Chapter 4 ExamFx: NC Statutes & Regulations For Property
Before the Commissioner will issue a brokers license, the license must obtain a bond for at least?
$15,000
What are the required qualifications to obtain an agents license in NC?
- Minimum age: 18 years or older - Complete Pre-licensing education - Demonstrate minimum competency by passing the licensing examination - Pay the applicable fees - Apply for a license
Insurers are classified according to their domicile. What are the three types of insurers?
1. Domestic 2. Foreign 3. Alien
If the Commissioner is scheduling a hearing for a potential violation of the Insurance Code, what is the minimum required notice?
10 Days
When an agent changes email addresses, the Department of Insurance must be notified within?
10 Days
How long does a North Carolina agent have to notify the Department of Insurance in event of a change in residence address?
10 business days
What is the maximum duration of a temporary license?
180 days
To maintain their insurance license, agents are required to complete how many hours of CE every 2 years?
24 hours
What is the continuing education requirement in Ethics for agents in this state?
3 hours every 2 years
A licensee who ceases to maintain residency in NC is required to deliver any insurance licenses to the Commissioner by mail or in person within how many days after terminating residency?
30 Days
A licensee who cease to maintain residency in North Carolina is required to deliver any insurance to the Commissioner by mail or in person within how many days after terminating residency?
30 days
After a claim has been settled, insurance companies are required to keep records pertaining to the claim for at least?
5 years
How long must a complaint record be maintained?
5 years
The Commissioner must examine every domestic insurer at least once every?
5 years
An agent has completed a total of 30 hours of continuing education during a license renewal period. How many of these hours may the agent apply towards the next CE compliance period?
6 Because you only have to have 24 hours every 2 years
What are the most common penalties for violations of insurance statutes?
A cease and desist order, a fine, and license suspension or revocation
What is a Business Entity?
A corporation, association, partnership, limited liability partnership, or other legal entity. This does NOT include a sole proprietorship.
What is a License?
A document issued by the Commissioner authorizing a person to act as an insurance agent for the kinds of insurance specified in the document
Who is a Limited Lines Agent?
A person authorized by the Commissioner to sell, solicit, or negotiate limited lines insurance
Who is an insurance agent?
A person authorized to sell, solicit and negotiate insurance contracts
Who is a Agent?
A person licensed to solicit applications for, or to negotiate a policy of insurance
Who is a Insurance Producer (OR Producer)?
A person required to be licensed to sell, solicit, or negotiate insurance. Includes: agent, broker, & limited representative
Who is a Broker?
A person who, being a licensed agent , procures insurance for a party other than himself through a duly authorized agent of an insurer that is licensed to do business in NC but for which the broker is not authorized to act as a agent. They represent the insured, NOT the insurer
Which of the following would be required in order to obtain a duplicate license due to a loss of the original one?
A written request to the Commissioner & payment of fees
A person licensed to solicit applications or to negotiate a policy of insurance is called?
An agent
Any agent, broker or limited representative who acts for a person other than himself negotiating a contract of insurance, for the purpose of receiving the premium, is deemed to be
An agent of the company
Who is considered a nonresident agent?
An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state
Person means?
An individual, partnership, firm, association, corporation, joint-stock company or any similar entity
Any insurer authorized to transact business in NC may appoint as its agent
Any individual who holds a valid agents license issued by the Commissioner
Who is a Adjuster?
Any individual who, for salary, fee, or commission, investigates or reports to his principal relative to claim arising under insurance contracts other than life or annuity
In cases when an applicant for insurance is blind or deaf, the insurer underwriting the policy may do which of the following?
Apply the same standards as are used for applicants whose sight and hearing are not impaired
What does Solicit mean?
Attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company
If an insurer holds a Certificate of Authority, it is known as what type of insurer?
Authorized or admitted
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?
Authorized or admitted
If a license is convicted of a criminal violation, the licensee's insurance is?
Automatically suspended
If the state Insurance Commissioner believes that a producer may be in violation of an insurance law or regulation, what would be issued?
Cease & Desist Order
If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?
Cease and Desist order
What document is required for an insurance company to transact insurance?
Certificate Of Authority
A state-issued document empowering an insurance company to become an admitted insurer is called what?
Certificate of Authority
How is the Commissioner elected & when does the term of office start & last?
Commissioner is elected to office by the people. Term of office begins on the first day of January after the election & last for 4 years
The Chief Officer of the Insurance Department is called?
Commissioner of Insurance
Commissioner means?
Commissioner of Insurance of North Carolina
What are producers required to do in order to renew their license?
Complete continuing education hours and pay a renewal fee
If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?
Defamation
A licensee decides to terminate his residency in this state. Which of the following would be an appropriate action?
Delivering the license to the commissioner within 30 days
Department means?
Department of Insurance of North Carolina
Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?
Discrimination
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT?
Dividends from a mutual insurer.
Intimidating or discouraging a claimant from seeking legal advice would be a violation of which of the following?
Ethical standards
When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, it's financial health is terrible and the company will soon have to file for bankruptcy, which of the following terms best describes the advertisement?
False Financial Statement
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?
False advertising
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
False advertising (This is considered to be false, deceptive or misleading advertising.)
The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?
Fiduciary
What type of insurer is formed under the laws of another state?
Foreign
The Commissioner has the power to examine & investigate the affairs of every insurance institution or agent doing business in NC to determine what?
If the insurer remains solvent & conducts business in compliance with state laws & regulations
In general, who can be excluded from producer licensing & examination requirements?
Insurance company officers, directors, or any other employees who do not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive or clerical)
What is controlled business?
Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates
An agent represents the?
Insurer
What is a Contract Of Insurance?
Is defined in North Carolina statutes as an agreement by which the insurer is bound to pay money or its equivalent or to do some act of value to the insured upon and as an indemnity or reimbursement for the destruction, loss, or injury of something in which the other party has an interest
What does Sell mean?
It means to exchange a contract of insurance by any means, for money or it's equivalent, on behalf of an insurance company
On it's advertisement, a company claims that is has funds in its possession that are in fact, not available for the payment of losses or claims. The company is guilty of?
Misrepresentation
On it's advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?
Misrepresentation
What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?
Misrepresentation
What is a Home State?
NC and any state or territory of the United States in which an insurance agent maintains his/her principal place of residence or principal place of business & is licensed to act as an insurance agent
NAIC means?
National Association Of Insurance Commissioner
Who may share in the commission from the sale of an insurance policy?
Only producers properly licensed for the type of insurance transaction
All of the following are true EXCEPT
Rebates are allowed if it is in the best interest of the client.
An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?
Rebating
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
Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as?
Rebating
An individual who sells insurance solely as a foreign military sales agent works with a?
Restricted license
All of the following are considered unfair trade practices in the business of insurance EXCEPT
Sharing commissions
All of the following must be found on a premium payment receipt EXCEPT?
Signature of the person making the payment
Who owns stock companies?
Stockholders
In order to get a nonresident license in North Carolina an agent must?
Submit the request for licensure in the form prescribed by the Commissioner and pay the applicable fees.
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 purchased the insurance policy today
If an insurer is required to file advertisements for review, it must submit them to?
The Department of Insurance
Who must be notified of a producer's change of address?
The Department of Insurance (Commissioner/Director/Superintendent)
What happens if a vacancy occurs during the term?
The Governor will appoint a replacement Commissioner for the unexpired term.
Who pays the annual agent appointment fee?
The Insurer
What does Negotiate mean?
The act of conferring directly with, or offering advice directly to, a purchaser or prospective purchasers of a particular contract of insurance concerning any of the substantive benefits, terms, or conditions of the contract, only if the person engaged in that act either sells insurance or obtains insurance from insurers for purchases
What type of licensee represents the insurance company?
The agent
What does Terminate mean?
The cancellation of the relationship between an insurance agent & the insurer or the termination of an agents authority to transact insurance
What does Uniform Application mean?
The current version of the NAI Uniform Application for residents & nonresident agent licensing
A friend helped an insurance producer sell an insurance policy. The producer can share the commission with the friend if?
The friend is licensed in the same line of insurance
An insurers advertisements are the responsibility of?
The insurer using them
Who is responsible for the costs associated with the examination of insurers?
The insurer who is being examined
Insurance agents licensed in this state must complete continuing education every 2 years by?
The last day of the licensee's birth month
An insurance company cannot pay a commission to a person for selling, soliciting, or negotiating insurance in NC if?
The person does not hold a required license
The Commissioner is empowered to examine the records of any person transacting insurance in the State as an agency, an agent or broker of record. If the Commissioner does examine a person, the expense of that examination will be paid by the?
The person examined
When a license is accused of any act, omission, or misconduct that would be subject the licensee to a license suspension or revocation, with the approval of the Commissioner, the license may be surrendered for a period of?
Time set by the Commissioner
To whom may a certificate of authority be issued?
To an insurer authorized to transact business in this state
What is the purpose of a Cause & Desist order?
To prevent a producer or insurer further violating laws for transacting insurance
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Twisting
When would a misrepresentation on an insurance application be considered fraud?
When it is intentional and material
When is controlled business legal?
When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state)
When can the Commissioner or Director examine insurers?
Whenever deemed necessary, but at least once every few years (please check your state regulations for specific time requirement)
An insurer or authorized representative of the insurer that terminates the appointment, employment, contract, or other insurance business relationship with an agent shall notify the Commissioner?
Within 30 days after the effective date of termination
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
If a licensee fails to notify the Commissioner of Insurer insolvency, if known or suspected, and to provide a statement of relevant facts, which of the following is true?
the commissioner may suspend or revoke the person's license