Last chapter: insurance regulation

What is the civil penalty for the first violation of the Pennsylvania insurance fraud prevention act?

$5,000 and increasing by 5,000 till hit 15,000

Maintaining a license requirement

- Continuing education for 2 years - Renewal Fees - Name/address change responsibility within 30 days - Reinstatement within 12 months if needed

What does the department of insurance do?

- controls and supervises insurance businesses - enforce insurance laws - issues licenses and certificates of authority - approves policy forms - conducts examinations, investigations, & hearings - Impose penalties

What are the commissioner of insurance duties?

- supervise insurance business - monitor licensing - Approve policies and forms - Enforce insurance laws and impose penalties - Conduct examinations, investigations, and hearings

Insurance Guaranty Association

-nonprofit legal entity -protects insureds against insolvent insurers -funded by member insurers -pays up to specified limits

How long can revocation last?

1 year

Licenses must make a report of any action taken against them in another jurisdiction within how many days?

30

How long do you have to report negligence actions to the department of insurance?

30 days

For how long must a company maintain a complete file of all advertisements used?

4 years

For the purpose of examination by the department, insurers must keep a record of all financial files for at least

5 years

How often are examinations required from the department of insurance?

5 years

Misrepresentation

A false, distorted or deceptive statements

Which of the following would be required to be licensed as an insurance producer?

A salaried employee who advertises and solicits insurance

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

If an insurer holds a Certificate of Authority, it is known as what type of insurer?

Authorized or admitted

What are the most common penalties for violations of insurance statues?

Cease & desist., fines, suspension or revocation

A state issued document empowering an insurance company to become an admitted insurer is called what?

Certificate of authority

All of the following violations may result in an agent's imprisonment EXCEPT

Failing to report to department a criminal prosecution

Which of the following entities established the do not call registry

Federal Trade Commission

What is the penalty for activities that affect interstate commerce making fraudulent statements?

Fine and imprisonment to 10-15 years

An insurance company ushers it's new policy holders that the premium cost will not increase for. At least five years. However, due to increasing financial strain, they plan to raise the premium cost for all insurance by 10% over the next two years. What term best describes this act?

Fraud

What is the difference between fraud and false/fraudulent statements?

Fraud is misinterpretation of a material fact made knowingly & false/fraudulent statements is knowingly making false or oral statements pertaining to any aspects of insurance or insurers

In general who can be excluded from producer licensing and examination requirements?

Insurance company officers, directors, or anyone not transacting insurance or receive commission

What is controlled business

Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

Misinterpretation

Twisting

Misleading Comparisions to get one to cancel or switch

A producer has become disabled. In order to keep his business going want me to producers designee do?

Obtain a temporary license

Rebating

Offering benefits or services not specified in the policy

Types of Liscenses

Producer/agent who represents the insurance company not the clients. Business Entity: must list at least 1 person Non- Resident License Temporary: Head of department of insurance 180 days

All of the following are requirements for producer license renewal EXCEPT

Renewal examination

All of the following are unfair claims settlement practices EXCEPT - Refusing to pay claims w/o conducting a reasonable investigation - Suggesting negotiations in settling claim - Failing to adopt and implement reasonable standards for settling claims - Failing to ackknowledge pertinent communication to a claim

Suggesting negotiations in settling claim

What act created a federal program that would share the risk of loss from potential terrorist attacks with the insurance industry?

TRIA

False Advertising

The deliberate use of false statements or deception in advertising.

Who pays for the examination under the department of insurance when the time is needed?

The insurers

What type of misinterpretation persuades an insured to their detriment, to cancel, lapse, or switch policies from one to another?

Twisting

When is controlled business legal?

When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state)

Unfair discrimination

discrimination of rate, premiums, or benefits

How often must the commissioner examine rating organizations?

every 5 years

Producers represent who?

insurers

Defamation

maliciously critical statements about a person or company