Alabama Insurance Law Common to All Lines

What is the duration of an insurance producer or service representative's license?

Licenses remain in effect unless revoked or suspended as long as the license renewal fee is paid and continuing education requirements for the license are met by the due date

Applicants for which type of insurance license are exempt from Alabama prelicensing education requirements?

Limited license

If an insurance producer is to charge to the client a fee that is in addition to the commission for the sale of an insurance policy, the producer must

Disclose the fee to the client, in writing, and be agreed upon prior to the issuance of the policy.

Which of the following will NOT be considered unfair discrimination by insurers?

Discriminating in benefits and coverages based on the insured's habits and lifestyle

Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Discrimination

What type of license is needed to transact non-major lines of insurance like baggage and accident only insurance?

Limited

To maintain their license in this state, how many hours of continuing education must producers complete every 2 years?

24

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?

Defamation

Which of the following is a requirement that must be satisfied before an applicant can receive an insurance producer license in Alabama?

Complete prelicensing classroom instruction, unless otherwise exempt by the Commissioner

Which of the following authorities issues insurance producer licenses?

Commissioner

An insurance producer who is late in filing an application for license renewal will be charged a fee of

$50.

How long must producers keep records of insurance transactions under their license?

3 years

A producer licensed in Alabama must notify the Insurance Department of any change of address in his or her residence or business address within how many days?

30

All of the following applicants for an insurance producer license are exempt from prelicensing education requirements EXCEPT

An applicant for a dealer's license.

While serving as Commissioner, which of the following would be allowable to that individual?

Be a policyholder of a health insurance contract

All of the following actions can be described as twisting EXCEPT

Explaining to client the advantages of permanent insurance over term and suggesting changing policies

All of the following may cause the Commissioner to suspend or revoke the license of an insurance producer, EXCEPT

Failure of a producer to meet company imposed sales quotas for two consecutive periods.

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?

Illegal

A producer has become disabled. In order to keep his business going, what may his designee do?

Obtain a temporary license

Should an authorized insurance company have their certificate of authority suspended, during the period of the suspension, the insurer must do all of the following EXCEPT

Reapply for the Certificate of Authority.

All of the following are true regarding rebates EXCEPT

Rebates are allowed if it's in the best interest of the client.

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of

Rebating.

Paul is a producer in Louisiana and wants to become a producer in Alabama. The Commissioner will waive certain examination requirements, provided that Louisiana would waive these same requirements if an Alabama producer sought licensure in Louisiana. What term is used to describe this phenomenon?

Reciprocity

When a domestic insurance company, examined by the Commissioner, disagrees with the findings of the examination, what recourse is available?

Request a hearing within 20 days of receiving the report

The failure of an authorized insurer to file its annual financial statement with the Commissioner when due may result in any of the following actions by the Commissioner EXCEPT

Requesting an audit.

A certificate of authority is not require for an insurance company that writes only

Surplus lines insurance.

If a producer changes his residential address who must he/she notify?

This change will need to be reported to the Commissioner.

The license of Forgetful Frank has lapsed. How long, from the due date of the renewal fee, may Frank be reinstated without having to re-take a course or exam?

12 months

What is the earliest legal age that a person can be licensed as an insurance producer?

18

A producer holds both a Life and Health and a Property and Casualty licenses. How many hours of continuing education will the producer be required to complete every 2 years?

24

For a producer to meet the state continuing education requirements, how many CE hours must be completed on the topic of ethics?

3

Whenever the Commissioner believes that a licensee is acting or using methods contrary to the insurance laws or regulations of Alabama, to prevent further acts or methods from being conducted before a hearing can be held to determine the facts, the Commissioner may impose

A cease and desist order on the licensee.

When the Commissioner suspects that a person is violating an insurance law or other regulation, what can be issued that would order the person to stop committing the act of violation?

Cease and Desist Order

What instrument is available to the Commissioner to prevent a licensee from performing specific acts or using certain methods of conducting the business of insurance before any hearing is held to determine if a violation of laws or regulations has occurred?

Cease and desist order

Which of the following authorities is authorized to issue a temporary insurance producer's license?

Commissioner

All of the following would be a reason that an insurance company's name could be disapproved for use in the State of Alabama EXCEPT

The name is too long to be printed on a single line of the policy in the required type size.

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

Twisting

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of

Twisting.

A resident of another state wishing to transact insurance in Alabama may obtain a nonresident producer license, without examination, upon meeting one of the following EXCEPT

Been an executive officer of an insurance company.

In Alabama, an insurance company certificate of authority is issued for what period of time?

Perpetual

A business entity acting as an insurance producer is required to do all of the following EXCEPT

Be a publically owned company.

Which of the following is the term used when a person, in a fiduciary position, has used funds in manner for which they were not intended such as the wrongful taking or use of money belonging to another?

Misappropriation of funds

In addition to obtaining an insurance producer license, a business entity, in order to transact insurance, must have at least

One individual licensed insurance producer.

The term "fiduciary capacity" deals with a producer's

Position of financial trust.

Before transacting insurance under an assumed or artificial name, a licensee must first obtain approval from

The Commissioner.

In Alabama, domestic insurance companies may be examined by the Commissioner or by an examiner designated by

The Commissioner.

If a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur?

The change must be reported to the Commissioner.

During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes

Misrepresentation

An insurance application cannot ask about which of the following information about an applicant?

Sexual orientation

Which of the following is an example of a producer being involved in an unfair trade practice of rebating?

Telling a client that his first premium will be waived if he purchases the insurance policy today

An insurance entity or licensee cannot pay a commission or fee to a person if the person's license is classified as one of the following EXCEPT

Temporary.

All of the following would be considered rebating EXCEPT

An agent misrepresents policy benefits to convince a policyowner to replace policies.

If another governmental agency takes legal action against a licensee, whose responsibility is it to report the action?

The licensee

A person convicted of willfully violating an insurance law of Alabama is subject to

A fine of up to $1,000, imprisonment, and a sentence to hard labor for a period of one year.

Should an insurer accept business from a producer who is not appointed as that insurer's agent, what penalty may be exacted?

The insurer is fined 3 times the amount of the premium received on that business

Whenever the Commissioner receives a demand for a hearing, a hearing shall be scheduled to be held within

30 days.

Licensees must make a report of any action taken against them in another jurisdiction or by another governmental agency in Alabama within how many days of the final disposition of the matter?

30

In the event that an insurer terminates the appointment of a producer, the insurer must notify the Commissioner within

30 days.

How long does a temporary producer's license last?

6 months

A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of

Coercion.

All of the following are lines of insurance that may be transacted under a life and accident/health producer license EXCEPT

Consequential loss insurance.

Producers are responsible to collect and disperse premiums, and return premiums or other funds. Which insurance term is association with this?

Fiduciary capacity

Which of the following best describes the unfair trade practice of defamation?

Making derogatory oral statements about another insurer's financial condition