Alabama Insurance License- Alabama Insurance Law Common to All Lines

The minimum capital required to form and organize a new domestic stock life insurance company is .......

$1,000,000.

The minimum surplus to form such a company is .......

$1,000,000.

The following are exempt from prelicensing education and from the exam

-Applicants for limited lines insurance -Applicants for a life license who hold a Chartered Life Underwriter (CLU) designation -Applicants for a property license who hold a CPCU or CIC designation.

To be eligible for a producer license you must meet these requirement

-Be at least 18 years old -Complete the required prelicensing education (20 hours per line of authority or 40 hours for a combined license) Pass each examination which is required for the license being sought (examination certificates are valid for 1 year from the date of completion); Pay the required fee; Have not committed any act which is a ground for denial, suspension, or revocation of a license.

Exemptions to CE are as follows:

-Persons writing only title insurance on specific property -Persons licensed for limited lines or industrial fire -Any producer who has been licensed for 15 years and is at least 60 years of age -CPCU, CIC, CLU, CFC, CFP, Registered Health Underwriter, Registered Employee Benefits Consultant, Certified Health Consultant, or Associate Risk Manager designations -Newly licensed producers for 12 months following licensure -Officers of insurers who are not engaged in active sales.

Certificate of Authority not required if

-Relative to the insurer's policies lawfully written in this state resulting from its former authorized operations in this state -Policies lawfully solicited, written or delivered outside this state covering only not resident insured, located or expressly to be performed in this state at time of issuance -With respect to surplus lines coverages; and Reinsurance.

Types of Licensees

1) Producers -are individuals or business entities that are required to be licensed to sell, solicit, and negotiate insurance in this state. The license must be for the class of insurance that a producer intends to sell or solicit. 2) Nonresidents -A person who is not a legal resident of Alabama may be licensed to act in this state as a nonresident producer without taking a written examination, if the following conditions are met: 3)Temporary -License given temporarily for special circumstances such as death , disabled ,active service in the armed forces 4)Business Entity-A business entity acting as an insurance producer must be licensed. The business entity must satisfy the following requirements:

Lines of Authority

1)Life Line 2)Property Lines 3)Other Lines

hearing resulting from a cease and desist order may not be held sooner than

10 days after the notice of hearing is served

Insurers must file a notice of appointment with the Commissioner within _____________ of the date the agency contract is executed or the first insurance application is submitted, whichever occurs first.

15 days

Numbers , Dollars, Days and Dates to Remember ! Licensing and Appointment Requirements:

18 Minimum age to apply for a license 20 hours Required prelicensing education per line of authority or 40 for combined 6 months Term of temporary license 2 years License renewal period(Continuing Education) 12 months Period of license reinstatement 15 days For insurer to notify the Commissioner of producer appointment 30 days For insurer to notify the Commissioner of producer appointment termination 15 days For insurer to notify a producer of termination of appointment 30 days After notification of appointment termination, for producer to file written comments with the Commissioner

All insurance producers must successfully complete a "minimum" of _________ credit hours of continuing education

24

How many continuing education hours can be carried to the next licensing period ?

24 hours

Numbers , Dollars, Days and Dates to Remember ! Miscellaneous Producer Regulations:

24 hours Continuing education requirement 2 years To complete continuing education (license period) 3 hours CE required in ethics or business practices 24 hours CE can be carried over to the next licensing period 3 months Extension to complete CE hours 30 days For producer to notify the Department of a change of address 30 days For producer to notify the Department of a legal action against the producer 3 years For producer to keep records of insurance transactions Important Dollar Amounts: $1,000 Fine for willful violation of the state Insurance Code $10,000 Civil penalty for violation of producer licensing laws

How many hours of the continuing education must be completed in ethics or business practices?

3 hours

Insurers that accept business directly from anyone who is not properly licensed and does not have an appointment with that insurer may be fined up to ........

3 times the amount of the premium received from that person

Insurers may terminate a producers appointment .Insurers must notify the Commissioner within

30 dats following the effective date of termindation

Address changes must be reported within

30 days *Failure to notify can result in a $50 penatly*

The Commissioner may hold a hearing upon written demand if a person feels that he or she has been wronged. The hearing must be held within

30 days after receipt of demand unless postponed by mutual consent.

Numbers , Dollars, Days and Dates to Remember ! Department of Insurance Regulations:

5 years Commissioner will examine every insurer 30 days After request for hearing is made for the Commissioner to hold or deny hearing 10 days To hold a hearing after a cease and desist order

If a person who was previously licensed in another state for the same line of authority wishes to become a resident producer in Alabama, an exemption to the exam is available if the person is currently licensed and the application is received within

90 Days

Twisting

A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage.

Record Keeping

A producer is required to keep complete records pertaining to all insurance transactions for at least 3 years (limited lines credit insurance producers are only required to keep the records for 2 years). Upon the Commissioner's request the producer must furnish a verified copy of these records. The records may be also provided to the insured, upon the insured's demand, if they pertain to the insured's policies.

A person convicted of willfully violating an insurance law of Alabama is subject to

A)100 hours of community service. B)A sentence to hard labor for a period of 2 years. C)A fine of up to $1,000, imprisonment, and a sentence to hard labor for a period of one year. D)A fine of up to $10,000, or a sentence of hard labor, determined by the violator. C- Because Willful violations of the insurance code may subject the violator to $1,000 fine, imprisonment, or one year of hard labor for the county.

In applying for an original certificate of authority, an insurer must submit an application with the appropriate fees and the following information, EXCEPT

A)A copy of its last financial statement. B)State or country of domicile. C)The amount of insurance it intends to write. D)Name of the company. C- because The applicant must disclose the kinds of insurance it intends to write, but not the amount.

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

A)Coercion. B)Twisting. C)Controlled business. D)Rebating. D- because When producers give or promise anything of value that is not specified in the policy, they are guilty of rebating.

All of the following are lines of insurance that may be transacted under a life and accident/health producer license EXCEPT

A)Consequential loss insurance. B)Annuities. C)Disability income insurance. D)Group health insurance. A- because Consequential loss is a coverage available in property insurance policies and can only be transacted by a licensed property/casualty producer.

The term "fiduciary capacity" deals with a producer's

A)Responsibility to report a policyholder's claims to the insurer. B)Need to keep a policyholder's personal information confidential. C)Position of financial trust. D)Responsibilities in communicating the policyholder's needs to the insurer. C- because Producers have a fiduciary responsibility, a position of financial trust, to their clients and insurance company. Producers are responsible to collect and disperse premiums, return premiums or other funds received, to the insured/insurer in a timely manner.

Whenever the Commissioner believes that a licensee is acting or using methods contrary to the insurance laws or regulations of Alabama, to prevent further acts or methods from being conducted before a hearing can be held to determine the facts, the Commissioner may impose

A)Revoke the license of the alleged offender. B)A warrant for the licensee. C)A fine for the licensee every day before the hearing. D)A cease and desist order on the licensee. D- because Whenever the Commissioner has reason to believe that a licensee is in violation of Alabama laws or regulation, the Commissioner may impose a cease and desist order on the licensee and order a hearing to be held within 10 days.

In Alabama, domestic insurance companies may be examined by the Commissioner or by an examiner designated by

A)The attorney general. B)The National Association of Insurance Commissioners. C)The Governor. D)The Commissioner. D- Because The Commissioner or an examiner designated by the Commissioner shall examine domestic insurance companies not less frequently than once every five years.

All of the following would be a reason that an insurance company's name could be disapproved for use in the State of Alabama EXCEPT

A)The name tends to misrepresent to the insurance buying public as to the nature of the organization. B)The name tends to mislead the insurance buying public that the company is agency of Medicare or other government agency. C)The name is the same or similar to a name already approved. D)The name is too long to be printed on a single line of the policy in the required type size. D-because Any name that is the same or similar to a name already approved for use by another insurer, or a name that tends to misrepresent or deceive the public will not be approved for use.

If a producer changes his residential address who must he/she notify?

A)This change does not need to be reported because a producer only needs to report a change in his or her business address. B)Inform other producers in the district in which he/she is moving. C)This change will need to be reported to the Commissioner. D)The change will need to be reported to the State Producer's Directory. C- because Every producer licensed in Alabama must notify the Department in writing within 30 days of any change of address in his or her residence address or business address. The producer must also notify all the entities for which the producer holds an appointment. The Commissioner must be notified of a producer's change of residence and/or business address.

A banker 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

ALoading. BDefamation. CTwisting. DCoercion. D- because This is an example of the illegal practice of coercion.

Reporting of Actions

An insurance producer must report to the Commissioner any administrative action taken against the insurance producer in another jurisdiction or by another governmental agency in this state within 30 days of the final disposition of the matter. The report must include a copy of the order, consent to order, or other relevant legal documents. Within 30 days of the initial pretrial hearing date, an insurance producer must report to the Commissioner any criminal prosecution of the insurance producer taken in any jurisdiction. The report must include a copy of the initial complaint, the order resulting from the hearing, and any other relevant legal documents.

Defamation

An unfair trade practice in which one agent or insurer makes an injurious statement about another with the intent of harming the person's or company's reputation.

How often does an insurance producer have to complete continuing education prior to license renewal?

Biennially (Every 2 years)

False Financial Statements

It is illegal to publish false statements regarding an insurer's financial condition with the intent to deceive.

If requirements aren't met to keep the certificate active it will expire on

May 31st

Assumed Name

Not a legal name but one that is used temporarily and by which a person is commonly known; nickname Anyone doing business under any name other than the producer's legal name must notify the Commissioner before using the assumed name.

Reciprocity

a mutual interchange of rights and privileges

Home state

a state in which an insurer is organized and has its main place of business

Inducement

an offer that attempt to influence the other party

Subpoena

an order for someone to appear as a witness or submit testimony or evidence

Producers

are individuals or business entities that are required to be licensed to sell, solicit, and negotiate insurance in this state. The license must be for the class of insurance that a producer intends to sell or solicit.

The Commissioner will verify within 30 days of receiving the notice of appointment that the producer is ........

eligible for appointment.

Surplus Lines Insurance

insurance that is not available from admitted insurers

Certificate Authority

is necessary to transact insurance in Alabama

Exempt

not subject to a duty or obligation

Examination of Books and Records

once every 5 years for every domestic insurer licensees must retain records subject to examination for: *6 years*

Commission

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

Disclosure

revealed information to help someone make an intelligent and educated decision

Commisioner

the head of the state department of insurance

Any Licensee holding more than one license is required to complete how many hours of continuing education?

the minimum ,which is 24 hours l

Coercion

the practice of persuading someone to do something by using force or threats

Cease and desist

to stop or discontinue

Certificate of authority suspensions can only last ......

up to 1 year

Licensing fines are

up to 10,000 per violation amount can not exceed 10,000 per violation

Any license that has lapsed must be reinstated within

within 12 months from the due date of the renewal fee

After notifying the Commissioner of a cancelled appointment, the insurer must mail a copy of the notification to the producer at his or her last known address.

within 15 after notifying the commissioner