Insurance

Representations

May be considered best of belief and knowledge and can be oral or written

Representations alteration and withdrawal

Means a representation may be altered or withdrawn before the issuance of the policy, but joy after contract has been issued

Admitted insurer

Means any person entitled to transact insurance businesses in this state, after satisfying the laws/ conditions in the state of California without regard to origin, and hold a certificate of authority.

Non admitted

Means any person not entitled to transact insurance business in this state.

Rules Regarding Internet Advertisements

The licensed agent who advertises on the internet shall identify name as it appear on their license, any fictitious name approved by insurance commissioner, principal place of business, and the insurance license number. PHONE # NOT REQUIRED

Licensee's Duty for Disclosure of the Effective Date of Coverage

A life agent, or fire & casualty broker-agent, shall provide to all insured's/ applicants at time of application, or upon receipt of premium, the Effective date of coverage, if known, or circumstances or conditions before coverage is effective

Public insurance adjuster

A person who, for compensation, acts on behalf of or aids an insured in the negotiating for, or effecting of, the settlement of a claim or claims for the loss or damage under an insurance policy

Insurance adjuster

A person, other than a private investigator, who, for compensation, acts on behalf of or aids in any matter, an insurer in the negotiating for or effecting the settlement of a claim or claims.

Marketing methods

Insurance companies may market their insurance products by mass marketing, direct response or insurance producers.

Insurance Solicitor- Section 1624 CIC

Is a licensed natural person, that must be appointed by an agent or broker, and hold a permanent broker-agent license

Unlawful acting aiding, assisting, or advertising for an insurer without a certificate of authority

Is a misdemeanor subject to $500 plus $100!for each month in which the violation continues.

MGA - Section 769.81 (c)

acts as an agent, and produces and underwrites gross direct written premium, equal to or more than 5%, of the policyholder surplus, as reported in the insurer's last annual statement

Definition of transact

any person who transacts insurance on behalf of an admitted insurer, must hold a valid insurance license to receive insurance commissions. If not licensed, maybe guilty of a misdemeanor, punishable by a fine up to $50,000 and/ or jail up to 1 year

Applications Filing and Suspension or Revocation of License WITHOUT A HEARING

applicant with a conviction of a felony; applicant of a misdemeanor denounce by insurance laws; or applicant denied for cause within the past 5 years of a volitional or occupational license, or had a license suspended or revoked for cause within past 5 years

Authorities of MGA

are granted specified geographic territories, have the ability to appoint and terminate agents under their agency, are able to act as underwriters, and can collect premiums from their producing agents

What constitutes transaction of insurance- section 35

is a solicitation of insurance, negotiations preliminary to execution of insurance contract, and transaction of matters subsequent to, and arising out of, a contract of insurance.

Surplus line and special surplus line broker- section 1761

is authorized to transact insurance with non-admitted insurers, in the event the riskhas been rejected by at least three (3) admitted insurers

Negotiation- section 35 (b) CIC

is gathering information to discover needs/ risk and reviewing premiums, coverage, deductibles, types & amounts of insurance, and the terms of the coverage. Names of insured's to be protected, which leads to execution.

Insurance Broker

is someone paid, by written agreement, for transacting insurance on behalf of the insured.

Solicitation- section 35 (a) CIC

is the initial contact with possible purchaser, and includes: calling to set up appointment, passing out flyer/ brochures, and handing out business cards

Execution of a contract of insurance - section 35 (c) CIC

is when agent issues a binder/ covering note; or when the insured signs application, the agent collects check/ premium, and then the policy is issued

Life Settlement Brokers

it is prohibited to place before the public, directly or indirectly, any means of communication (including TV, Radio, internet) for the purpose of inducing public to purchase, sell, assign, devise, or bequest an insurance policy

Code prohibits certain actions by unlicensed persons

it prohibits any person to solicit, negotiate, or execute any type of insurance contract, or act in any capacity for which a license is required. shall be guilty of a misdemeanor, punishable by a fine not to exceed $50,000, or up to one year in jail, or both.

All agency names, or use of name by any person transacting insurance in this state

shall file all names used transacting insurance. All names may be disapproved by insurance commissioner, except the bona fide natural name

Effect of the Code regarding Termination of Producer's License

states that upon death of insurance producer, license or cease to exist

Inactive License

upon notice of termination of appointment or cancellation of a bond license shall remain inactive as long as continuing education and renewal fees are paid

Different between insurance agent, broker, and solicitor

An agent is appointed by an insurer, a broker is required to have on file a $10K bond, in favor of the people of California. And a solicitor is a natural person appointed by agent or broker to work on their behalf.

Distribution systems

Are a means insurance companies use to sell their insurance products: insurance producers, independent/ exclusive, direct writing / mail and internet

Alien insurers

Are organized outside of the United States, whether admitted or not.

Foreign insurers

Are organized outside the laws of California.

Domestic insurers

Are organized under the laws of their home state, where admitted or not.

Agency Name, Use of Name

Broker Agents who have a contract with corporations or associations, licensed under the code, must clearly identify in advertisement or printed materials, names of corporation or association, and their relationship.

Managing General Agent MGA- Section 769.81

Can be ay person, firm, association, partnership, or corporation that manage all or part of an insurer's business

Misrepresentation (punishments)

Fine up to $25k. If victim suffered a loss of over $10k agent may be required to pay 3xs amount and up to 1 year in jail. Revoked license up to 3 years.

Insurance producers

Have a legal relationship as agents to insure and insured. Agents have a fiduciary responsibility to both parties that have trust in them.

Change of address

Must be notified in writing immediately

Life Settlement Brokers, When an insured is terminally ill

Must obtain a written statement from an attending physician that the owner of the policy is of sound mind and under no constraints or influence to enter into the contract.

Identify the prohibitions of free insurance

No insurer or agent shall participate in any plan to offer or effect any kind of insurance or annuities as an inducement to purchase or rent any real or personal property or services, without a separate agreement and charges for insurance

Representations regarding future

Qualifies as a promise, unless it is merely a statement of best belief and knowledge

Underwriting applications

Requires the gathering of additional information in order to evaluate risk for selection, classification, and rating of the policy to be issued.

Cancellation of a license by the Licensee in the Licensee's Possession or in the Employer's Possession

Surrender of License may be accomplished by delivery of the document itself to the insurance commissioner or, if the license is in the possession of employer, surrender of license can be by written notice delivered to commissioner

Life Settlement Broker

They are licensed to assist the insured to find the best buyer for their existing Life insurance policy

Errors & Omission (E&O) Coverage Available

They are: professional liability, directors and officers and malpractice

Life broker or health broker

Under California Insurance Code, Life or Health Brokers do not exist

Filling a notice of appointment

insurers must file a notice of appointment for each agent they employ to act as their agent. A broker filing notice of a bond shall have his/ her broker authority active

Person under the insurance code

Is a natural person, corporation, association, organization, partnership, business trust, or limited liability corporation- LLC

Insurance agent

Is a person authorized by, and on behalf of, an insurer to transact all classes of insurance other than life insurance.

express warranty

Is a statement in the policy of a matter relating to the person being insured, or thing being insured, or risk being insured.

Warranty

Is a statement of fact. It may be either expressed or implied, but must be the truth.

Implied Warranty

Is included in contract, even though not specifically stated. It may quality as a representation or as an implied warranty.

Twisting (form of misrepresentation)

No one shall misrepresent the terms of any insurance policy with the intent to induce a person to cancel, lapse, forfeit, change, or surrender their existing policy, whether it be a temporary or permanent plan.

Be Able to Identify the Code Specifications Regarding Producer Application Denial After a Hearing

if applicant is not properly qualified to perform the duties of a person holding the license, then granting license would not be in the best interest of the public. Applicant is lacking integrity, not trust worthy, or has engaged in dishonest matters.

Insurance Broker- Section 1623 CIC

is a licensed person, who has a written agreement from the insured, and is transacting insurance on behalf of the client

Personal Lines Licensee - Section 1625.5 CIC

is a person authorized to transact personal automobile, homeowners, watercraft, inland marine, excess, and umbrella insurance

Property broker-agent or casualty broker-agent licensee

is a person that is authorized to act as an insurance broker, insurance agent, or insurance solicitor, and has the authority to transact 24 hour coverage and any coverage that a personal lines licensee is authorized to transact.

Insurance Agent's Errors & Omissions Insurance

is a professional liability insurance, and is the responsibility of the agent purchase in case they are sued by the insured for an unintentional error or omission

Life Agent

may submit a proposal for a life policy on behalf of the insurer, to which the agent is not appointed with, provided the insurer submits notice of appointment w/in 14 days after agent has submitted the insurance application

Rules regarding fictitious names

must be filed for approval with the insurance commissioner

MGA - Section 769.81 (c)

negotiates and binds ceding reinsurance, on behalf of the insurer