Chapter 10 Florida statues, rules, and regulations common to all lines

Telling a client that his first premium will be waived if you purchased insurance policy today

What is an example of a producer being involved in an unfair trade practice of rebating?

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

What is an example of a producer's fiduciary duty?

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

What is controlled business?

Promptly forwarding premiums to the insurance company

What is the definition of a fiduciary responsibility?

Ownership

What is the major difference between a stock company and a mutual company?

18

What is the minimum age that a person can obtain a life insurance license?

To prevent a producer or insurer from further violating laws for transacting insurance

What is the purpose of a cease and desist order?

To primarily write business other than controlled business

What is the purpose of an insurance license?

Absolute

What level of authority is given to the Office of Insurance Regulation with respect to examination of insurer's activities to determine compliance Unfair Trade Practice Laws?

The agent

What type of licensee represents the insurance company?

Broker

What type of licensee represents the insured?

A salaried employee who advertises and solicits insurance

What would be required to be licensed as an insurance producer?

File a written notice with the department of insurance within 30 days of termination; make sure that the agent's contract rights are not violated; provide a 60-day advance notice to the agent

When an insurer terminates an agent's appointment, the insurer must

Whenever deemed necessary, but at least once every few years

When can the Commissioner or Director examine insurers?

Only producers properly licensed for the type of insurance transaction

Who may share in the commission from the sale of a life insurance policy?

All insurers authorized to write insurance within a state

Who must be a member of insurance guaranty associations?

The Department of Insurance (Commissioner/Director/Superintendent)

Who must be noticed of a producer's change of address?

Stockholders

Who owns stock companies?

Failing to acknowledge a claim within 30 days

What is an example of an unfair claims settlement practice?

Three- one for each insurer

An agent transacts business for Insurer A and Insurer B, both selling life insurance, and for Insurer C, selling health insurance. How many appointments must the agent hold?

For continuation of business in case the licensed producer dies or becomes disabled

For what reason can a temporary license be insured?

The prospective insured and the insurer

In accordance with the Code of Ethics, agents must provide a completed application to

Insurance company officers, directors, or any other employees who do not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive or clerical).

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

Handling insurer funds in a trust capacity

In insurance transactions, fiduciary responsibility means:

Insurer

In the agent/insurer relationship, who is considered the principal?

The state legislature

New laws are enacted by who?

Filed with and approved by the Office of Insurance Regulation

No insurance policy form can be issued, delivered, or used in this state unless it has been:

"Not taxable" since the IRS treats them as a return of a portion of the premium paid.

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are:

Misrepresentation

On its advertisement, a company claims that it has funds in its possession that are, in face, not available for the payment of losses or claims. The company is guilty of:

Fiduciary Responsibility

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

To an insurer authorized to transact business in this state

To whom may a certificate of authority be issued?

Reinsurance

What method do insurers use to protect themselves against catastrophic losses?

Certificate of Authority

What must an insurer obtain in order to transact insurance within a given state?

Domestic

What term best describes an insurance company that has been formed under the laws of this state?

Concealment

What term best describes the act of withholding material information that would be crucial to an underwriting decision?

Defamation

What term describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?

Churning

What term is used for replacing insurance policies for the sole purpose of making commissions?

Department of Financial Servies

Which authority grants and revokes licenses?

Commingling

A producer who fails to separate premium monies from his own personal funds is guilty of

4

All agents licensed in this state must complete how many hours of continuing education specific to law and ethics?

Dividends from a mutual insurer

All of the following could be considered rebates if offered to an insured in the sale of insurance except: An offer of employment Stocks, securities, or bonds An offer to share in commissions generated by the sale Dividends from a mutual insurer

30 days

An agent has been convicted of a crime punishable by a 1-year imprisonment. Within how many days must the agent notify the department of insurance?

Rebating

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

Excess

An agent's client needs additional insurance which the agent's own insurer cannot provide. The agent has to solicit additional coverage from another authorized insurer. This coverage is known as:

A pre licensing education course

An applicant for an insurance agent's license must complete what?

6 months

An application for a life agent's license may obtain a temporary license for a maximum period of

Send a written notification to the department of insurance

An insurance agent has been found guilty of a felony and was sentenced to 3 years in prison. What would be the appropriate plan of action?

Rebating

Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as:

License identification number of the agent, name of the insurer, and name of the agent

Applications to an insurer must include what information?

No, advertising of the existence of the guaranty association for the purposes of solicitation and sale of insurance policies by insurers is an illegal business practice

Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?

2 years

Continuing education requirements must be met every:

Expiration of the license

Failure of a licensee to maintain an appointment with an insurance company within 48 months after the date the license became effective will result in

By their members - authorized insurers

How are state Insurance Guaranty Associations funded?

30 days

If a licensee changes his or her address, within how many days must the department be notified?

Defamation

If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?

$250

If an agent does not notify the insurer of an address change, what is the maximum penalty that can be imposed for a one-time offense?

An unfair trade practice

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered:

Authorized or Admitted

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

Authorized

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be:

cease and desist order

If the Commissioner/Superintendent finds a licensed engaging in an unfair method of competition or an unfair practice, what order will be issued?

24 hours every 2 year period

In order to maintain an insurance license, an agent for less than 6 years will need to satisfy Florida's continuing education requirement of

50%

In the state of Florida, it is illegal for a licensee's commissions from controlled business to exceed what percentage of the total in a given year?

Insurer and policy owner

Insurance contracts are agreements between which two parties?

Domestic, foreign, and alien

Insurers are classified according to their domicile. What are the three types of insurers?

Misrepresentation

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?

General lines

The agent in charge of an agency must hold which of the following licenses?

Discrimination

Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?

12 months

Under specific circumstances, continuing education requirements may be extended beyond the 2-year period for a maximum period of:

Enforcing the insurance code, issuing certificates of authority, instituting legal proceedings

What are 3 responsibilities of the Office of Insurance Regulation?

Complete continuing education hours and pay a renewal fee

What are producers required to do in order to renew their license?

The Office of Financial Regulation and the Office of Insurance Regulation

What are the 2 offices of the Financial Services Commission?

Be a state resident; pass a criminal background check; be found competent and trustworthy

What are the general qualifications for an agent's license?

A cease and desist order, a fine, and license suspension or revocation

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

Enforcing the insurance code, issuing certificates of authority, instituting legal proceedings

What are the responsibilities of the Office of Insurance Regulation?

Stocks bonds securities; an offer to share commission of the sale; an offer of employment

What could be considered rebates if offered to an insured in the sale of insurance?

Foreign

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?

When the commissions from controlled business do not exceed the aggregate commissions on all the other business

When is controlled business legal?

Alien insurer

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

Forgery

Which activity would be sufficient violation to warrant rejection, revocation, or suspension of an insurance agent's license?

The Office of Insurance Regulation

Which entity is responsible for agent licensing and administrative supervision?

Producer's spouse or designee in case the licensed producer dies or becomes disabled

Who can usually be granted a temporary license?

The Chief Financial Officer

Who examines the books and records of insurance companies in Florida?

A person authorized to sell, solicit and negotiate insurance contracts

Who is an insurance agent?

An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state

Who is considered a nonresident agent?

The insurance company

Who is responsible for the content of insurance advertisements?

The insurer who is being examined

Who is responsible for the costs associated with the examination of insurers?

Pay dividends to the policy owner

A participating insurance policy may do which of the following? Provide group coverage Pay dividends to the stockholder Require 80% participation Pay dividends to the policy owner

Dividends to the policy owner

A participating insurance policy may pay:

Twisting

What type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

To protect policy owners, insureds and beneficiaries from financial losses caused by insolvent insurers

What is the purpose of insurance guaranty associations?

Agent in charge must be licensed

What is true regarding branch agency licensing?

Certificate of authority

What document is required for an insurance company to transact insurance?

Misrepresentation

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

The insurance contract

What is an agreement between an insured and an insurer, where the insurer agrees to indemnify the insured for specific losses in exchange for a premium?

Admitted

What is another term for an authorized insurer?

An agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him; an agent offers to share his commission with a policy holder; an agent offers tickets to a baseball game as an inducement to buy insurance

What would be considered rebating?

Authorized or Admitted

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

The policy will not be affected

An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen?

False advertising

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?

Mutual

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?