to $2,500 with a maximum penalty of $15,000 ■ Order restitution to any party injured by the licensee Instead of or in addition to suspending, revoking or refusing to renew a producer license. Controlled business will result in action taken against agent/producer. Definition of controlled business: Using the insurance producer's license principally to provide insurance that covers the life, property or insurable interests of the licensee, family members, employer or employees.
Defamation of insurer
Includes: Making Publishing Disseminating, circulating any oral or written statement or any Pamphlet, Circular, Article or Sales material or literature which is False or maliciously critical of or derogatory to the financial condition of any insurer and which is calculated to injure any person engaged in the business of insurance or any domestic corporation or group being formed pursuant to this code for the purpose of becoming an insurer DOES NOT restrict lawful rights to objectively publish and disseminate news.
Claims payment
Insurer must pay first party claims within 30 days after receipt of an acceptable proof of loss. Postmark used to determine date of payment Does not apply to Medicare Not overdue if insurer unable to pay claim because a legal recipient does not exist to give valid release for payment; insurer must promptly notify claimant of inability and offer in good faith to promptly pay upon determination of who is entitled to receive payment
Certificate of authority
Issued by the Director Evidences authority to transact the kind of insurance specified in the certificate No person may act as an insurer and no insurer can transact insurance in Arizona except as authorized by the Director To receive a Certificate of Authority insurer must Complete application to receive Certificate of Authority Meet minimum capital stock or Minimum basic surplus requirements (aka legal reserves) to prove sufficient funds to pay claims All authorized insurers must file: ■ Rates ■ Rating system (to determine rates) ■ Policy forms ■ Annual financial statement With the Director
Insurance fraud
It is a fraudulent practice and unlawful for a person to knowingly: 1. Present, cause to be presented or prepare with the knowledge or belief that it will be presented an oral or written statement, including computer generated documents, to or by an insurer, reinsurer, purported insurer or reinsurer, insurance producer or agent of a reinsurer that contains untrue statements of material fact or that fails to state any material fact with respect to any of the following: (a) An application for the issuance or renewal of an insurance policy. (b) The rating of an insurance policy. (c) A claim for payment or benefit pursuant to an insurance policy. (d) Premiums paid on any insurance policy. (e) Payments made pursuant to the terms of any insurance policy. (f) An application for a certificate of authority. (g) The financial condition of an insurer, reinsurer or purported insurer or reinsurer. (h) The acquisition of an insurer or reinsurer or the concealing of any information concerning any fact material to the acquisition. Definitions: "Runner", "capper" or "steerer" means a person who procures clients at the direction of, or in cooperation with, a person who intends to perform or obtain services or benefits under a contract of insurance or who intends to assert a claim against an insured. 2. "Statement" includes any notice, proof of injury, bill for services, payment for services, hospital or doctor records, x-rays, test reports, medical or legal expenses, or other evidence of loss or injury, or other expense or payment. It is an unlawful practice for a person who sells or repairs auto glass to knowingly: 1. Submit a false claim to an insurer for auto glass repair or replacement or for related services: (a) If the services were not provided
Place of business and records
Required to keep insurance records at producer's principal place of business for 3 years following each transaction. Director may conduct examination any time it is deemed necessary Records must be kept confidential Examined party must pay reasonable cost of examination Business Entity Producer must have at least one (1) individual licensed for the appropriate lines of authority transacted at EACH location
Fraud and false statements including waiver
The 1033 federal regulation outlines the punishment for crimes by or affecting person engaged in the business of insurance whose activities affect interstate commerce. The 1033 Waiver allows those who are ineligible for licensing in insurance or the financial services to submit a waiver along with an application for an insurance license and the state will determine eligibility on an individual basis. Fees are not refundable if your application is denied.
Sell
To exchange a contract of insurance for consideration on behalf of an insurer
Insurance information and privacy protection
applies to insurance institutions, insurance producers or insurance support organizations that In the case of property or casualty insurance: (a) Collect, receive or maintain information in connection with insurance transactions involving policies, contracts or certificates of insurance delivered, issued for delivery or renewed in this state. (b) Engage in insurance transactions involving policies, contracts or certificates of insurance delivered, issued for delivery or renewed in this state. In the case of property or casualty insurance, the persons, including natural persons who are the subject of information collected, received or maintained in connection with insurance transactions involving policies, contracts or certificates of insurance delivered, issued for delivery or renewed in this state, and applicants, individuals or policyholders who engage in or seek to engage in insurance transactions involving policies, contracts or certificates of insurance delivered, issued for delivery or renewed in this state. C. For purposes of this section, a person is considered a resident of this state if the person's last known mailing address, as shown in the records of the insurance institution, insurance producer or insurance support organization, is located in this state.
Solicit
attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company
Inactive license status during military service
licensee or applicant ordered to military service may request license or application be placed on inactive status by sending the Department a written statement that includes all of the following: ■ The licensee's name ■ The licensee's license number or Social Security number ■ The date that the active military service begins ■ A request for inactive status May NOT: Sell/Solicit or Negotiate insurance but CAN receive renewal or other deferred commissions. Does NOT include periodic and routine service as a military reservist.
Sharing commissions
must be in same line of insurance. Renewal or other deferred commissions may be paid if person was licensed at time of transaction
Types of licensees-Nonresidents
must be properly licensed in home state. If home state has a reciprocal agreement with Arizona-Director may issue non-resident insurance license to persons who DO NOT have either a principal residence or a place of business in Arizona. Exempt from Arizona exam, however; must pay proper fees, file the proper forms and furnish a letter of good standing from home state. Agent/Producer can only have a resident license in ONE state but may have up to 49 non-resident licenses
Types of licensees-Life Settlement Broker
must have life line of authority to meet licensing requirements to operate as a life settlement broker. Must notify the Director within 30 days of operating as a life settlement broker that he/she is acting as a broker
Report of actions
producer/agent has 30 days to report any administrative action or criminal prosecution that occurs in any jurisdiction or by another governmental agency in this state
Renewal of license
subject to renewal per insurance code. Prior to renewal: Director may require applicant to submit fingerprints and verify information contained in license application including prior criminal records. Must be compliant with continuing education requirements. May renew within 12 months of expiration by filing a renewal application, paying appropriate licensing fee and a $100 late renewal fee.
Acts constituting insurance transaction
the act of Negotiating/selling/soliciting insurance
Fees
Insurer and insurance producer MAY: Charge a fee for services not customarily provided if the fee is filed with the director and Services are in excess of those normally performed for insureds Service charge and specific services disclosed and agreed to in writing by the insured on a form approved by the Director Amount of service charge is reasonably related to cost of the service performed Insurer and insurance producer MAY NOT: Charge a fee or service charge in addition to premium for motor vehicle insurance policies that insure 6 or fewer motor vehicles After notice and hearing-Director determines if services are customarily provided in transaction of insurance If after examination and a hearing, Director determines insurer or producer violated must refund fee or part of fee determined to be excessive-may impose civil penalties Insurer or producer pays cost of examination from monies deposited with the Director regardless of findings of exam does not prohibit fees, including membership fees charged by a reciprocal or mutual insurer, if the fees are filed with the director and are included by an insurer in supplemental rate information. does not apply to insurers and insurance producers transacting commercial insurance
Unfair discrimination
Similar risks must be charged similar rates Cannot deny a claim incurred or deny, refuse, refuse to renew, restrict, cancel, exclude or limit coverage or charge a different rate solely on the basis the insured or proposed insured was a victim of domestic violence or is an entity or individual or entity that provides counseling, shelter, protection or other services to victims of domestic violence, or a mental or physical condition. Can refuse if family or household member who commits the act of domestic violence is the beneficiary or the applicant for or prospective owner of the policy; or if the applicant or prospective owner lacks an insurable interest
Types of licensees-Business entities
a Business Entity is any corporation, association, partnership, limited liability company, limited liability partnership or other legal entity except an individual or sole proprietorship. The application of a business entity MUST include the names of all members, officers and directors of the business entity. For any individual who is identified, the director may require the applicant to provide the information required for a license as an individual. Before the director grants a license, the director may require the applicant to: Provide any document that is reasonably necessary to verify the information that is contained in an application and other. information including prior criminal records. A business entity insurance producer shall have at least one insurance producer individually licensed for the appropriate lines of authority in each office or place of business in which the business entity transacts insurance in this state.
Boycott, coercion or intimidation
Cannot commit acts tending to result in unreasonable restraint or monopoly of insurance business.
False financial statements
Cannot deliver or place before the public any false statement of the financial condition of an insurer with intent to deceive No person shall make false entry in any book, report or statement of any insurer or other person required to have records with intent to deceive any agent or examiner lawfully appointed to examine its condition or into any of its affairs, or any public official to whom the insurer or person is required by law to appoint. Includes: willfully omitting to make a true entry of any material fact pertaining to the business of the insurer or person in any book, report or statement thereof.
Assumed business name
an insurance producer must notify the Director in writing within 30 days after any material change to the information filed with the Director. The Director will not issue any license in a trade name except to a business entity as long as the trade name is legally registered. MUST notify Director prior to using the assumed name. Name may not be misleading or deceptive; must be lawfully registered; the Director may deny the use of an assumed name.
License application requirements
application to the Director. Application must include the applicants identity and personal history; business record and experience in insurance; other pertinent information required by the Director.
Change of personal/business information
must inform director in writing within 30 days of any change in: Residential/Business address Members, Directors, Officers or Designated Producer-(Director may require full set of fingerprints for each) May exchange fingerprints with Federal Bureau of Investigations i.e. the FBI Name Director may contract with third party if related to producer licensing if Director deems appropriate-includes the collection of fees.
Terrorism Insurance Program
program established in 2002. Under the program, insurers must offer certain types of terrorism risk coverage. If losses from an attack exceed a set amount, the federal backstop kicks in Extended in 2005 Reauthorization Act of 2007 contains rules prescribed by the Department of the Treasury to implement and administer the Terrorism Risk Insurance Program. Applies to insurers subject to the Act and their policyholders
Types of licensees-Adjusters
receives compensation for adjusting, investigating or negotiating settlement of claims arising under insurance contracts. Can be on behalf of insurer or the insured Does NOT include licensed attorneys, salaried employees or MGA's or licensed insurance producers who adjust losses arising under the policies they produced. To be an adjuster both resident and non-resident applicants must be at least 18 years of age and take and pass the Arizona Adjuster's examination.
Gramm-Leach-Bliley Act
requires companies that offer consumers financial products or insurance to explain their information sharing practices to their customers and to safeguard sensitive data
Negotiate
the act of conferring with to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract if the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers.
