Texas Insurance Chapter 5 - Texas Statutes and Rules Common to All Lines

What is the maximum allowed value of a gift that an agent can give to an insured without violating the regulation on rebating?

$25 - merchandise, promo materials, gifts that have redeemable value of $25

Maximum fine for violating the Insurance Code

$25,000

Fine for willful violation of the Fair Credit Reporting Act

$2500

Maximum agent licensing fee

$50

How many hours of continuing education can be carried over from one licensing period to the next?

0 - all CE hours must be completed during the reporting period

__ days after receiving the request for Commissioner to hold the hearing

10 days

Results of the licensing examination are valid for..

12 months

Minimum required age for licensing

18

Commissioner's term of office

2 years

Duration of agent's license

2 years

Duration of reporting period

2 years

Whats is the minimum percentage of a licensee's total volume of premiums in a calendar year that must come from business other than controlled business?

25%

If an agent suspects that insurance fraud is being commited, within how many days must the agent motify the Insurance Fraud Unit of the Department of Insurance?

30 days

The Commissioner of Insurance issues a Cease and Desist Order to an agent. If the agent wishes to contest the charges in court, how many days after the order was issued does the agent have to make the request?

30 days

___ days for agents to request a hearing after receiving a cease and desist order

30 days

How long must producer maintain records of continuing education course completion?

4 years

Administration, attorney, or CPA experience required before applying to become the admissioner

5 years

After felony conviction for breach of fiduciary duty before another license application can be filed

5 years

After license revocation or denial before another license application can be filed

5 years

No more than one temporary license issued per person

6 months

After license renewal date for agents to pay fees and complete CE before license expires

90 days

An agent's license will terminate within how many days from the due date of obligatory fees and continuing education requirements?

90 days

Maximum duration of temporary license

90 days

Which of the following persons is required to hold a producer license?

A person who negotiates insurance contracts

An individual licensed as an Insurance Service REpresentative may be employed by which of the following?

A property and casualty agent

When transacting business in this state an insurer formed under the laws of another country is known as a/an

Alien insurer

All of the following statements about the continuing education requirement in this state are true EXCEPT

All licensed agents must comply by January 1 of even-numbered years

Which of the following applicants will be able to obtain an adjuster's license without taking the state examination?

An applicant who is renewing a license

Commissioner of Insurance

Appointed by the governor for 2 years - Regulates the internal affairs of the Department of Insurance - Does not write laws - Examines all authorized insurers

24 hours

CE to be completed during each reporting period

To legally transact insurance in this state, and insurer must obtain which of the following?

Certificate of Authority

Company Regulation

Certificate of Authority - Domestic/foreign/alien - location of incorporation - ownership: stock or mutual - avoid unfair trade practice or unfair claims settlements

A bank is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of...

Coercion

Which of the following actions is NOT in violation of the Unfair Claims Settlement Practices Act?

Denying an unsubstantiated claim

If a licensed agent in Texas receives a criminal conviction, that information must be reported to

Department of Insurance

The requirement that agents not commingle insurance monies with their own funds is known as

Fiduciary Responsibility

Types of Licenses

Individuals: resident and nonresident Temp license - valid for 90 days; issued to maintain the existing business

A participating insurance policy may do which of the following?

Pay dividends to the policyowner

For which of the following actions can an agents license be suspended or revoked?

Rebates of premiums

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of

Rebating

All of the following are considered unfair trade practices in the business of insurance EXCEPT

Sharing commissions

A nonadmitted insurer who provides insurance coverages that are not available from an admitted insurer is called..

Surplus lines insurance

Disciplinary actions

Suspension, revocation, cease and desist orders, and/or fines

An agent discovers his newest client was the result of a referral. To show his thanks to the referring customer, the agent could

Thank the customer - unless the customer is also an insurance agent / former agent, it is illegal for the agent to pay or offer to pay for referrals

Commissioner

The head of the state department of insurance.

All of the following statements apply to temporary licenses EXCEPT

They may be renewed

statute

a formal written law enacted by legislature; insurance statutes can be found in the state Insurance Code

reciprocity

a mutual interchange of rights and privileges

Inducement

an offer that attempts to influence the other party

moral turpitude

conduct that is contrary to community standards of justice, honesty or good morals

In Texas, the state's continuing education requirement

consists of completing 24 hours of CE each biennium

Permitting individuals of the same class to be charge a different rate for the same insurance is the unfair trade practice of

discrimination

Two individuals are in the same risk and age class; yet, they are charge different rates for their insurance policies due to an insignificant factor. What is this called?

discrimination

Coercion

forceful act or threat aimed to influence a person to act against his or her will

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?

foreign

Home office

insurer's headquarters principal place of business

All of the following are types of adjusters licenses availible in this state EXCEPT

life and health claims adjuster

2 hours

minimum requirement for ethics training

Continuing education

must be completed every reporting period

Maintenance and Duration

must be renewed every two years - can be reinstated within a short period of time after lapse

Exempt

not subject to an obligation

Agent Regulation

only one license of the same type is allowed per agent - must be licensed in the line of authority for which the agent transacts insurance. - avoid unfair trade practices

Licensing Process

pass examination submit application and fees

Who might recieve dividends from a mutual insurer?

policyholders

restitution

restoration to the original condition or repayment

Life Insurance Counselor

someone who, for a fee or commission, offers to examine a life insurance, an annuity, or pure endowment policy and gives advice, recommendations or information regarding the policies terms, conditions, benefits, coverage or premium

Cease and desist

to stop or discontinue

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

dividends from a mutual insurer

Mutual Insurer

has no stock, is owned by the policyholder - dividends received by a policyholder of a mutual insurer are not taxable

To become a Texas Insruance agent, an individual must

have passed a licensing exam within the 12 months before applying

Who do agents represent?

the insurance company

Insolvent

unable to meet financial obligations

rebating

when producers give or promise anything of value that is not specified in the policy

Which of the following is an example of a producer's fiduciary duty?

The trust that a client places in the producer in regard to handling premiums

No one whose license has been revoked can receive another license in Texas for

5 years

The Insurance Commissioner may examine the affairs of any insurer as often as necessary, but not less frequently than once every...

5 years

The commissioner must conduct annual examination of authorized insures every

5 years

What percentage of continuing education hours must be in a classroom setting>

50 %

Fiduciary duty

an agent acts in a fiduciary capacity,based upon trust and confidence, when handling the financial affairs of their customers, including the handing of premiums

Commission

payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium

Certificate of Authority

Issued by the commissioner, must hold one in order to transact insurance business in Texas

In which of the following situations is it legal to limit coverage based on marital status?

It is never legal to limit coverage based on marital status