Chapter 2
Temporary License
Issued upon death, disability, or military leave of a producer, to another to act on their behalf 3 months but can extend by the supper intended of Insurance.
Home State
where a producer is licensed maintains there primary Residence or business
Rebating / Gift
Tangible Value has to be a 15 dollar or less Name of the producer or insurer printed on it
Redlining
Only illegal for Auto Policy refusing auto Insurance sole on based on geographic location
Captive Exclusive Agent
Only represents on insurance Company
Domestic Insurance
Organized or incorporated in NY Stated
Alien Insurer
Organized or incorporated outside the US
Stock Insurance
Owned by share holders, share in the profit and losses
General Compensatory
Pain and suffering
Special Compensatory
Pays Bills
Acting like a prodcucer when your not one
Untill you are physically holding your license your not considered a producer.
Producer
Any License or Broker sells solicits or negotiates insurance
Co Mingling
Mixing Premiums with any othere account is illegal
Compensatory Damages
These indemnify the injured party
Misrepresentation
Written or verbal lie of a material Fact
Consumer Privacy
(Graham Leach Bliley Act) 1 Must clearly disclose there privacy police and Practices 2 Must give the policy holder the option to opt out of having there information Shared on an annual Bases
Fraternal Benefit Society
(type of mutual) owed by the policy holders, only available to members of certain organizations. They have the right to asses the additional premium at the end of the year to cover there Losses
Producer licensing Renewal
1 All Licenses renew on your birthday of every year depending odd or even 2 Renewal app must be submitted in 60 Days prior to 3 licensing expiration if your application is late you pay a 10 dollar late fee
Reasons License Can be suspended
1 Misrepresentation on licensing application 2 Comitting fraud or Dishonest Practice 3 Incompetence 4 Untrustworthy 5 Financial Irresponsibility 6 Any felony Conviction 7 Insurance license denied or Suspended in another Stated Cheating on any Insurance Exam
Unfair Claims Practices
1 Misrepresentation when related to claims 2 Fail to acknowledge of Communications 3 Failure to Initiate suitable turn around of Claims 4 Bad Faith Litigation Compelling a claimant to institute legal action when its not necessary 5 Failure to disclose coverages and other relevant information 6 rejecting a claim w out written Notice 7 Making a claim payment with out explanation 8 Not responding to a NY Department Inquiry with in 10 Days
Process To be Licensed
1 Must be 18 2 Pass a min of 40 hour Licensing Class 3 Pass the NY stated licensing Exam an pay the fee 3 Complete the licensing application and pay the 80 dollars licensing Fees 4 Be Trustworthy
Agent Duties
1 Underwrite and Supply the insurance company with underwriting information 2 Prepare the quote and sell the policy 3 Create a binder 4 Counter sign and issue the policy 5 Collect Premiums 6 Provide a link between insurance companies and the insured by servicing the policy
Continuing Education Obligation
1 You have to complete 15 hours of continue education following your first two years 2 There is a 10 dollar filing fee for continuing education obligation 3 Baggage agents do not need to complete continuing education
Consultant License
1 a license producer that sells there advice by making recommendations. 2 Don not represent the insurance company 3 Do not earn Premiums 4 all consultant contracts must by keped for 3 years
Superintendent of Department of Financial Services (Super Intended of Insurance)
1) Appointed by the govener of NY 2) Term is congruent with that of the govener, and he service a 4 year term 3)Runs the NY department of financial Services which is now comprised of the banking Department, and the insurance Department 4)Directly responsible for issuing, revoking and suspending insurance licenses 5)conducts investigation of suspected law violations 6) Ad-minsters NY involentery program
Insurane Fraud Prevention Act
1) This Law defines insurence fraud as a criminal act 2) Allows a miximum of 5,00 dollars in Civil Funds 3) Establishes a fraud buero (Investigates the reports on Insurane fraud) 4) Superintendent can sapina for witnesses and Documents 5) Buero can submit its findings to law inforcement agencies 6) by 3/15 of every year the Fraud report is due (this details the superintendets campain against Fraud 8/1 The special Fraud Studies report is do, An analysis of Insurance Fraud Trends 7) All Auto Insurance must have a fraud Disclaimer on there application and Claim Form 8)All insurance companies must maintain a seperate department aimed at admitagating fraud Losses 9) All producers must reprt suspected Fraud with in 30 Days to the Frauds Buero 10) This Provides an imunity from law suits if someone is suied for reprting Insurance Fraud
Name and Address Change
All Producers must notify department of insurance if you change your name or address with in 30 days No longer Maintain a residence in NY your license is Automatically terminated
Foreign Insurer
A company that is organized or incorporated out of NY but with in the US
Special Compensation
Any payment other then a commission licensed producers may charge additional compensation for Evaluation Recommending, Advising, Examining, Appraising, Reviewing only if the following is done. 1 Keep the contract signed by both parties for three years 2 Specifies in the contract the amount of the special Compensation
Contractual Liability
Assumed under contract making your self legally liable that your normally not libel for Hold Harmless Contract
Solicit
Atempting to sell insurance or asking a person to apply for insurance
Express Authority
Authority given to the agent by the Principal either orally or writing
Punitive Damages
Awarded by a judge over compensatory to punish Gross negligence or recklessness only ordered by a judge
Comparative Neglagence
Blame the victim accused pays a percent, and the victim pays a perecent
Contributory Negligence
Blame the victim and the victim pays 100 perecent
Bsiness Entity
Business license to sell insurance Include Corporations general Partnerships Sole Proprietors LLC and Corporations
NY Departmentof Insurance
Certificate of Authority (license for an insurance company to do business) Before an insurance company can do business in Ny it mus apply for and receive a certificate of authority ( they are considered admitted or Authorized) Policy Holders of an admited insurence company are protected by the State Guarentee act
Termination of Agent Appointment
Certificate of appointments are valid until terminated by appointed insurance company or if the agent license is suspended, revoked or expires or is non renewed
Risk Retention Group
Companies need insurance they create and form there own insurance company the company formed is called the Captive- and that provides insurance to its owners.
Reciprocal
Companies that need insurance agree to insure each other
Purchase Group
Companies that need insurance form an agreement and Purchase together. for usually a discounted rate
Negotiate
Conferring or offering advise to an insured in regards to benefits insurance terms or Conditions
Monitors Solvency of Insurers
Department has the right to monitor books and records at any time 2) March 1 of every year an annual statement 3) Maintains minimum standard for record book Keeping 4) All producers are expected to report any insolvency to the insurance department Financial rating by others then the NYSDOI Am Best Duff And Felts Moodys Standard And Poors
Ratificiation of Policy Forms and Rates
Department has to approve all Policy forms and rate Changes (File and use - insurance company must final the change and then they can use it MUST IN NY) Use and File - can change the rate and then use it
False Advertising
Distribution or circulation of false information indicating that the insurer or producer has authority to take action or write types of insurance that they are not authorized to do includes making misleading claims and using deceptive wording
Adjuster License
Estimated the amount of damages after a loss all adjusters are licensed
Sell
Exchange of money for an Insurance Contract
Negligence
Failuar to use proper care to keep others from harm. Duty to protect injured party Breach of legal Duty owed Proximate cause Actual injury
Twisting
Form of Misrepresentation where the producer convinces the client to cancel there insurance policy and to by there insurance policy which is detriment to the client
Waiver 1033 and 1034
Fraud Conviction, if a person has been previously convicted of fraud they can only hold an insurance license or hold a position in the insurance industry need the written consent of the superintendent
Involentery Program
Government program the designed to Provide insurance for those that could not get it other wise. (example: medicade)
Penalties
Guilty plea 1 Cease and desists order- that you stop and no longer do the illegal action you were doing
Apparent Authority
If the customer who is dealing with the agent believes that the agent has the authority to act the insurance company is bound by the agents actions
Unfair Discrimination
Illegal to discriminate based on race color cread nation oragin mental or physical disability or domestic violence if there infomration is protectyed and they have an order of protection
Jail Time
In Ny State Jail Time Varries Federal Crosses state lines 15 years or 50 thousand dollar fine
Display of Licenses
In any location where business is conducted the license of the Supervising producer must be Displayed
Appointment of Agent
In order to represent an insurance company that insurance company must appoint the agent
Agent
Independantly licensed producer 1 they represent the insurance company there for they combined policy and make policy changed 2 Earned Comissions on Earned Premium only 3 Authority of the agent extends to the agents employees 4 Notice of loss to an agent is the same as it is to the insurance company 5 May or may not owen there owen there owen experation dependent on the contract the they negotiate with there insurance
Government Insurance
Insurance provided directly by the state or federal Government (flood Insurance, Medicare, Medicaid)
Non Resident License
Issued to a non resident of ny state who is licensed in their home state and it allows them to sell policy in NY stated
Deformation of Insurer
Making a misleading statement of the solvency of another insurance Company
Damages
Money
Reporting Criminal Charges
Must be resorted to the NY state Department of Insurance with in 30 Days of a pre trial hearing
Reporting Actions
Must report any action taking against you by a government agency against professional license, actions would include fines suspensions warnings
Implied Authority
No written or verbal communication specifying what there allowed or not allowed to do
Commission and Compensation
Only Licensed producers 1 Producers may split there commissions with others licensed producers
Fines
Per Offense 500 Per hearing is 2500 Failuar to Respond to Inquiry after hearing per Day 500, 10,000 Max False Advertising 5,000 Insurance Fraud Prevention Act 5.000 Deformation of an insurer and 1 year in jail 1,000 Not paying any fine with in 20 days license revoked or suspended Guilty of 5 or more civil penalties within five years 50,000
Fiduciary
Person in the position of trust all producers are Fiduciary because there trusted with othere peoples money
Regulation 194
Producers must be transparent in regards to the compensation they are receiving all discloses on file for 3 years
Assumed Names
Producers must only use there legal names as reported to the department of insurance Not Alieses
Maintains Complaints Bureau
Recieves complaints from the public regarding producers and companies (they forward the complaints to the insurance companies, every complain must be answered, and the insurance company must keep detailed complaint records for 6 years)
Fair Credit Reporting Act
Regulates the Collection Distribution and use of Consumer Reports. 1 Protects the consumer Privacy 2 Promotes Accuracy 3 Allows for the promt correction of errors Legal reasons to Run Credit Reports In connection with credit transaction Housing related transactions underwriting Insurance Employment Purposes Government Agency's that issue licenses and benefits Child Support investigation Agency In response to a court Order National Security Purposes 4 Must inform the applicant before we run the report 5 Must advise the applicant as to where they could uptain a copy of the report
Public Adjuster
Represent the policy holder in the negotaion and setalment of the claim
Broker
Represents the Policy Holder Independently Licensed Producer which means there self Employed Does not have the Authority to binde or to Modify the insurance Policy Broker Deals with Many insurance agency Earned there full commission once the policy issued and the premium has been payed Broker always owns there owned Experation which is the right to renew an insurance Policy Brokers Keep the Float
Agent/ Independent Agent
Represents two or more insurance Companies
Sarbaines Oxly Act
Requires and Regulates Financial Institution and insurance companies to report there financial information.
Company Adjuster
Salaried by the insurance company to investigate and settle claims
Independent adjuster
Self employed adjusters who lent there services to insurance company not salaried paid by the job
Direct Writer Company Employee
Similar to a captive agent except is salary and commission by the agent * ie Geico Employees
Assumption of Risk
The injured party new the risk but took the chance any way
Hearings
The superintendent will provide 1 At least 10 Days notice when calling to a hearing written 2 the accused can be represented by councel 3 Superintendent will provide written notice of his finding follwing the hearing
Excess Lines Broker
This Producer is Licensed to Place Specialized risks w a none admitted insurer when that risk can not be written w any admitted insurer. 2 the Producer must first be licensed as a broker befor becomin an excess lines broker 3 Excess lines broker app is 400 Dollars
Deffense Against Liability
To get out of payin anything or to lesson the amount
Suspensions Revocations and None renewals
Usually only suspended after a hearing but if the Superintend feels you are serious threat to public well fair he can immediately suspend license and then call a hearing. 1 year to Get license back
Negligence Per Se
When some one violates a law and as a result someone is injured the law breaker is automatically liabel
Strict or Absolute Liability
You are Liabel no matter what only specialize situation Dangers Animals, tunnelin excavation, explosive Principal to Policies written by the agent
Lloyds
a market for insurance where individual insures underwrite Risks
Statute of Limitation
law suits must be filed with in a specific time of claim
Vicarious Liability
one party i responsible for another party Parents are liable for there children employer always legally liable for the employees
Mutual Insurance
owned by there policy holders, and the policy holders share in the profit and the losses
Marketing Distribution System
the way that they get there buisness in