State Laws, Rules, and Regulations
The insurer must deposit a trust with the state in the following amount:
$100,000 for ONE CLASS of insurance AND $25,000 for each additional class of insurance -No more than $200,000 total is required for any combination of classes
The Commissioner of Insurance
- elected for a term of 4 years - position carries out and enforces the provisions of the Insurance code Duties: -set up any divisions or sections of the department, appoint assistants, clerks etc, maintain official records, examine accounts, issue a cease and desist order if any violations, july 1st each year- compile report regarding property and casualty insurance -first week each quarter- report of chairperson of house committee on insurance and senate committee on insurance and labor.
After notice, hearing, and a cease-and-desist order of the Commissioner, anyone (an insurer or agent) who violates the order may be subject to following penalties:
-A fine up to $10,000 for each violation -suspension or revocation of license -any other relief appropriate
Commissioner of Insurance: state regulations
-Elected for 4 years -regulates the internal affairs of the Department of Insurance -Does not write laws -Examines all authorized insurers
In order to qualify for an original certificate of authority, an insurer must:
-Have a minimum of $1.5 million in capital stock or surplus. Insurers must maintain surplus equal to the larger of $1.5 million or 50% of paid-in capital stock (if a stock insurer) or insurer's surplus (if mutual or reciprocal insurer)
In Georgia, any of the following acts is considered transacting insurance:
-Solicitation and inducement -Preliminary insurance negotiations -Execution of insurance contracts -Transactions of matters arising out of the effectuation of insurance contracts
Life insurance solicitation regulation DOES NOT apply to the sale of:
-annuities -credit life insurance -group life insurance -variable life insurance policies which death benefits and cash values vary -policies connected with pension and welfare plans subject to ERISA
temporary licenses may be issued without requirement of:
-residence -examination -education to employee of agency
Life Insurance Solicitation
-to help buyers make information decisions -buyers guide and policy summary -keep records for 3 years
For administration/assessment purposes, the Life and Health Insurance Guaranty Association maintains two separate accounts. What are they?
1. Life insurance and annuity account 2. health insurance account
In the state of Georgia, there are 6 classes of insurance:
1. Life, accident, and sickness 2.Property, marine, and transportation 3. Casualty 4. Surety 5. Title 6. Health Maintenance Organizations
Small group insurance # of employees?
2-50 employees
If an agent changes his residence address, within how many days must the agent notify the Commissioner of the change?
30 days -commissioner must be notified of any changes of names or addresses within 30 days of change
Coverage for annual prostate antigen tests for covered males who are
45 years or older or covered males 40 years or older ordered by physician
How long will a licensee whose application was refused/revoked have until entitled again to apply?
5 years after the action that was denied.
If commissioner finds any records inadequate, how long does that person have to make corrections?
60 days
A paid-up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available option within how many days after the due date of the premium in default?
60 days after due date of premium
Agent Training Requirements for LTC
8 hours of initial training and 4 hours of ongoing training every 24 months
Prior to soliciting or receiving an application, the insurer must provide to all possible purchasers:
A Buyer's Guide AND A Policy Summary -file must contain one copy of each authorized form for a period 3 years following date of last authorized use
Minimum age to buy insurance in Georgia
A minor who is at least 15 years old -will exercise all rights to policy
Georgia Life and Health Insurance Guaranty Association
A nonprofit, unincorporated association that protects policyowners, insureds, and beneficiaries of life, health,, annuities and supplemental contracts by member insurers who become unable to perform contract obligations -assess members for funds necessary to pay benefits -continue coverage for insolvent insurers -help commissioner detect and prevent insurer impairment
When replacement is involved, who performs duties?
A producer
Life Insurance Advertisements and Solicitation
Advertisement mean any material designed to persuade the public to purchase life insurance
Foreign Insurer
An insurance company that is incorporated in another state, the district of Columbia, or a territorial possession.
Domestic Insurer
An insurance company that is incorporated in the state.
Alien Insurer
An insurance company that is incorporated outside the United States.
Insurable Interest
An interest in the subject of an insurance policy that is not unduly remote and that would cause the interested party to suffer financial loss if an insured event occurred. -Insurable interest must exist at the time of the application, and DOES NOT exist at the time of loss
Defamation occurs when:
An oral or written statement is made that is intended to injure a person engaged in the insurance business -also applies for statements that are maliciously critical
Coercion
An unfair trade practice in which an insurer uses physical or mental force to persuade an applicant to buy insurance.
Controlled Business
Any coverage written on a producer's own life, health or property, and/or that of the producer's immediate family or business associates
Rebating
Any inducement in the sale of insurance that is not specified in the insurance contract -both the offer and acceptance of a rebate are illegal.
Replacement means:
Any transaction in which NEW life insurance or new annuity is to be purchased, and as result, an existing policy has been or will be: -lapsed, forfeited, surrendered, terminated -reissued -converted to reduced paid-up insurance -reduction in benefits
Counselor License
Anyone who engages in the business of counseling, advising, or rendering opinions as to the benefits under any insurance contract inssued
Unfair Discrimination
Applying different standards to insureds in rates, premiums, or policy benefits for persons within the same class or with the same life expectancy is illegal
before usage, basic insurance policy forms/applications must be filed when
At least 90 days before usage
how often does commissioner of community health conduct examinations of health Maintenace organization (HMOs) ?
At least once every 5 years
how often must The Commissioner examine all domestic insurers?
At least once every 5 years.
Advertisements must:
Be clearly written, truthful, and not misleading in fact or by implication AND Must clearly identify and display the name of the insurer -The commissioner of insurance will determine is it is written clearly and can be understood by person of average education or intelligence
Basic coverage for child wellness services for an insured child is:
Birth through age 5
Based on the Insurance Guaranty Association, Insurers:
CANNOT advertise protection
Insurers must obtain a _______ prior to transacting business in this state
Certificate of Authority
A producer who fails to separate premium monies from his own personal funds is guilty of
Commingling -it is illegal for insurance producers to commingle premiums collected from applicants with their own personal funds
Stock Companies
Companies owned by the stockholders whose investments provide the capital necessary to establish and operate the insurance company.
If the agent is working within the conditions of his contract, the _____ is fully responsible
Company
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?
Defamation Defamation is making statements that are false to the financial condition of any insurer
Nonparticipating stock policy
Does not pay dividends to policy owners; however, taxable dividends are paid to stockholders
Producer/Agent licenses expire:
Every 2 years on the last day of the licensee's birth month standard requirement: -24 CE credit hours every 2 years including -3 credit hours in ethics education
Enforcement Procedures are kept for how long
For 4 years or until the next regular examination by the Department, whichever is longer
How long does insurer have to reserve the right to defer the payment of any cash surrender value?
For a period of 6 months after demand with surrender of the policy
charitable institution
Gives money, food, or help to those who are in need, for free
Policy Provisions/Life Insurance Regulations
Grace Period- 30 days Right to return/ Free look- 10 days Incontestability period - 2 years Dividends- 3rd policy year policy loans - after policy has been in effect for 3 years and has accrued cash value reinstatement- 3 years
Dividends are not
Guaranteed
In insurance transactions, fiduciary responsibility means
Handling insurer funds in a trust capacity
Insurance Fraud in Georgia
If a person knowingly or willfully makes or helps make false statements or representations of any material fact thing in any written statement or certificate, filing of a claim, policy of insurance, etc
Fiduciary is someone:
In a position of trust
Unfair Claims Settlement Practices
Insurers delaying claims or denying claims without a good reason.
Whose responsibility is the cost of examination?
It is the responsibility of the HMO being examined
Temporary insurance license
License for period of 6 months -renewable from time to time periods of 3 months for maximum of 15 months from the date of first issuance
what is the maximum period of time a temporary license can be in force?
MAXIMUM 15 months
Transacting insurance without a license in this state is considered a
Misdemeanor
Written proof of loss must be supplied to an insurer within what period of time?
No later than 90 days from date of loss
No legal action may be brought against an insurer any sooner than how many days before? Or how long after?
No sooner than 60 days OR 3 years after proof of loss
Which term describes the benefits of a life insurance policy that the policyowner does not automatically relinquish even if the policy lapses?
Nonforfeiture Values these are the benefits of a life insurance policy that the policyowner doesn't lose even if it lapses
Traditionally, what kind of policies are issued under stock companies?
Nonparticipating policies -meaning the policyowners do not share in profits or losses
Medicare supplement policies
Open enrollment- 6 months free look- 30 days -cannot duplicate benefits provided by medicare
Mutual Companies
Owned by the policy owners and issue participating policies. -policyowners are entitles to dividends, which in case of mutual companies, are a return of excess premiums an are NONTAXABLE
If policy is paid-up or is continued under a paid-up nonforfeiture benefit, the insurer will
Pay a cash surrender amount if the policy is surrendered within 30 days after policy anniversary
A participating policy may do which of the following?
Pay dividends to the policyowner based on actual mortality cost, interest earned and costs
Violations of insurance fraud law
Punishable by imprisonment for a term of at least 2 years, but no more than 10 years. AND/OR a fine up to $10,000
A nonresident agent is allowed to conduct insurance transactions in Georgia because his home state allows Georgia residents to transact insurance business in it. This is known as a/an
Reciprocity agreement -allows agent to receive a nonresident's license if he or she resides in a state that awards nonresident agent licenses to residents of Georgia on same basis
Any references to policy dividends must include a statement of what?
That the dividends are NOT guaranteed
Who is the chief officer of the Department of Insurance?
The Commissioner of Insurance
What happens after a hearing in the commissioner determines that the person charged has engaged in an unfair method of competition or act?
The commissioner send the person a written copy of the violations and a cease and desist order which requires the person to stop engaging in act, practice, or violation. May also impose following penalties: -monetary fine up to $1000 each violation or $5000 for willful violations -suspension or revocation of person's license of knowingly committed -Any other relief as is reasonable & appropriate
An insured buys a Medicare Supplement insurance policy from a new insurer. This policy will replace one provided to her by another insurer. Which of the following must provide her with a notice of replacement?
The replacing insurer
Which of the following in an example of a producer's fiduciary duty?
The trust that a client places in the producer in regard to handling premiums
purpose of the Life Insurance Solicitation Regulation
To provide buyers with information which will improve their ability to select the most appropriate life insurance products to serve their needs, improve understanding of basic features of policy, & improve ability to evaluate costs of similar plans of life insurance -This regulation applies to ANY issuer of life insurance contracts
Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of
Twisting
Twisting and Churning
Twisting- misrepresentation/incomplete fraudulent comparison of insurance policies that persuades an insured/owner to cancel, lapse, switch or take out a policy with ANOTHER INSURER TWISTING IS PROHIBITED Churning- replacing insurance policies for the sole purpose of making commissions to purchase another insurance WITH THE SAME INSURER to earning additional premiums, fees, commissions.
Existing insurers must provide policyowners with a policy summary for the existing life insurance within how many days of receiving the written communication and replacement?
Within 10 days of receiving the written communication and replacement if requested
Within how many days of hearing does commissioner have to issue order?
Within 30 days of the hearing -Hearing notice of time and place must be given within 15 days in advance
Existing life insurance or annuity
any life insurance or annuity in place
When does the commissioner of insurance furnish a report of the examination to the HMO?
at least 20 days prior the filing the report
Time of payment of claims provision
claim benefits no later than 30 days from receiving proof of loss
Agents licensed for 20 years are required to
complete 20 credit hours of CE, including 3 hours of ethics
Blanket policies
covers members of a particular group when they are participating in a particular activity. Groups include students, campers, passengers on a common carrier, or sports teams
Replacing insurer must maintain all records for how long?
for 3 years
Advertisement records are on file for how long?
for 4 years
trustee
has insurable interest in a policyowner
Disclosure Requirements
in securities law, the revealing of financial and other information relevant to investors considering buying securities; the requirement that sufficient information be provided prospective investors so that they can make an informed evaluation of a security.
Corporation (foreign or domestic) has:
insurable interest in an insured who holds 10% or more of company shares or death would cause financial loss to corporation
Insurable Interest and Consent of Insured to Insurance Contract
insurable interest must exist at time of application -minimum age to buy insurance - 15 years old consent in writing -Exceptions: insurance on spouses, minors, family members, or employees of publicly-owned corporations
legal entity
law which allows a group of people to conduct business as a single unit, for example) a group ownership -provides a multiple employer welfare arrangement (MEWA)- meaning any employee benefit plan established for purpose of providing accident and sickness benefits to employees or two or more employers
required coverage under accident and sickness insurance regulations
mammograms heart/bone marrow transplants coverage for newborn children from moment of birth coverage for adopted children child wellness visit to age 5
group accident and sickness insurance
policy form that covers a group of employees, members of an association or other eligible group, with or without one or more members of their immediate family being covered
Limited Subagent licensees
required to complete 5 hours of continuing education every 2 years
Replacing Insurer
the company that issues or proposes the new policy
Existing insurer
the company whose policy is being replaced
A domicile refers to: (aka location of incorporation)
the location where an insurer is incorporated, not necessarily where the insurer conducts business