Insurance Regulation
A mutual company must have what minimum levels of surplus to write life and health insurance?
Life: $3,000,000 Health: $1,000,000
At a minimum, how often must the Commissioner examine an insurance company's books?
At least every 5yrs
If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?
Cease and desist order
What person examines insurance annuity contracts and makes recommendations for a fee?
Certified Insurance Consultant
Requiring, as a condition to a loan, that the applicant purchase insurance from a specific insurer is known as what?
Coercion
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
What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?
Misrepresentation (Specifically, False financial statements)
If someone is acting as an agent but is not actually licensed, can an insurer pay them commissions, fees, or anything else for selling/soliciting?
NO. Commissions are only payable to licensed agents
Can a producer transact business with an insurer that does not hold a certificate of authority?
No
Can consultants receive commissions?
No
If an agent's primary purpose is to write Controlled Business insurance, can they become licensed?
No. Most states will not issue a license if that agent's sole purpose is to write Controlled Business
Who may share in the commission from the sale of a life insurance policy?
Only licensed producers
A producer who UNKNOWINGLY violates the Fair Credit Reporting Act is liable to what amount?
The amount equal to the loss to the consumer
Who is responsible for the costs associated with the examination of insurers?
The insurer who is being examined (think of it like a registration fee)
In CT, by what factors must premiums from controlled business policies exceed the premiums on policies issued to the general public in order for the Commissioner to determine that the producer's license is only used to write Controlled Business?
The premiums for Controlled Business must exceed 9x the premiums on policies issued to the general public
Who is responsible in the case of a producer acting with an unauthorized insurer?
The producer is personally liable
Who can be granted a temporary license?
The spouse or designee in the case that a licensed producer dies or become disabled.
If a producer has committed a violation or is engaged in an unfair trade practice, the Commissioner may do what?
Hold a hearing
Under what circumstance may a Consumer report not contain certain types of information?
If the report requested is in connection to a life insurance policy OR credit transaction of less than $150k
Which type of underwriting report includes interviewing associates, friends, and neighbors of the consumer?
Investigative reports
To whom may a certificate of authority be issued?
To an insurer authorized to transact business in this state
What is the purpose of a cease and desist order?
To prevent a producer or insurer from further violating laws for transacting insurance.
Misrepresentation can occur in oral statements (true or false)?
True
What type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Twisting
To knowingly commit an unfair method of competition or to engage in such actions with high frequency is considered what?
Unfair Trade Practice
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?
Unfair discrimination
What are the penalties for an agent acting with an insurer who does not hold a certificate of authority?
Up to $2,000 and 6 months in jail
A producer who KNOWINGLY violates the Fair Credit Reporting Act is liable to what amount?
Up to $2,500
When can the Commissioner or Director examine insurers?
Whenever deemed necessary, but at least once every few years
In general, discrimination may not be made among what group of people?
People within the same CLASS and LIFE EXPECTANCY
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
Any inducement offered to the insured in the sale of insurance products that is not specified in the policy is called what?
Rebating
Applicants who live in CT would apply for what kind of license?
Resident license
An insurer must report to the Commissioner when a producer fails to remit premiums for policies issued to insureds within how many days?
Within 30 days
If an agent is no longer licensed but made a sale back when they were licensed, can they still collect renewal or deferred commissions from that policy?
Yes
Can an insurer or agent assign their commissions to be paid to persons who do not sell or solicit insurance?
Yes, so long as it doesn't violate state law
Must the consumer be alerted about an Investigative Report being conducted?
Yes; within 3 days of the report request
What type of licensee represents the insurance company?
agent/producer
What type of licensee represents the insured?
broker
If a administrative action is taken against a producer, when must they alert the Commissioner of this?
within 30 days
When must a Change of Address form be submitted to the Commissioner?
within 30 days
When will a producer's license expire (date)?
Every 2yrs. on the last day of the producer's birth month
If an insurer holds a Certificate of Authority, it is known as what type of insurer?
Authorized
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?
Authorized
What is the fine to a producer for KNOWINGLY engaging in an unfair practice?
$25,000 (aggregate cannot exceed $250,000)
The fine for twisting can be up to what?
$5,000 and 30 days in jail
What are the most common penalties for violations of insurance statues?
1.) A cease and desist order 2.) A fine 3.) License suspension 4.) Revocation
What is the prohibited information excluded from a Consumer Report when applicable?
1.) Bankruptcies over 10 years old 2.) Civil suits 3.) Records of arrest or any crimes more than 7 years old
What requirements must an insurer maintain to retain its license for conducting business in CT?
1.) Its surplus funds must be reasonably related to its liabilities in type, volume, and nature of the insurance 2.) Risk-based capital related to its adjusted capital must be adequate for the types of business transacted
Federally, unfair discrimination is along what lines?
1.) Marital status 2.) Race 3.) Nationality 4.) Gender 5.) Sexual orientation 6.) Creed
What are the minimum continuing education requirements of resident producers in CT?
1.) Minimum of 24hrs of continuing education credits every 2yrs. 2.) 3 of these hours must be completed in courses related specifically to state regulations or ethics 3.) A minimum of 6hrs. must be completed for each line of authority 4.) Credit hours cannot be carried over to the next 2 year continuing education period
In addition to the federal standard for unfair discrimination, what additional terms does CT add to it?
1.) Physical disability 2.) Mental retardation 3.) Blindness or partial blindness 4.) Exposure to diethylstilbestrol
What forms can a rebate take?
1.) Rebates of premiums payable on the policy 2.) Special favors or services 3.) Advantages in dividends 4.) Stocks, bonds, securities, and their profits
What are the Commissioner's duties?
1.) See that all laws regarding insurance and health care companies are executed 2.) Administer the Insurance Code 3.) Recommend changes to insurance law to the General Assembly 4.) Develop a periodic review system to ensure compliance with the minimum standards of NAIC 5.) Establish a program to reduce costs and increase efficiency through electronic methods
How soon must a hearing be held after a producer is notified?
30 days
Upon receiving the "Notice of Appointment," the Commissioner has how many days to verify that the producer is eligible to transact the business?
30 days
When must the Commissioner alert a producer that their license will expire?
30 days prior
When before expiration should applicants submit renewals?
90 days
Before a company may transact insurance in CT, what must they obtain from the Commissioner?
A Certificate of Authority
If the Commissioner determines that the producer has engaged in an unfair trade practice or deceptive act, the Commissioner may order what?
A cease and desist
Who is an insurance agent?
A person authorized to sell, solicit and negotiate insurance contracts
Who is considered a nonresident agent?
An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state
To obtain a Certificate of Authority in CT, companies must meet standards along the guidelines of what?
Capital and Surplus
What legally requires a producer from engaging in the acts, methods, or practices which violate the Insurance Code?
Cease and Desist
What are producers required to do in order to renew their license?
Complete continuing education hours and pay the renewal fee
What are the two types of reports that an underwriter will pull from?
Consumer and Investigative reports
Which type of underwriting report includes written information regarding a consumer's credit, character, or habits from employment records, credit reports, and other PUBLIC sources?
Consumer reports
Coverage written on a producer's own life, health, or property is known as?
Controlled Business
An ad in a newspaper, magazine, television, or internet that is untrue, deceptive, or misleading about the business of insurance or anyone who conducts it is called???
False Advertising
For what reason can a temporary license be issued?
For continuation of business in case the licensed producer dies or becomes disabled
In general, who can be excluded from producer licensing and examination requirements?
Insurance company officers, directors, or any other employees who do not transact insurance nor receive commissions
Producers may only receive extensions on their continuing education requirements under what circumstance?
Military duty
Issuing, publishing, or circulating any illustration or sales material that is false, misleading, or deceptive about a policy's benefits, terms, or dividends is what?
Misrepresentation
Can the state Insurance Commissioner be affiliated with a company or its directors?
NO. The Commissioner must be independent
When does the license of a Certified Insurance Consultant expire?
September 30th of each odd-numbered year
Who must be notified of a producer's change of address?
The Commissioner
What act guarantees the consumer the right to know what was in a report?
The Fair Credit Reporting Act
What act regulates the procedures that insurers will take in the course of acquiring information and requires insurers to disclose the nature of information that they will seek?
The Insurance Information and Privacy Protection Act
What is the fine for violating a cease and desist order?
$50,000 per violation
What is the fine to a producer for UNKNOWINGLY engaging in an unfair practice?
$5,000 (aggregate cannot exceed $50,000)
What components of a policy can you not misrepresent?
1.) Terms, benefits, conditions, or advantages of the policy 2.) Any dividends to be received or previously paid out 3.) Financial condition of the insurance company 4.) The true purpose of an assignment or loan against a policy
What Compliant Records are insurers required to maintain until their next examination?
1.) Total number of complaints 2.) The classification of the complaints by line of insurance 3.) The nature of each complaint 4.) The disposition of the complaint 5.) The amount of time that it took to process each one
Anyone engaged in the business of insurance whose activities affect interstate commerce and makes misrepresentations may be fined what?
10 years
A producer who has let his license lapse may reinstate it without being required to pass the exam again within how long?
12 months
When an insurer chooses to appoint an agent, within how many days must they file a "Notice of Appointment" with the Insurance Department?
15 days
An insurer must report to the Commissioner when a check issued by a produce to the insurer bounces within how many days?
15 days following the receipt of the return
Anyone engaged in the business of insurance whose activities affect interstate commerce and makes misrepresentations and also affects the insurer they represent may be fined what?
15 years
For how long can a temporary insurance license be issued?
180 days
If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?
defamation
