Lesson 6: Minnesota Insurance Regulation

the commissioner of commerce is appointed by who?

the governor

managing general agent

this person hires producers, supervises a territory, manages producer activities, and must be licensed as an insurance producer

the person shall apply within how many days after removal from active duty?

within 90 days

receipts

must be issued any time the producer takes possession of money, insurance policies, or documents belonging to an insured or prospective insured

claim records

must be retained for 3 years after the claim is paid or denied

policy forms and applications

must be retained for 3 years after the effective date

complaint records

must be retained for 4 years after complaint is made

financial and complaint records

must be retained for 6 years

suitability

must determine whether or not an insurance policy is suitable for the customers individual needs before selling a policy

1995 Agent Disclosure Law

must disclose the following in writing: -name -insurance company -the fact that you are in the business of selling insurance

rebating

offering or giving any rebate of premiums or anything else of value as an inducement to buy insurance. the penalty is $60-$200 per violation

express authority

powers given to the agent as part of the agency agreement

apparent authority

powers not given by the agency agreement but that a reasonable person would presume the producer has

implied authority

powers not given by the agency agreement, but necessary to complete the functions allowed in the agency agreement ex: use logo

fiduciary responsibility

relationship based on trust. producer must always protect the insurer's interest and follow any lawful instructions from the insurer.

twisting

replacing insurance to the detriment of the insured (without their knowledge)

Gramm-Leach-Bliley Act

requires insurance companies to disclose their privacy policy and how a customers personal (non public) information may be used and shared with affiliates and third parties -requires companies to provide their privacy policy when policy is issued and at least once a year thereafter

producer

someone who acts on behalf of another

coersion

strong armed into buying insurance

any insurer that fails to file a company appointment is penalized how much per offense?

$25 up to $300 max

defamation

(has to be a lie) making any statement that is maliciously critical of the financial condition of an insurer that is intended to injure any person engaged in the business of insurance.

can only transact insurance business if:

- has been appointed by the insurer -obtains appointment within 15DAYS after submitting the first application

the following are gross misdemeanors on the first offense:

-acting as an insurance producer without a valid license -making false statements on an application for insurance -forging the signature of another person

fair credit report: notify the applicant both verbally and in writing of the following:

-applicant has the right to request a copy of report -applicant may request to be interviewed - right to challenge any erroneous information, we must respond within 30 days -may make a writing statement regarding any negative information on credit report

must notify the commissioner in writing

-change of name or address: 10 days -administration action against producer: 30 days of final disposition -criminal prosecution against producer: 30 days of pre-trial hearing date criminal convictions: 10 days of conviction(jail)

commissioner of commerce

-empowered to enforce Minnesota insurance laws -establish rules -conduct investigations -audit -publish information -require reports of all sales

Guaranty Association

-purpose is to protect policyholders from an insurer's inability to pay claims due to insolvency or bankruptcy. -association will pay unpaid claims up to certain maximums limited by Minnesota Statute. -notice of policyholder rights must be given at time of application, if not in person notice must be sent within 72 hours of taking the application.

the insurer must send written notice of termination to producer after notifying the commissioner within how many days?

15 days

duration of license

2 years expires last day of producers birth month

how many hours of continuing education is required ?

24 hours 3 hours ethics no more than half can come from courses offered by insurance company or its producers

apply for a permanent insurance license within how many years after passing the exam?

3 years

producer may file written comments concerning the termination with the commissioner within how many days?

30 days

if the insurer terminates a company appointment how many days do they have to notify the commissioner?

30 days following the effective date of termination

oral binder must be followed up in writing within how many days?

5 business days

Fair credit reporting act: most adverse information remains in a credit report for how many years?

7 years 10 for bankruptcy information

discrimination

making or permitting any unfair discrimination between individuals in the same class of insureds when setting rates, or refusing to offer, sell, or renew coverage on the basis of marital status, gender, a disability, or because the proposed insured is a victim of domestic abuse.

censure

a formal reprimand of a producer this becomes a permanent part of the producers record, but doesn't otherwise affect the producers ability to remain licensed

Non-resident producer

a non-resident insurance producers license shall be issued to a person if that person is already a licensed resident producer in good standing in the persons home state.

resident producer

a resident producer's license shall be issued to a person who resides in Minnesota or maintains the person's principal place of business in Minnesota

temporary license

a temporary 180 day license may be issued by the commissioner in the following circumstances: -armed forces of the US -upon death of producer -any circumstance that serves the public interest - transition: keeps business - transaction: buys out

certificate of authority

an admitted or authorized carrier is any insurance company that has obtained this to transact business

free-look period

at least 10 days. if the insured is dissatisfied with the policy for any reason, the policy can be returned for a full refund during the free look period

producers may accept loans from clients provided the loan agreement in writing, all records must be kept on file for how many years?

at least 6 years after repayment

misrepresentation

making statements that misrepresent the policies, dividends, or financial condition of any insurer for the purpose of inducing a policyholder to lapse, forfeit, or surrender an insurance policy

non-admitted carriers

companies without a certificate of authority "un-licensed carriers"

appointment

contract/ agency agreement

surplus lines companies

may sell insurance in Minnesota without a certificate of authority but they may only transact business through a licensed surplus lines agent

delivery of refunds

must be delivered or mailed within 5 days of receipt by the producer

flesch scale analysis

eighth grade reading level

fines

in addition to taking action against a producers license, the commissioner may fine a producer up to $10,000 per violation

McCarran- Ferguson Act

individual states, not the federal government are responsible for regulating the insurance industry

Fair Credit Reporting Act

insurance companies need accurate information about an applicant to make proper underwriting decision. -information from the application -driving records provided by department of motor vehicles -medical records provided by applicants physician -credit reports

delivery of policies

must be delivered within 30 working days of the producers receipt from the insurer

denial of licensure

the commissioner refuses to issue a new insurance license to a person who has previously committed an act that would have resulted in disciplinary action if the person had been licensed at that time

revocation

the commissioner revokes a producers license for serious misconduct. -prohibited to sell for at least 2 years. -if reapply, producer must obtain a performance bond of $20,000

suspension

the commissioner suspends a producers license for 3 months or more. may not sell during suspension 3 months - 2 years

agency agreement

the legal agreement that establishes the relationship between the principal and agent; it also outlines the powers and responsibilities of the agent

principal (insurance company)

the party for whom the action is taken