DOHRN CASUALTY COMMON LAW POSSIBLE QUESTIONS

What is the maximum civil penalty that can be imposed for a single cause of license suspension, revocation or denial?

$10,000 A civil penalty of up to $10,000 may be levied against a producer per cause of license suspension, revocation or denial.

The fee, every 2 years, for a business entity license is

$150 Business entity must pay $150 every two years to renew

A producer violates the written order from the Director pertaining to their market conduct activities. What is the maximum civil penalty that can be assessed by the Director against a producer in this circumstance?

$20,000 Any person who violates, or aids or abets the violation of, a written order of the Director pertaining to market conduct examination, is subject the possible suspension revocation or denial of license in addition to a civil penalty maximum of $20,000.

Of the following statements regarding a producer hearing to determine whether or not rebating was occurring, which is FALSE?

A participant in such a hearing is immune from perjury charges even if perjury is committed in the hearing. Perjury by a participant in a rebate hearing is not immune for prosecution for perjury.

All of the following insurance placements would be considered controlled business, EXCEPT:

A producer places a property insurance policy on the home of his uncle. Controlled business pertains to insurance written on the life, property or risks of the producer, their spouse or their employer.

Deferred or renewal commissions may be paid under which of the following conditions?

If the producer was licensed at the time of sale they are entitled to receive deferred compensation even if not licensed at the time renewal commissions are paid. Any producer who was properly licensed at the time of an insurance sale may be paid renewal commissions or deferred compensation without holding a license at the time of renewal commission payment.

An employee of an insurance company is instructed by her superior to enter false information in the official company records pertaining to financial matters of the firm. Which of the following statements is true concerning this action?

This is the unfair trade practice of falsifying records and it is a felony action. Intentionally falsifying insurance company records to deceive financial status is an unfair practice and those who engage in the activity are guilty of a felony offense.

If an insolvent property or casualty insurer had unearned premiums at the time of bankruptcy, what is the responsibility of the Guarantee Fund concerning these unearned premiums?

To pay all unearned premiums, except for the first $1,000, up to $10,000 Illinois law requires the Fund to pay up to $10,000 of unearned premiums in the possession of a bankrupted member company after the first $1,000,

Under which of the following circumstance can the Director cancel the right of an insurance company to hire producers under the temporary License for Producer Application authority?

When, during any six months period, more than half of a company's temp licensees fail to obtain their full producer license within the 90 day licensing period. At least 50% of 90 day temp licensees must continue to become fully licensed (pass the sate exam, pay the fee and have the producer license in hand) within the 90 day period or the Director may cancel this authority of an company.

Producer S has just collected the first year premium and an application from a client. Within how many days is S expected to turn the money over to the insurance company on whose behalf S collected the premium?

Within 15 days. The law says that a producer who holds premiums funds in excess of 15 days without depositing them into a Premium Fund Trust Account has breached their fiduciary duty.

The best definition of a "fiduciary" is

any licensed person who collects money in the course of their employment. A fiduciary is a person who is in a position of trust in which they handle the money of other people in the course of their employment and who are expected to tender the funds to the appropriate party in a timely manner.

The Guarantee Fund has the duty to investigate claims brought against the Fund and to then

deny all claims for which the Fund is not obligated to pay loss. The Fund must adjust, settle and pay covered claims to the extent of the Fund's obligation and to deny all other claims.

If a producer is found guilty of defamation, their producer license may be suspended, revoked or denied and additionally they may be assessed a civil penalty of

from $200 to $10,000.

What is the total fee a producer must pay to reinstate a lapsed license within the allowed statutory period?

$360 The penalty to reinstate a lapsed license is the requirement of the producer to pay a double license fee which will total $360.

How many classroom hours are required for a property insurance prelicensing course?

7.5 Each of the four main lines of licensing authority: Life, Health, Property and casualty require 20 total course hours of which 7.5 must be classroom hours.

How many days does the Director have to issue a final written order once a hearing has been held pertaining to a market conduct examination?

90 days The Direct has 90 days from the filing of an examination report or within 90 days after a hearing is held regarding a market conduct examination to issue a written order.

Which of the following is a prohibited investment option into which to place Premium Fund Trust Account monies?

A brokerage account in which options futures are traded. PFTA money must be put in safe, secure and conservative accounts as regulated by state law which strictly prohibits placing such monies into accounts where risk to principal is great such as securities options, stock futures or purchasing equities on margin.

Which of the following actions could be taken against a producer found guilty of rebating?

A: The producer could have their insurance license suspended, revoked or denied. B: The producer could be subjected to a civil fine. C: The producer may be forced to forfeit all commissions from policies in which rebating was involved.

If an insurer is approved to sell auto insurance that provides a $100 refund after one year if the insured is accident-free during the year, why is this NOT rebating?

Because the refund is part of the contract that was approved for sale by the Director. Value offered to induce a sale is only a rebate if it is not part of the contract of insurance, therefore in this case the $100 is part of the policy and not a rebate.

What is the greatest level of criminal prosecution that can result from producer rebating?

Both the offer and the acceptance of a rebate is a Class B misdemeanor. Both the producer and the client could be found guilty of a Class B misdemeanor.

If a producer charges a service fee in addition to being paid a commission for a sale of insurance, what is required of the producer in such an instance?

If the total compensation will exceed 10% of the annual premium amount there must be a written disclosure document signed by the producer and the applicant for insurance.

The Slez E insurance agency has their Premium Fund Trust Account audited by the Department of Insurance and $3,000 is missing and unaccounted for. Which of the following is the legal presumption in this scenario?

It is presumed the licensee responsible for the money has misappropriated it. Premium Fund Trust Accounts must balance to the penny at all times and any shortfall is considered theft by the producer responsible for the fund.

Written defamation is known as

Libel

How often must Premium Fund Trust Account bank statements be balanced?

Monthly

A twenty hour prelicensing course requirement applies to all of the following lines of authority EXCEPT

Motor Vehicle Motor Vehicle is a 12.5 hour prelicensing course requirement

An individual life insurance application must bear the name and signature of which of the following entities?

The licensee who solicited and wrote the application. State law requires certain insurance applications to bear the name and signature of the soliciting producer on the application.

The best way to summarize the controlled business law is that the producer

must sell more insurance to strangers than they do to themselves, their spouse or to their employer.

A producer who places insurance with an insurer, either directly or indirectly, with whom the producer does not have an agent contract

requires that the producer must post a surety bond in favor of the people of Illinois. A bond must be posted in favor of the people when a producer places business either directly or indirectly with any insurer with whom they are not contracted as an agent.

All of the following statements pertaining to a temporary license are true, EXCEPT:

they survive the transfer of ownership of an insurance company who sponsored the licensee. Temporary licenses automatically terminate upon the change of ownership of any company or agency that sponsors the temporary licensee.

Producer G brokered $100,000 in insurance premiums last year. Based on this premium amount, what is the penalty (face) amount of the surety bond G is required to maintain in favor of the people of Illinois?

$5,000 A producer who is required to maintain a surety bond must hold a bond in the amount of $2,000 minimum or 5% of the previous year's brokered premiums, whichever is the greater amount up to a $50,000 penalty amount maximum. 5% of $100,000 equals $5,000.

When a non-financial conduct examination is held and the party examined makes a written request for a hearing, at least how many days notice must the Director provide of time and place of a hearing as designated in the notice?

10 days The party examined who requested a hearing must be given at least 10 days notice of a hearing time and place in the notice issued by the Director.

When a producer is examined for non-financial market conduct, how many days from the filing of a duplicate copy of a written examination report does the producer have in which to request, in writing, a hearing on the matter?

14 days A holder of any type of producer license (including a business entity license) must request a hearing within 14 calendar days from the day upon they receive a duplicate copy of the written examination report.

Which of the following period of time meets the definition of reasonable promptness as it pertains to an insurance company, under Regulation 919?

15 days Reasonable promptness means 15 days from receipt of communication from a claimant or another insured.

If insurance Company X place funds into a producer D's Premium Fund Trust Account on April 1 to refund to an insured, by which of the following dates must these funds be credited to the account of the insured?

16-Apr All credit balances from returned premiums must be credited to the insured's account within 15 days of receipt by a producer from an insurer.

How many different forms of temporary producer licensing authority exist in Illinois?

2 There are two types of temp license: the Temporary License and the Temporary License for Producer Application.

Which of the following most accurately describes the Illinois continuing education requirement?

24 total credit hours must be completed within each two year renewal period and of this 24 hours at least 3 must be a classroom ethics course.

Illinois will grant all of the following licensing authorities to non-resident's, EXCEPT:

Securities licensing authority. Securities licensing is only granted through Federal licensing rules and administered through FINRA; Illinois will recognize such authority but has no power to grant such authority.

If a producer violates an insurance law and also commits a criminal action in the process, which action is the Director most likely to take against the producer?

Send the producer a revocation notice in the mail and notify the attorney general about the alleged criminal activity for possible prosecution.

The regulation that requires a producer to reveal their name and the name of the insurer or firm that they are representing when soliciting the sale of an insurance policy is called

The Disclosure Rule The disclosure rule requires a producer to reveal who they are and who they work for when soliciting the sale of an insurance policy.

What action would be required of a producer who fails to reinstate a lapsed producer license within the statutory allowed time period?

The person would be required to take a certified prelicensing course and state exam for each line or authority sought and then to submit an application with the payment of a $180 license fee. Once a producer license in not reinstated within one year from the date of lapse at the double fee of $360, the person must obtain the license in the same manner as any other unlicensed individual.

An insured has recently joined the Marine Corp and their insurance company has indicated to the insured that an increase in premium will result from this action. The insurance company

may face action by the Director because this is an example of unfair discrimination. An insured cannot be charge on a higher premium basis for insurance coverage solely based on the fact they have joined any branch of the US military.

If a Cease and Desist order is issued the Director must serve notice to the recipient of the order of a hearing to be held at a fixed time and place which

may not be less than 20 or more than 30 days after the notice of hearing is served to the recipient