Chapter 5: Nevada Statutes and Regulations Common to All Lines

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 A Rebating. B Coercion. C Twisting. D Controlled business.

A Rebating. When producers give or promise anything of value that is not specified in the policy, they are guilty of rebating.

Which of the following is NOT an eligibility requirement for a bail enforcement agent license? A State residency B Completion of training C High school diploma D U.S. citizenship

A State residency State residency is a requirement for a bail agent, but not a bail enforcement agent. All the other qualifications are required.

If a person is charged with a category D felony for committing insurance fraud, what would be the maximum time of imprisonment? A 4 years B 6 months C Up to 10 years D 1 year

A 4 years If convicted, such person can be charged with a category D felony and subjected to imprisonment of 1 to 4 years.

Which of the following is true regarding insurance company appointment for a broker? A Brokers do not need to be appointed. B Brokers must be appointed by the insurer. C Brokers act as agents. D Brokers represent insurers.

A Brokers do not need to be appointed. A broker is a producer who is not acting as an agent of an insurer and does not need to be appointed.

Which of the following is NOT a duty of the Commissioner? A Develop insurance rates B License insurance companies and producers C Enforce violations of the Insurance Code D Regulate insurance rates

A Develop insurance rates The Commissioner reviews rates to make sure that they are fair, adequate, and not unfairly discriminating, but the Commissioner does not develop the rates.

Which of the following is an example of a producer being involved in an unfair trade practice of rebating? A Telling a client that his first premium will be waived if he purchased the insurance policy today B Inducing the insured to drop a policy in favor of another one when it's not in the insured's best interest C Charging a client a higher premium for the same policy as another client in the same insuring class D Making deceptive statements about a competitor

A Telling a client that his first premium will be waived if he purchased the insurance policy today Rebating is defined as offering any inducement in the sale of insurance products that is not specified in the policy, including money, reductions in commissions, promises, and personal services. Both the offer and acceptance of a rebate are illegal.

A licensed agent in Utah wants to become a nonresident agent in Nevada in the same line of insurance. Considering that all other requirements are met, which of the following would most likely happen? A The agent will be exempt from education and examination requirements. B The agent will have to relocate to Nevada. Nonresident licenses are not allowed. C The agent's current license will be cancelled. D The agent will have to pass the examination and pay required fees.

A The agent will be exempt from education and examination requirements. A nonresident producer who wants to be licensed in Nevada does not need to complete any education or examination requirements if the producer is currently licensed in good standing for the same line of authority in his or her home state.

Producers must complete how many hours of continuing education on the subject of ethics every licensing period? A 1 hour B 3 hours C 5 hours D 10 hours

B 3 hours Continuing education must include 3 hours of ethics training.

An insurance application cannot ask about which of the following information about an applicant? A Address B Sexual orientation C Age D Gender

B Sexual orientation It would be considered unfair discrimination to ask an applicant for their sexual orientation, as well as using sexual orientation as a rating factor to determine insurability.

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of A Misrepresentation. B Rebating. C Twisting. D Defamation.

C Twisting. Twisting is a misrepresentation that persuades an insured or a policyowner, to his or her detriment, to cancel, lapse, or switch policies.

Which of the following does NOT fit the definition of an administrator? A A person who collects premiums for workers compensation insurance B Someone who administers a trust C A life and health producer who only sells insurance D A person who administers a self-insurance program for an employer

C A life and health producer who only sells insurance Administrators collect premiums, adjust or settle claims, administer trusts and self-insurance programs. Someone whose activities are limited to the sale of insurance would not be considered an administrator.

Which of the following would be required to be licensed as an insurance producer? A A person whose activities are limited to producing insurance advertisements B A salaried full-time employee who furnishes information for group insurance C An insurance company director who performs executive, administrative and managerial duties D A salaried employee who advertises and solicits insurance

D A salaried employee who advertises and solicits insurance A person does not require an insurance producer license if he or she only advertises without intent to solicit insurance. However, once there is solicitation, a license is required.

Which of the following best describes an insurance company that has been formed under the laws of this state? A Sovereign B Alien C Foreign D Domestic

D Domestic A company is domestic when doing business within the state in which it is incorporated.

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? A Undercutting B Twisting C Slandering D Defamation

D Defamation 誹謗 Defamation is making statements that are false as to the financial condition of any insurer and which are calculated to injure any person engaged in the business of insurance.

When requested by a person aggrieved by an act, a hearing must be held within how many days after the Commissioner receives the written demand? A 30 days B 60 days C 10 days D 15 days

A 30 days If the Commissioner finds that the application is made in good faith, that the applicant would be so aggrieved if his grounds are established, the Commissioner shall hold a hearing within 30 days after the filing of the application, unless postponed by mutual consent.

The Commissioner must give reasonable notice to all interested parties as to the time, place and purpose of a hearing within the minimum of how many days of the hearing? A 10 days B 15 days C 20 days D 30 days

C 20 days The Commissioner shall give reasonable notice to all interested parties, by registered mail, as to the time, place and purpose of a hearing within 20 days.

How often are producers required to complete continuing education requirements to keep the license in force? A Annually B Every 2 years C Every 3 years D Every 5 years

C Every 3 years Each licensee must certify that he or she has successfully completed 30 hours of approved continuing education (CE) within a 3-year period before the date of renewal of his or her license.

During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes A Twisting. 扭曲 B Coercion. 強迫 C Misrepresentation. D Defamation. 誹謗

C Misrepresentation. Making false or misleading statements with the intent to defraud another is misrepresentation.

The mechanism used by individuals to transfer their risk of loss to a larger group of individuals that have similar exposures to loss, is called A Insurance. B Diversification. C Hedging. D Risk taking

A Insurance. Insurance is the mechanism whereby an insured is protected against loss by a specified future contingency or peril in return for the present payment of premium. Because many other individuals with the same or similar risk of loss are paying premiums, funds are available to indemnify those who actually suffer that loss.

Which of the following is an example of an agent's fiduciary responsibilities? A An agent promptly forwarding premiums to the insurance company B An agent helping clients to file claims C An agent doing a review of his/her client's coverage D An agent offering additional coverage to his client

A An agent promptly forwarding premiums to the insurance company Fiduciary refers to a position of trust. When agents are handling the premiums that belong to an insurance company, they are acting in a fiduciary capacity.

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? A Alien B Domestic C Unauthorized D Foreign

D Foreign A foreign insurer is domiciled in one state and transacts insurance in another. A domestic insurer transacts insurance in the domicile state (in this case, Montana). An alien insurer is domiciled in one country and transacts insurance in another.

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act? A Legal, provided that the information can be verified B Illegal until endorsed by the Guaranty Association C Legal, provided that the other insurers are paid royalties for the usage of their names D Illegal under any circumstances

D Illegal under any circumstances When a company criticizes the financial situation of another company with the intention of injuring that company, it has committed an illegal trade practice called defamation.

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. The company is guilty of A Concealment. B Unfair claim practice. C Rebating. D Misrepresentation.

D Misrepresentation. Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal.

When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered A Twisting. B Controlled business. C Adverse selection. D Discrimination.

D Discrimination. Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination.

Should any person willfully engage in an unauthorized insurance transaction, the Commissioner may impose an administrative fine or penalty of up to A $10,000 for all acts. B $10,000 for each and every act. C $5,000 for all acts. D $5,000 for each and every act.

B $10,000 for each and every act. This fine will be in addition to any other administrative fine or penalty, except where specifically provided by the Insurance Code.

Which of the following best describes a misrepresentation? A Making a maliciously critical statement that is intended to injure another person B Discriminating among individuals of the same insuring class C Issuing sales material with exaggerated statements about policy benefits D Making a deceptive or untrue statement about a person engaged in the insurance business

C Issuing sales material with exaggerated statements about policy benefits 發行有關政策利益的誇張陳述的銷售材料 Misrepresentation is issuing, publishing or circulating any illustration or sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This includes oral statements.

For purpose of determining its financial condition, fulfillment of its contractual obligations and compliance with Nevada law, the Commissioner will examine the affairs of each insurer as often as deemed necessary. Each domestic insurer must be examined at least A Every year. B Every two years. C Every three years. D Every five years

D Every five years The purpose and time parameters for insurance company examinations is established by the Insurance Code.

When transacting business in this state an insurer formed under the laws of another country is known as a/an A Admitted insurer. B Alien insurer. C Domestic insurer. D Foreign insurer.

B Alien insurer. Alien insurer is defined as an insurer formed under the laws of another country.

The Commissioner of Insurance is responsible for all of the following actions EXCEPT A Adopt new regulations. B Setting premium rates. C Enforcing the Insurance Code. D Conducting examinations and investigations of insurers.

B Setting premium rates. The Commissioner organizes, manages, and supervising all of the activities of the Division of Insurance. Commissioner may also examine and investigates all authorized insurers. The Commissioner does not, however, set premium rates - those are established by law.

Which of the following would NOT be considered a misrepresentation on the part of the insurer? A Backdating policies to secure a lower premium for the insured B Implying that term insurance has cash value C Embellishing the benefits provided in the policy D Overstating returns on policy dividends

A Backdating policies to secure a lower premium for the insured It is illegal to issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms, or the payment of dividends. Demonstrating conservative returns in the illustrations would not be a violation.

The document that indicates that an insurer has been approved and is authorized to transact insurance in a particular state is known as A Certificate of Authority. B Discretionary Authority. C Certificate of Insurance. D Binder.

A Certificate of Authority. When the Commissioner of a particular state has determined that an insurer has met all of the requirements for transacting insurance in that state, a Certificate of Authority shall be issued to that insurer.

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? A Making comparisons between different policies B Stating that the insurance policy is a share of stock C Exaggerating the benefits provided in the policy D Stating that the competitors will arbitrarily increase their premiums each year

A Making comparisons between different policies Making accurate comparisons of policies is not illegal.

Every Insurance Administrator must file a surety bond with the Commissioner which is written for an amount of at least A $75,000. B $100,000. C $25,000. D $50,000.

B $100,000. No person may act as an administrator, or hold themselves out to the public as an administrator, unless they have obtained a certificate of registration as an administrator from the Commissioner and filed a bond issued by an authorized surety in favor of the State of Nevada, continuous in form, and in an amount determined by the Commissioner of not less than $100,000.

What is a foreign insurer? A An insurer with licensed agents who are citizens in more than one country B An insurer with a home office in another state C An insurer with a home office in another country D An insurer with licensed agents doing business in other countries

B An insurer with a home office in another state A domestic insurer's home office is in this state, a foreign insurer's is in another state, and an alien insurer's is in another country.

Which of the following actions by an insurance company will cause an examination by the Commissioner? A Increase in premium rates charged for coverage. B Application for an initial Certificate of Authority. C Decrease in premium rates charged for coverage. D Change of an insurance policy form.

B Application for an initial Certificate of Authority. The Commissioner will examine each insurer applying for an initial Certificate of Authority to transact insurance in Nevada.

Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called? A Adverse selection B Discrimination C Law of large numbers D Misrepresentation

B Discrimination Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination.

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT A An offer to share in commissions generated by the sale. B Dividends from a mutual insurer. C An offer of employment. D Stocks, securities, or bonds.

B Dividends from a mutual insurer. Dividends paid to policyholders of a mutual insurer are not considered to be a rebate because the policy specifies that they might be paid.

The requirement that agents must account for all insurance funds collected, and without the expressed consent of the insurance company(ies) are not permitted to commingle those funds with their own funds, is known as A Accepted accounting principal. B Fiduciary responsibility. C Premium accountability. D Fiscal responsibility.

B Fiduciary responsibility. Money collected with respect to an insurance transaction must be held in a position of trust by the agent.

The duties of a managing general agent may include all of the following EXCEPT A Adjusting claims. B Negotiating reinsurance contracts. C Issuing binders. D Altering policies.

B Negotiating reinsurance contracts. Managing general agents negotiate reinsurance contracts on behalf of the insurer, issue binders, as well as participate in the adjustment of claims. Only an insurer's executive officer may change a policy.

In life insurance, agents are permitted to share or split commissions, provided that A The Division of Insurance knows of the arrangement. B There is a written agreement between the agents. C Both are properly licensed for the line of insurance. D The insured knows and agrees to the arrangement.

C Both are properly licensed for the line of insurance. For an agent to receive commissions from the sale of insurance, they must be properly licensed for that line of insurance.

When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of A Discrimination. B Nothing, unless the remarks were in writing C Defamation. D Misrepresentation.

C Defamation. A producer or broker who makes oral or written statements intended to injure another producer or insurer is guilty of the unfair trade practice of defamation.

When an agent is handling premium funds while conducting business, the insurance agent acts in a(n) A Financial capacity. B Special capacity. C Fiduciary capacity. 受託人 D Accounting capacity.

C Fiduciary capacity. 受託人 Money designated as premium belongs to the insurance company. An agent is handling this money in a position of trust. Fiduciary is the term that refers to the handling of money.

Which of the following criminal activities would be sufficient violation to warrant rejection, revocation, or suspension of an insurance producer's license? A Trespassing through a neighbor's yard. B Public drunkenness C Forgery D Speeding in an automobile.

C Forgery 偽造 Upon conviction of a felony, a producer's license will be revoked by the Commissioner.

Which of the following licensees are not compensated directly related to the amount of insurance sold? A Insurance company B Insurance agent C Insurance broker D Insurance consultant

D Insurance consultant Insurance consultants advise others about their insurance needs and coverages. Consultants are compensated by the people they advise, not by agents or insurers. Their compensation is not directly related to the amount of insurance sold, but based upon their advice and recommendations.

All of the following are true regarding rebates EXCEPT A Rebates are only allowed if specifically stated in the policy. B Rebating can be anything of economic value, given as an inducement to buy. C Dividends are not considered to be rebates. D Rebates are allowed if it's in the best interest of the client.

D Rebates are allowed if it's in the best interest of the client. A rebate is an illegal act which involves returning something of value to the client as an inducement to buy, such as the commission. Rebates are only allowed if specifically stated in the policy. Insurance dividends are not considered rebates as the IRS considers it as a return of overpaid premium.

How many days does a nonresident producer have to file a change of address when the agent moves to Nevada from another state? A 10 B 30 C 60 D 90

B 30 A nonresident producer that moves from 1 state to another must file a change of address within 30 days of this change.

In Nevada, how long must producers keep records of insurance transactions under their license? A 2 years. B 3 years after a policy expires C 5 years after a policy is issued D 1 year after the Commissioner's examination

B 3 years after a policy expires The records may be kept in an electronic form, and must be open to the Commissioner's inspection for at least 3 years after the policy expires.

The term "adjuster" may include which of the following? A Attorney at law B A firm that acts on behalf of the insurer C Officer, director or regular salaried employee of an insurer D Associate adjuster

B A firm that acts on behalf of the insurer An adjuster is any person, firm, association or corporation, who, for a commission, acts on behalf of an insurer in the work of investigating and adjusting claims. Associate adjusters, attorneys or insurer's salaried employees are excluded from the definition.