Chapter 10 Insurance Regulation

Licensees must make a report of any action taken against them in another jurisdiction or by another governmental agency in Pennsylvania within how many days of the final disposition of the matter?

30

_______ days To report, notify, correct, or provide a response of any change such as address, criminal conduct, & department inquiry

30

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

License fee for nonresident insurance producers

$110

Lapsed license fee

$165

Licensing Process

-Complete prelicensing education -Pass examination -Submit application and fees -Submit fingerprints

Types of Licenses

-Individuals: resident and nonresident -Business entities -Temporary license - valid for 180 days; issued to maintain the existing business

New insurance licenses are issued for a period of....

2 years.

A producer sold an insurance policy. Subsequently, his license was suspended. In this case, how much of the commission will the producer receive?

All

An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act?

Fraud

A producer has become disabled. In order to keep his business going, what may his designee do?

Obtain a temporary license

In which of the following situations would punishment include imprisonment?

Omission of a material fact with intent to embezzle funds

Paul is a producer in Ohio and wants to become a producer in Pennsylvania. The Commissioner will waive certain examination requirements, provided that Ohio would waive these same requirements if a Pennsylvania producer sought licensure in Ohio. What term is used to describe this phenomenon?

Reciprocity

A licensee serving in the military is unable to fulfill her continuing education requirement. What would the licensee have to do to renew the license?

The licensee may submit a request to the department to have requirements and fees waived. The department will then determine if the request is permissible.

Inducement -

an offer that attempts to influence the other party

Limited Lines Insurance

any other type of insurance as determined by the Commissioner.

Property insurance

coverage for the direct and consequential loss or damage to property of every kind;

Life insurance -

coverage on human lives

Variable life and variable annuities

coverage under variable life and/or variable annuities;

Aggrieved

injured party; someone entitled to begin a lawsuit or request a hearing

The purpose of producer licensing is to .....

make sure that producers have adequate knowledge of insurance when selling insurance to customers on behalf of insurers in this state.

Personal Lines Insurance

noncommercial property and/or casualty coverage;

It is not unlawful to sell insurance out of state with a ....

nonresident license.

Commissioner

the head of the state Department of Insurance

Waiting period before rate filings go into effect

30 days

Licensees must make a report of any administrative action taken against them in another jurisdiction or by another governmental agency within

30 days of the final disposition of the matter.

After moving to Pennsylvania for nonresident to become licensed as a resident

90 days

If a licensed person is moving to Pennsylvania, he or she may become licensed as a resident by submitting a completed application within

90 days of establishing residence in Pennsylvania with proof of licensing or a letter of clearance from the prior home state, and pay the appropriate fees.

In order for a foreign insurer to do business in this state, it must apply for and obtain

A certificate of authority.

Which of the following would be required to be licensed as an insurance producer?

A salaried employee who advertises and solicits insurance

An individual was just caught acting as an exclusive general agent - even though he is not properly licensed. Assuming that this occurred in a single day, what is the maximum penalty he faces?

A third degree misdemeanor and a $1,000 fine

NOT be considered an unfair and deceptive practice

Controlled business

30 days

For Commissioner to approve or disapprove changes to a form

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?

The Fair Credit Reporting Act

Which of the following entities established the Do-Not-Call Registry?

The Federal Trade Commission

Exclusive General Agents

a licensee which has been granted sole authority to act directly or indirectly as an insurance producer for a domestic insurer with respect to a specific portion of the insurer's business or within a specific territory

Reciprocity/Reciprocal -

a mutual interchange of rights and privileges

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

Commissioner will examine each insurer

5 years

If a licensed person is moving to Pennsylvania, he or she may become licensed as a resident if they submit a completed application within how many days of establishing residence in Pennsylvania with proof of licensing from their prior home state?

90 Days

Which of the following includes information regarding a person's credit, character, reputation, and habits?

Consumer report

Casualty Insurance

Coverage against legal liability;

If an insurer appoints a producer, which authority must be notified?

Department of Insurance

Which of the following regulatory authorities participated in creating the National Do Not Call Registry?

FTC

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?

Fair Credit Reporting Act

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

False advertising

10 days

Hearing on rate filing after insurer is informed of disapproval

Which of the following best describes a misrepresentation?

Issuing sales material with exaggerated statements about policy benefits

Which of the following licensees is classified as a representative of the insurance company and not allowed to represent an insured or claimant?

Producer

Privacy: Gramm-Leach-Bliley Act

Rules regarding disclosure of nonpublic personal information to nonaffiliated third parties

The National Do Not Call Registry was created to regulate

Telemarketers.

Which of the following is an example of a producer being involved in an unfair trade practice of rebating?

Telling a client that his first premium will be waived if he purchases the insurance policy today

Which of the following entities must approve all continuing education courses in this state?

The Commissioner

If a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur?

The change must be reported to the Commissioner.

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?

The customer's associates, friends, and neighbors provide the report's data.

Respond to the consumer's complaint.

Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must

Statute -

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

A producer's license must be renewed

biennially (every 2 years).

Accident and Health Insurance

coverage for sickness, bodily injury or accidental death, and disability income;

Credit Insurance

debt insurance (limited line)

Statutory -

enacted or regulated by a statute

Managers

is a person that negotiates and binds ceding reinsurance contracts on behalf of a domestic insurer or manages all or part of the insurance business of an insurer and does not act as an agent for that insurer.

Civil penalty for each intentional violation of insurance laws regarding unfair methods of competition

$5,000

What is the minimum age for obtaining an insurance producer's license in this state?

18

Reciprocity

occurs when the state in which the person resides accords the same privilege to residents of Pennsylvania.

If a licensee moved out of state, they must give up their Pennsylvania resident license.

they must give up their Pennsylvania resident license.

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

Discrimination

Motor vehicle rental insurance

auto rental insurance (limited line)

Coercion

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

Even though a prospective licensee passes the state exam, ....

he or she cannot sell insurance until the license is actually issued.

Aggregate penalties for intentional violations within 6 months

$50,000

License fee for resident insurance producers

$55

To correct the violation if a person failed to respond to the Department's inquiry within 30 days

15 day to respond

To obtain a license, a prospective licensee must be at least ...

18 years old, complete prelicensing training and pass the exam, pay applicable fees, and have not committed any prohibited acts.

Prior to license renewal, all insurance producers must successfully complete a minimum of

24 credit hours of CE.

Pennsylvania requires ____ of prelicensing training prior to taking an insurance exam.

24 hours

A producer has successfully completed 52 hours of CE. How many hours can the producer apply to her current reporting period, and how many hours can she carry forward to the next reporting period?

24 hours will be applied to the current reporting period, and 24 can be applied to the period immediately following. The excess 4 hours may not be carried over.

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

3 days

Ethics education included in prelicensing education requirements

3 hours

An insurance producer who has the authority to sell annuities must complete at least

4 CE credits in an approved annuity training course.

Which of the following criminal activities would be sufficient violation to warrant rejection, revocation, or suspension of an insurance producer's license?

Forgery

Written notice of a hearing for a person suspected of prohibited behavior

10 days

Civil penalty for each unintentional violation of insurance laws regarding unfair methods of competition

$1,000

Aggregate penalties for unintentional violations within 6 months

$10,000

What is the civil penalty for violating a cease and desist order of the Commissioner?

$10,000

Fine per day for failure to correct any violation

$100

Nonresident Producer

An individual or business entity currently licensed as a resident producer in another state, may apply to the Department for a nonresident producer license, for line of authority equivalent to their existing license.

Producer

An insurance producer is a person who sells, solicits or negotiates contracts of insurance. It is unlawful to act as a producer without a license

Which of the following authorities is authorized to issue a temporary insurance producer's license?

Commissioner

After a hearing, if the Commissioner finds that a licensee is in violation of the state insurance laws, the Commissioner can NOT

Imprison the licensee.

If another governmental agency takes legal action against a licensee, whose responsibility is it to report the action?

The licensee

Temporary producer licenses may be granted for

up to 180 days.

Cease and desist

to stop or discontinue

When applying for insurance producer licenses, business entities must

-Have one or more designated licensees, in good standing with the Department; -Apply for licensure in the same lines of authority held by the designated licensees; -Have not committed any prohibited acts; -Be owned, operated, and managed by persons possessing general fitness, competence, and reliability; -Pay all applicable fees; and -Meet any other criteria established by the Department.

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

Fair Credit Reporting Act

-Protects consumers from circulation of inaccurate and obsolete personal financial information -Consumer reports and investigative consumer reports

Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce

Without receiving written consent from an insurance regulatory authority.

Commission

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

The licensing examination will not be required, if the applicant is a business entity or a person who

-Has professional designations -requirements are waived by the Commissioner -Is licensed in another state as an insurance producer for the lines of authority for which the person is seeking a resident license—is applying for limited line credit insurance, or any other limited line of insurance; -Will be licensed in domestic mutual fire insurance, appointed to an insurer that does not sell automobile insurance; or -Will be appointed with a fraternal benefit society.

To reinstate a lapsed license with current effective date

1 year

Insolvent -

unable to meet financial obligations

Home office (domicile) -

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

Line of authority -

a type of insurance a producer or a business entity is authorized to transact

Insurer Regulation

-Must obtain Certificate of Authority -Responsible for agent appointments -Must meet solvency requirements -Avoid unfair trade practices or unfair claim settlements

Do Not Call List

-National Do Not Call Registry -Strict telemarketing rules -Insurers must consult the current registry every 31 days