Chapter 17/3: Florida General Regulations Continued

What is excess business as it relates to insurance?

"Excess business" is that portion of a risk above the limits of that which the agent's own insurer will accept. "Rejected business" is a risk that the agent's own insurer is authorized to write but rejects for underwriting reasons. The correct answer is: The portion of a risk above the limits of that which the agent's insurer will accept

In Florida, what defines proper business practices expected of agents?

Florida's Code of Ethics defines proper business practices expected of agents. The correct answer is: The Florida Code of Ethics

What is the maximum fine for twisting?

If a person commits "twisting," he has committed a misdemeanor of the first degree. He is subject to an administrative fine of up to $5,000 for each unintentional violation, or up to $75,000 for each willful violation. The correct answer is: $75,000 per violation

What is the criminal classification for twisting?

If a person commits "twisting," he has committed a misdemeanor of the first degree. He is subject to an administrative fine of up to $5,000 for each unintentional violation, or up to $75,000 for each willful violation. The correct answer is: A first-degree misdemeanor

Which of the following is best described as a group formed for the purpose of obtaining insurance coverage?

A fictitious group is defined as a group that is formed for the sole purpose of obtaining insurance coverage. The correct answer is: Fictitious group

Who are the members of the Florida Life and Health Guaranty Association?

All member insurers must be members of the association as a condition to eligibility to transact insurance in Florida. In addition, member insurers are assessed amounts to contribute to the guaranty fund for insurer insolvency. The correct answer is: All insurers authorized by the state of Florida

Sliding is the act or practice of:

All of the above are examples of sliding. The correct answer is: All of the above

If an agent includes an additional charge in the coverage without telling the applicant, this would be:

Sliding includes charging an applicant for a specific ancillary coverage or product, in addition to the cost of the insurance coverage applied for, without the informed consent of the applicant. The correct answer is: Sliding

What is the maximum amount the Florida Life and Health Guaranty Association will pay for any one life?

The association will pay a maximum of $300,000 for all benefits on any one life. The correct answer is: $300,000

The fact that an insurance agent cannot commingle their insurance funds with their personal funds is referred to in legal terms as:

All premiums belonging to insurers or others received by an agent are trust funds received by the licensee in a fiduciary capacity. An agent must keep the funds belonging to each insurer for which an agent is not appointed in a separate account so as to allow the department or office to properly audit such funds. Agents must not use such funds for their own purposes. The correct answer is: Fiduciary responsibility

Which of the following best describes controlled business?

An agent is transacting controlled business when more of his policies sold in a 12-month period are to his family and employees/employer, than to the general public. The correct answer is: Insurance transacted to an agent's family, amounting to more than the agent's total business sold to the general public

Which of the following penalties is applied for committing an intentional act of churning?

Any person committing an intentional act of churning is guilty of a misdemeanor of the first degree and subject to a fine in an amount up to $75,000. The correct answer is: Misdemeanor of the first degree and fine of $75,000

What is the maximum fine for willfully submitting fraudulent signatures on any insurance related document?

If a person willfully submits fraudulent signatures on an application or policy-related document, the person has committed a felony of the third degree, punishable by an administrative fine not greater than $5,000 for each non-willful violation or an administrative fine not greater than $40,000 for each willful violation. The correct answer is: $40,000 per violation

Which of the following would be considered defamation?

Defamation is unethical and defined as making, publishing or circulating any oral, written or printed statement which is false, or maliciously critical of or derogatory to the financial condition of any insurance company, or which is calculated to injure any person engaged in the business of life insurance, and this practice is declared to be unethical. The correct answer is: All of the above

How long must an insurer keep a copy of every document authorized by the insurer?

Each insurer subject to this section shall maintain at its home office or principal office a complete file containing one copy of each document authorized by the insurer for use pursuant to this section. Such file shall contain one copy of each authorized form for a period of 3 years following the date of its last authorized use. The correct answer is: 3 years

What is the criminal classification for submitting fraudulent signatures on any insurance related document?

If a person willfully submits fraudulent signatures on an application or policy-related document, the person has committed a felony of the third degree. The correct answer is: A third-degree felony

What is an impaired insurer?

Impaired insurer is a member insurer deemed by the department to be potentially unable to fulfill its contractual obligations and not an insolvent insurer. The correct answer is: An insurer that may potentially be unable to fulfill its contractual obligations

Whose approval is required in order for agents to do advertisements?

Insurers are responsible for the form and content of all advertisements. Agents must have the insurer's approval to use advertisements. The correct answer is: Their insurer

Which of the following defines "unfair discrimination" as it relates to insurance sales in Florida?

It is an unfair trade practice to discriminate against individuals of the same class and equal expectation of life in the rates, terms, conditions, benefits, or any policy provision for insurance. The correct answer is: Discriminating against individuals of the same class and equal expectation of life

Which of the following groups is not allowed to buy group insurance?

Life and health insurance may not be sold to fictitious groups, or group that are formed from membership, employment, franchise, or in any other way, with the sole purpose of obtaining insurance coverage. The correct answer is: A group whose sole purpose is obtaining insurance coverage

Which of the following is NOT a misrepresentation?

Misrepresentation is defined as: Knowingly making a false or fraudulent written or oral statement or representation on, or relative to, an application or negotiation for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual. Knowingly making a material omission in the comparison of a life, health, or Medicare supplement insurance replacement policy with the policy it replaces for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual. A material omission includes the failure to advise the insured of the existence and operation of a preexisting condition clause in the replacement policy. The misstatement may be intentional or unintentional. Misstatements of material facts are subject to voiding the contract. The correct answer is: Misstatements of material facts

A rebate would NOT be allowed for which of the following?

No insurance agency agent shall rebate any portion of a commission except as follows: The rebate shall be available to all insureds in the same actuarial class. The rebate shall be in accordance with a rebating schedule filed by the agent with the insurer issuing the policy to which the rebate applies. The rebating schedule shall be uniformly applied in that all insureds who purchase the same policy through the agent for the same amount of insurance receive the same percentage rebate. The rebate schedule is prominently displayed in public view in the agent's place of doing business and a copy is available to insureds on request at no charge. The age, sex, place of residence, race, nationality, ethnic origin, marital status, or occupation of the insured or location of the risk is not utilized in determining the percentage of the rebate or whether a rebate is available. The insurance agency agent shall maintain a copy of all rebate schedules for the most recent 5 years and their effective dates. No rebate shall be withheld or limited in amount based on factors which are unfairly discriminatory. No rebate shall be given which is not reflected on the rebate schedule. No rebate shall be refused or granted based upon the purchase or failure of the insured or applicant to purchase collateral business. The correct answer is: Rebate requires the purchase of collateral business.

In Florida, which of the following is considered as misrepresentation?

No person will make, publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, any advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading. The correct answer is: All of the above

When is life insurance replacement considered twisting?

Not all life insurance replacement is twisting , only those cases in which replacement is based on the agent making inaccurate representations. The correct answer is: When an agent makes inaccurate representations

How are insurance agents paid?

Only licensed and appointed insurance agents may transact life and health insurance policies in Florida. Agents are paid by commissions, which are apportioned from policy premiums. Agents are permitted to charge additional amounts if they provide counseling services for insurance, and a written contract is signed between the agent and client before the additional fee is charged. The correct answer is: Commission plus an additional fee is allowed from the client with the client's approval

In Florida, which of the following is illegal when not specified in the contract?

Rebating is unethical. Except as otherwise expressly provided by law, no person will knowingly permit or offer to make or make any contract of life insurance, life annuity or disability insurance, or agreement as to such contract other than as plainly expressed in the contract issued thereon, or pay or allow, or give or offer to pay, allow, or give, directly or indirectly as an inducement to such insurance, or annuity, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract. The correct answer is: All of the above

What is rejected business as it relates to insurance?

Rejected business" is a risk that the agent's own insurer is authorized to write but rejects for underwriting reasons, or is willing to accept only on a substandard basis; but which business will be accepted and issued by another authorized insurer at a lower rate. The correct answer is: All of the above

If an agent states that there is no charge for a certain coverage when there is, this would be:

Sliding includes representing to an applicant that a specific ancillary coverage or product is included in the policy applied for without an additional charge when such charge is required. The correct answer is: Sliding

If an agent states that certain coverage is required by law when it isn't, this would be:

Sliding includes representing to an applicant that a specific ancillary coverage or product is required by law in conjunction with the purchase of insurance when such coverage or product is not required. The correct answer is: Sliding

Which of the following is described as charging insureds additional fees without their consent?

Sliding occurs when agents or insurers charge applicants additional charges without applicants' consent. The correct answer is: Sliding

Someone who is a licensed agent only may use which term to describe themself?

Terms such as "financial planner," "investment adviser," "financial consultant," or "financial counseling" shall not be used in such a way as to imply that the insurance agent is generally engaged in an advisory business in which compensation is unrelated to sales unless such is actually the case. The correct answer is: None of the above

What is the maximum liability of the Florida Life and Health Guaranty Association for death benefits or health insurance claims?

The association's liability for the contractual obligations of the insolvent insurer will be no more than the contractual obligations of the insurer in the absence of such insolvency. Listed below are the maximum amounts the association will pay for covered insolvent policies: Life insurance death benefit: $300,000 per insured life, Life insurance cash surrender: $100,000 per insured life, Health insurance claims: $300,000 per insured life, Annuity cash surrender: $100,000 per contract owner, Annuity benefits: $300,000 per contract owner The correct answer is: $300,000

Which of the following is prohibited in Florida?

The charge agent may be in charge of one or more agency locations. Agents may work out of their homes and do not have to register their homes as insurance agencies. Mail order insurance (insurance transacted by mail without agents) is prohibited in Florida. All insurance in Florida must be transacted through an agent. The correct answer is: Mail order insurance without an agent

A Medicare Supplement Insurance advertisement must be sufficiently complete and clear to avoid deception or the capacity or tendency to mislead or deceive based on what type of person?

The form and content of a Medicare Supplement Insurance advertisement must be sufficiently complete and clear to avoid deception or the capacity or tendency to mislead or deceive based on a person of average education or intelligence, within the segment of the public to which the advertisement is directed. The correct answer is: Average education and average intelligence

What is the maximum fine for an intentional act of twisting or churning?

The penalty for committing an act of twisting or churning is a misdemeanor of the first degree, and a fine of up to $5,000 for unintentional violations, and up to $75,000 for intentional violations. The correct answer is: $75,000

What is the charge for an act of twisting or churning?

The penalty for committing an act of twisting or churning is a misdemeanor of the first degree. The correct answer is: First degree misdemeanor

What is the penalty for committing an unintentional act of twisting?

The penalty for committing an unintentional act of twisting is a misdemeanor of the first degree and an administrative penalty of up to $5,000 for each unintentional act of violation. The correct answer is: Misdemeanor of the first degree and an administrative fine of up to $5,000

What is the maximum fine for failure to comply with a subpoena?

The penalty for failure to comply with a subpoena is a maximum fine of $1,000 per violation. The correct answer is: $1,000 per violation

Which of the following is true?

To receive a commission, a person must be licensed as an insurance agent and be appointed with at least one insurer. Insurers, nor agents, may pay a commission to an unlicensed individual. Agents and insurers may pay commissions to other licensed agents. The correct answer is: An agent can pay a commission to another agent.

Getting someone to change policies with a different company without revealing all the repercussions is:

Twisting involves changing policies with a different company without revealing all the repercussions. The correct answer is: Twisting

Which of the following is described as making fraudulent comparisons of insurance policies for the purpose of inducing a person to purchase a policy?

Twisting is making misrepresentations or incomplete comparisons of insurance policies for the purpose of inducing a policy purchase, or a person to lapse, forfeit, surrender, termination or convert an insurance policy. The correct answer is: Twisting

Which of the following is an unfair claims settlement practice?

Unfair claims settlement practices are committing or performing with such frequency as to indicate a general business practice any of the following: Denying claims without conducting reasonable investigations based upon available information: Failing to affirm or deny full or partial coverage of claims, and, as to partial coverage, the dollar amount or extent of coverage, or failing to provide a written statement that the claim is being investigated, upon the written request of the insured within 30 days after proof-of-loss statements have been completed; Failing to promptly provide a reasonable explanation in writing to the insured of the basis in the insurance policy, in relation to the facts or applicable law, for denial of a claim or for the offer of a compromise settlement; Failing to promptly notify the insured of any additional information necessary for the processing of a claim; or Failing to clearly explain the nature of the requested information and the reasons why such information is necessary. The correct answer is: Providing a written statement 45 days after the incident