Chapter 10

restitution

(n.) the act of restoring someone or something to the rightful owner or to a former state or position; making good on a loss or damage

Department of Insurance Powers and Duties

-control and supervise all insurance business in the state -enforce insurance laws -issue licenses and certificates of authority -approve policy forms -conduct examinations, investigations, and hearings audit-5 years for Texas. -impose penalties

How may hours of educations can be carried over from one licensing period to the next

0

Anyone who violates the Insurance Code of Texas may be fined up to

25,000

insurer

A person or company that underwrites an insurance risk; the party in an insurance contract undertaking to pay compensation.

What is a foregin insurer

An insurer with a home office in another state

Who is an insurance agent?

Any person licensed to sell, solicit or negotiate insurance

Certificate Authority

Authorization granted by the Department of Insurance to an agency or insurer to transact insurance in this state.

What type of licensee represents the insurance company?

Broker

If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?

Defamation

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

Insurers are classified according to their domicile. What are the three types of insurers?

Domestic

Which of the following occupations will not directly help qualify someone for the office of Commissioner for Insurance?

Insurance Agent

Business Insurance

Life or Health insurance written to cover business situations such as key person, sole proprietor, partnership, corporations, etc.

On its 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

Can insurers advertise the existence of the guaranty association during the solicitation and sale of insurance policies?

No advertise the existence of the guaranty association during the solicitation and sale of insurance policies by insurers is an illegal business practice

Insurance Transaction

Solicitation, negotiations, sale, advising an individual concerning coverage or claims

What are the most common penalties for violations of insurance statues

a cease and desist, a fine, a license suspensionusually no more than a year, revocation (permanent)

Coercion

a forceful threat or act aimed to influence a person to act against their will

Reciprocity

a mutual interchange of rights and privileges

comissioner

a person sent to meet with others to plan and make official decisions

inducement

a thing that persuades or influences someone to do something

All of the following statements about continuing education requirement in this state are true except

all licensed agents must comply by Jan 1 of even number years

all of the following would be considered rebating exept

an agent misrepresents policy benefits to convince a policy owner to replace polices

In insurance the comissioner of insurance is

appointed by the governor

Which member of a corporation or partnership are required to obtain an individual insurance agents license in order for the association to be licensed

at least one officer or partner and any other person acting as an agent

If an insurer holds a Certificate of Authority, it is known as what type of insurer?

authorized or admitted

If Commisioner finds proucer has engaged in unfair method of competition or deceptive act....

cease and desist order

What document is required for an insurance company to transact insurance?

certificate of authority

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 an insurance policy from the bank in the amount of the loan

coersion

What are producers required to do in order to renwew their licence?

complete continuing education hours and pay a renewal fee

moral turpitude

conduct that is contrary to community standards of justice, honesty or good morals

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

The Department of Insurance does not

set premium rates or establish fines and penalties

It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability?

sexual orientation

All of the following are unfair settlement practices except

suggesting negotiations in the claim

Who is responsible for the cost associated with examination of insurers?

the insurer who is being examined

What is the purpose of the life insurance agency guaranty association

to help protect policy owners and beneficiaries against financial loss caused by the insolvency of an insurance company (protect the public)

cease-and-decist order

to stop or discontinue

Insolvent

unable to meet finacial obligations

The comissioner of insurance issues a cease and decist order and immediaetly receives a request for the charges to be reviewed in a hearing. Within how many days must the hearing be held.

30 days

Who must be notified of a producer's change of address?

The Department of Insurance:comissioner-director-superindendent

An agent explains the details of a life insurance policy to a client. The agent does not realize, however, that the state has recently rewritten two of the provisions. As a result, the agent inadvertently misrepresents the policy, making it more attractive than it really is. What best describes this situation?

There is no misconduct

What is the purpose of a cease and desist order?

To prevent a producer or insurer for further violating laws for transacting insurance

exempt

excused

No one who license has been revoked can receive another license in Texas

for 5 years

unfair trade practices

fraud-any misrepresentation of material fact, knowingly and with the intent to deceive, an act of deceit or cheating false or fraudulent statements-knowingly making false oral or written statements pertaining to any aspect of insurance or insurers Penalty is fine or imprisonment of up to 10-15 years

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

illegal

What is controlled busniess

insurance on the producers own life or property, or the lives or property of the producers family or business associates

In the agent/insurer relationship, who is considered the principal?

insurer

Home office

insurer's headquarters, principal place of business

Which of the following best describes a misrepresentation?

issuing sales material with exaggerated statements about policy benefits

Statue

law

A temporary license holder can receive a comisson from a sale made to all of the following except

license holder sister in law

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

misprepresentation

What is the purpose of insurance guaranty association?

nonprofit phantom association-illegal to advertise protection when selling insurance products To protect policy owners, insured, and beneficiaries from financial losses caused by insolvent insurers. Conservator uses this to pay claims-specified limits funds to protect the public-funded by member insurers

A particiapting insurance company may do which of the following

pay dividends to the policy owner

comission

payment to the agent for placing insurance usually a percentage of the policy premium