Insurance Regulation
1. Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
a. Twisting
1. In which of the following situations would punishment include imprisonment?
a. Omission of a material fact with intent to embezzle funds
1. Which of the following is the term used when a person in a fiduciary position has used assets in manner for which they were not intended such as the wrongful taking or use of money belonging to another?
a. Misappropriation of funds b. Wrongful taking or use of money belonging to another
1. Which of the following would be considered an unfair claims settlement practice?
a. Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered
1. When the Commissioner suspects that a person is violating an insurance law or other regulation, what can be issued that would order the person to stop committing the act of violation?
a. Cease and Desist Order
1. Which of the following regulatory authorities participated in creating the National Do Not Call Registry?
a. FTC
1. Which of the following would NOT be considered an unfair and deceptive practice?
a. Controlled business
1. Which of the following is an example of an unfair claims settlement practice?
a. Failure to promptly settle a claim when liability has been clearly established b. After a claim has been adjusted and is found to be covered under the policy, the insurer must pay the claim upon receipt of a signed proof of loss
1. All of the following are unfair claims settlement practices EXCEPT:
a. Suggesting negotiations in settling the claim
1. Which of the following entities must approve all continuing education courses in the state?
a. The Commissioner
1. If an insurer terminates a producer's appointment, the Commissioner must be notified within how many day?
a. 30 days
1. Which of the following is an example of a producer's fiduciary responsibilities?
a. A producer promptly forwarding premiums to the insurance company b. Fiduciary - position of trust, safe care of the money, don't comingle
1. For how long must a company maintain a complete file of all advertisements used?
a. At least 4 years
1. A producer licensed in another state wants to become a producer in Pennsylvania. The other state gives the same privileges to Pennsylvania producers wanting to be licensed in that state as it does its own agents. Pennsylvania therefore, extends the privileges of its agents to the prospective agent of the other state. What is this called?
a. Reciprocity
1. All of the following violations may result in an agent's imprisonment EXCEPT:
a. Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction
1. If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's
a. Ancestry
1. A person applying for a manager or exclusive general agent license must meet all of the following criteria EXCEPT
a. Be responsible for at least 25% of total commissions collected by the office that he or she manages
1. Which of the following authorities is authorized to issue a temporary insurance producers license?
a. Commissioner
1. 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. Defamation
1. If another governmental agency takes legal action against a licensee, whose responsibility is it to report the action?
a. The licensee b. Licensees must make a report, of any action taken against them in another jurisdiction or by another governmental agency in Pennsylvania within 30 days of the final disposition of the matter
1. A licensee serving in the military is unable to fulfill her continuing education requirement. What would the licensee have to do to renew the license?
a. The licensee may submit a request to the department to have requirements and fees waived. The department will then determine if the request is permissible
1. Within how many days must a producer respond to an inquiry from the Commissioner?
a. 30 days
1. If another governmental agency takes legal action against a licensee, whose responsibility is it to report the action?
a. The licensee
1. Which of the following does a producer NOT have the authority to do?
a. Issue policies b. Insurance producers sell, solicit, or negotiates contracts of insurance
1. In which of the following situations is it legal to limit coverage based on marital status?
a. It is never legal to limit coverage based on martial status b. Benefits or coverage can't be denied based on sex or martial status
1. With regards to premium rates, which of the following statements is NOT true?
a. The Commissioner sets all insurance premium rates used in Pennsylvania
1. Which of the following is an example of a producer's fiduciary duty?
a. The trust that a client places in the producer in regarding to handling premiums
1. How soon after the due date should the insurer pay the agent appointment fees?
a. Within 30 days
1. A producer's license must be renewed
a. Biennially
1. Which of the following would be considered an illegal inducement to purchase insurance?
a. Confirming future dividends in a life insurance proposal b. A participating life insurance policy may pay a portion of its net earnings to a policyholder, but dividends cannot be guaranteed
1. Which of the following includes information regarding a person's credit, character, reputation, and habits?
a. Consumer report b. Includes written and/or oral information regarding a consumer's credit, character, reputation, and habits collected by a reporting agency from employment records, credit reports, and other public sources
1. How often must the Commissioner examine rating organizations?
a. Every 5 years
1. What was created to keep telemarketers from calling consumers who do not wish contacted?
a. National Do Not Call Registry
1. Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must
a. Respond to the consumer's complaint
1. 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?
a. Sexual orientation
1. All of the following are considered unfair trade practices in the business of insurance except
a. Sharing commissions b. Its allowed as long as both producers are properly licensed
1. Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?
a. The Fair Credit Reporting Act
1. Which of the following entities established the Do-Not-Call Registry?
a. The Federal Trade Commission
1. If a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur?
a. The change must be reported to the Commissioner b. If doing business under a fictitious name other than the name on the license, the licensee is required to notify the commissioner in writing prior to use
1. Once it has been reasonably proven that a person has knowingly violate the Insurance Code regarding unfair methods of competition, the Department may impose a civil penalty of
a. $5,000 for each violation
1. To avoid violations of unfair claims settlement regulations, insurers are required to acknowledge the receipt of a claim within how many days?
a. 10 days
1. What is the minimum age for obtaining an insurance producer's license in this state?
a. 18
1. According to the telemarketing sales rules, what are the permissible calling hours for telemarketing calls?
a. 8 am until 9 pm
1. Which of the following will NOT be considered unfair discrimination by insurers?
a. Discriminating in benefits and coverages based on the insured's habits and lifestyle
1. What is the civil penalty for violating a cease and desist order of the commissioner?
a. $10,000
1. In order for a foreign insurer to do business in this state, it must apply for and obtain
a. A Certificate of Authority
1. Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
a. False Advertising
1. The National Do Not Call Registry was created to regulate
a. Telemarketers
1. A producer who fails to separate premium monies from his own personal funds is guilty of
a. Commingling
1. ABC Insurance Company wishes to begin transacting business in Pennsylvania before it can do so, it must do which of the following?
a. Obtain a certificate of authority
1. Which of the following would NOT be considered an exception to the National Do Not Call List?
a. Calls based outside the United States
1. A producer has become disabled. In order to keep his business going, what may the producer's designee do?
a. Obtain a temporary license
1. An individual was just caught acting as an exclusive general agent—even though he is not properly licensed. Assuming that this occurred in a single day, what is the maximum penalty he faces?
a. A third-degree misdemeanor and a $1,000 fine
1. In insurance transactions, fiduciary responsibility means
a. Handling insurer funds in a trust capacity
1. When a producer holding a certificate or a broker's license has a change in his/her residence or business address, he/she must notify the Department of Insurance and any company for which the producer holds an appoint within
a. 30 days
1. A producer licensed in Pennsylvania must notify the Insurance Department of any change in address in his or her residence or business within how many days?
a. 30 days
1. Prior to license renewal, all insurance producers must successfully complete how many hours of continuing education?
a. 24 credit hours b. Must do 24 credit hours every 2 years, prior to license renewal
1. Which of the following is true regarding Continuing Education required for those holding a Pennsylvania producer license?
a. 24 hours each licensing period
1. Licensees must make a report of any action taken against them in another jurisdiction or by another government agency in Pennsylvania within how many days of the final disposition of the matter?
a. 30 days b. Within 30 days of the final disposition of the matter
1. A licensed producer moving to Pennsylvania may become licensed as a resident if the producer submits a completed application within how many days of establishing residence in Pennsylvania with proof of licensing from their prior home state?
a. 90 days
1. Which of the following would be required to be licensed as an insurance producer?
a. A salaried employee who advertises and solicits insurance b. A person does not need a producer license if they only advertise without intent to solicit.
1. If an insurer appoints a producer, which authority must be notified?
a. Department of Insurance b. Every insurer authorized to transact business in Pennsylvania must notify the Insurance Department of all appointments and terminations of appointments of producers in the format and within the time frame required by the Commissioner. Termination of appointment shall be provided to the department in writing on an approved form or through an approved electronic process within 30 days following the effective date of the termination.
1. Which of the following authorities monitors the financial strength of insurers?
a. Department of Insurance b. The Commissioner and the Department of Insurance are charged with monitoring the financial strength and integrity of insurers authorized to conduct business in PA
1. All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT
a. Dividends from a mutual insurer b. These aren't considered a rebate because the policy specifies that they might be paid
1. An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
a. Fair Credit Reporting Act b. Governs what information can be collected and how the information can be used
1. Which of the following criminal activities would be sufficient violation to warrant rejection, revocation, or suspension of an insurance producer's license?
a. Forgery
1. An insurance company assures its new policyholders that their premium costs will not increase for a period of at least 5 years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act?
a. Fraud b. False written or oral statements, or any omissions of material fact are considered unlawful insurance fraud.
1. Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report
a. Must be informed of the source of the report b. If an insurance policy is declined or modified because of information contained in a consumer report, the consumer must be advised and provided with the name and address of the reporting agency
1. 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. Illegal under any circumstances b. When a co. criticizes the financial situation of another company with the intention of injuring that company, it has committed an illegal trade practice called Defamation
1. An agent offers his client free tickets to a sporting event in exchange for the purchasing of an insurance policy. The agent is guilty of
a. Rebating b. When producers promise anything of value that is not specified in the policy, they are rebating
1. A producer has successfully completed 52 hours of continuing education (CE). How many hours can the producer apply to her current reporting period, and how many hours can she carry toward the next reporting period?
a. 24 hours will be applied to the current reporting period, and 24 can be applied to the period immediately following. b. Excess hours over the 2-year period may be carried forward only to the next 2-year period.
1. Which of the following persons is required to hold a producer license?
a. A person who negotiates insurance contracts b. You need one if you solicit, negotiate, or sell
1. According to the Fair Credit Reporting Act, all of the following would be considered native information about a consumer EXCEPT:
a. Disputes regarding consumer report information
1. All of the following are requirements for producer license renewal EXCEPT
a. Renewal examination b. There are no renewal exams
1. All of the following would be considered rebating EXCEPT
a. An agent misrepresents policy benefits to convince a policyowner to replace policies
1. All of the following would be considered rebating EXCEPT:
a. An agent misrepresents policy benefits to convince a policyowner to replace policies b. Rebating is when an insured offers something of value in order to induce the sale of an insurance product. Both the offer and acceptance of a rebate are illegal
1. Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance?
a. Only written statements can be considered fraud b. Oral or written statements by any person engaged in the business of insurance that are false or any omissions of material fact are considered unlawful insurance fraud
1. Which of the following acts created a federal program that would share the risk of loss from potential terrorist attacks with the insurance industry?
a. TRIA (Terrorism Risk Insurance Act) b. Purpose was to crate a temporary federal program that would share the risk of loss from future terrorist attacks with the insurance industry. Requires all commercial insurers offer insurance coverage for acts of terrorism
1. What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
a. $2,500
1. Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to
a. 10 years
1. How long does a temporary producer's license last for the surviving spouse of a deceased producer?
a. 180 days
1. When a producer died, his surviving spouse needed to maintain the insurance agency until it could be sold. Without passing an examination, she could qualify for a temporary license for a maximum period of
a. 180 days
1. Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
a. 3 days
1. If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
a. 5 days
1. If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
a. 5 days b. Insurer has 5 days to provide the consumer with the additional information
1. 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 a life insurance policy from the bank in the amount of the loan. This is an example of
a. Coercion