QUIZ 4

Which one of the following is not one of the three principal parts to the privacy requirement of the Gramm-Leach-Bliley Act? Credit Reporting Safeguards Rule Pretext Provisions Financial Privacy Rule

Credit Reporting

A subsequent violation of a cease and desist would result in: a minimum fine of $5000 a fine up to $55,000 license suspense imprisonment up to 5 yrs

license suspension

Which is not a violation of Unfair Practice? Age discrimination Misrepresentation Defamation of an insurer Delaying an investigation

Age discrimination

Which of the following describes use and file as a type of rating law? The insurer files policy rate information with the Department of Insurance. After filing, the insurer delivers evidence that the rates proposed are reasonable and fair. Then the insurer waits (30-60 days) for approval. An insurance company must file rates with the commission, but can then use those rates until they hear back from the commission. Insurers compete with one another by quickly changing rates without review by the state regulators. An insurance company uses the rate they determine appropriate first and then file that rate with the commission.

An insurance company uses the rate they determine appropriate first and then file that rate with the commission.

All of the following are efforts the Department of Insurance takes to combat insurance fraud EXCEPT: Each company is required to have a fraud detection unit. Every automobile insured is assessed about $1 per year to fund automobile insurance fraud Each company is required to submit a complete record of fraudulent claims made to the business each year. Every insurer pays an annual fee to fund the fraud detection units

Each company is required to submit a complete record of fraudulent claims made to the business each year.

Which of the following is NOT a type of rating law? Prior approval File and use Legal Competition Use and file

Legal Competition

Which court case reversed the Paul vs. Virginia case of 1868? SEUA case of 1944 Houghton-Mifflin case of 1938 Public Law 15 McCarren-Ferguson Act of 1945

SEUA case of 1944

Which of the following is NOT a purpose of the Unfair Practices Article? To protect the public from agents who practice bad methods of selling insurance. To regulate trade practices in the insurance business. To keep agents honest when selling insurance. To determine the punishment for an agent found guilty of unfair practices in insurance.

To determine the punishment for an agent found guilty of unfair practices in insurance

According to the Code, the word "person" means: any person, association, organization, partnership, business trust, limited liability company, or corporation. the client seeking insurance. the insurer in an insurance contract. any person capable of binding an insurance contract.

any person, association, organization, partnership, business trust, limited liability company, or corporation

An example of a self-regulatory authority of the insurance industry is: the ISO the Commissioner the NAIC the State legislature

the NAIC

All of the following are penalties for unfair discrimination EXCEPT: $2,500 for first violation prison $5,000 for subsequent violations $15,000-$100,000 for frequent violations

prison

Which of the following is a penalty for violating the Insurance Information and Privacy Protection Act? $5,000 fine for violations committed with regularity showing they are a general business practice $20,000 fine for violations committed with regularity showing they are a general business practice $100,000 fine for violations committed with regularity showing they are a general business practice $50,000 fine for violations committed with regularity showing they are a general business practice

$50,000 fine for violations committed with regularity showing they are a general business practice

Which of the following statements about insolvency is TRUE? An insurer cannot escape the condition of insolvency except by permission from the Commissioner. An insurer can escape the condition of insolvency by being able to provide for its liabilities and reinsurance of all outstanding risks. An insurer can escape the condition of insolvency by meeting its financial obligations when they are due. An insurer cannot escape the condition of insolvency by being able to provide for its liabilities and reinsurance of all outstanding risks.

An insurer cannot escape the condition of insolvency by being able to provide for its liabilities and reinsurance of all outstanding risks.

Who administers the California Administrative Code of Regulations? Congress State Senate Commissioner Governor

Commissioner

Which of the following is NOT considered an unfair practice? Making false statements that mislead the public. Filing false financial documents. Failing to display the license in a clearly visible place for the public to see. Unfairly discriminating against classes of insured`s.

Failing to display the license in a clearly visible place for the public to see

What is the significance of the SEUA case of 1944? The court decided the federal government should regulate insurance. The court established the right of the states, instead of the federal government, to regulate insurance. The court gave authority to the federal government to apply antitrust laws to the insurance business that was not being regulated by the state level. The court exempted the insurance industry from the federal regulation required for most interstate commerce industries.

The court decided the federal government should regulate insurance.

Which of the following describes prior approval as a type of rating law? Insurers compete with one another by quickly changing rates without review by the state regulators. An insurance company must file the rates with the commission, but can then use those rates until they hear back from the commission. An insurance company uses the rate they determine appropriate first and then file that rate with the commission. The insurer files policy rate information with the Department of Insurance. After filing, the insurer delivers evidence that the rates proposed are reasonable and fair. Then the insurer waits (30-60 days) for approval.

The insurer files policy rate information with the Department of Insurance. After filing, the insurer delivers evidence that the rates proposed are reasonable and fair. Then the insurer waits (30-60 days) for approval.

Penalty for violation of a summary seizure would be: $1,000 1 yr imprisonment misdemeanor any and/or all of these

any all of these

When the Commissioner takes over a company that is insolvent, his/her first responsibility is to: liquidate the company and appoint new officers. shut down the company`s operations and start a full investigation. sell all the company assets and pay any open claims. attempt to restore the company if possible.

attempt to restore the company if possible.

CIGA pertains to: insurer's rating insurer's forms insurer's fraud unit insurer's insolvency

insurer's insolvency

If convicted of insurance fraud: the fine can be up to $10,000. the fine can be up to $10,000 and up to 5 years in state prison. the fine can be up to $50,000. the fine can be up to $150,000 and up to 5 years in state prison.

the fine can be up to $150,000 and up to 5 years in state prison.

Insurer has up to how many days to accept or deny a claim? 30 days 21 days 15 days 40 days

40 days

All of the following are incorrect penalties for violating the Unfair Practices article EXCEPT: $15,000 fine for the first offense; Minimum of 3 years in prison $5,000 fine for each act in violation; $15,000 fine for willful violation $10,000 fine for each act in violation; $15,000 fine for willful violation $5,000 fine for each act in violation; $10,000 fine for willful violation

$5,000 fine for each act in violation; $10,000 fine for willful violation

Upon receiving any written or oral inquiry from the Department of Insurance concerning a claim, every licensee shall immediately, but in no event more than _______ calendar days of receipt of that inquiry, furnish the Department of Insurance with a complete written response based on the facts as then known by the licensee. 30 14 7 21

21

Once insured an insurer are in agreement payment must be made within: 15 calendar days 15 business days 30 business days 30 calendar days

30 calendar days

The State of California requires that all admitted insurers be a member of the: Insurance Board Council Privacy Protection Committee California Code and Ethics Board California Insurance Guaranty Association

California Insurance Guaranty Association

According to the Code a "Notice of Claim" is a(n): neither qualify written notification oral notification either qualify

Either may qualify, written notification or oral qualification

How is the Insurance Commissioner put into office? Appointed by the governor Elected by the council Elected by the citizens Appointed by the previous commissioner

Elected by the citizens

What is the role of the Commissioner and the Department of Insurance in relation to consumers? The Commissioner and the DOI are responsible for making sure companies bring in more income than claims being paid out. The Commissioner and the DOI are responsible for advertising to the public the roles and responsibilities of insurance. The Commissioner and the DOI are responsible for making sure the public is given the opportunity to purchase insurance. The Commissioner and the DOI are responsible for regulating the conduct of agents and insurers.

The Commissioner and the DOI are responsible for regulating the conduct of agents and insurers.

Which of the following is a responsibility of the Commissioner? To enforce the law of insurance. to write the law of insurance. To change the law of insurance. To form and appoint a council that will regulate the code.

To enforce the law of insurance.

Solvency requires the insurer to have enough assets to cover: paid-in-capital liabilities reinsurance all of these

all of these

Every company in California is required to report its financial condition to the Commissioner every year: on or before March 1. on or before April 15. on or before December 31. on or before January 1.

on or before March 1.

To change the California Insurance Code a bill is brought before the Assembly and the Senate. After both parties vote on the bill and it is approved, it moves on to the: Congress State Senate Commissioner Governor

Governor

Rates shall remain in effect if they are: reasonable not discriminatory all of the following adequate

all of the following

Unless expressly otherwise provided, any personal notice required by any provision of the insurance code may be given by any of the following EXCEPT: notification at his residence or principal place of business a third party mailing notice postage prepaid

a third party