Ethics

Leo, a producer, sat down with a prospective client to discuss a long-term care policy. He used a computer program to outline and emphasize his remarks. The visual presentation contained the principal benefits of the policy he was trying to sell. Although he mentioned that it also had, the usual, conditions, he did not include those in his visual presentation or specify what they were. The producer was engaging in:

Misrepresentation

All of the following, if performed frequently enough to indicate a general business practice, are unfair claims settlement practices, EXCEPT:

Requiring submission of preliminary claim report or a formal proof of loss before paying a claim.

In a conversation with an older family friend, an insurance agent, Sly, inquired with what company she had a Medicare supplement policy. When she told him, the agent was silent. Concerned by his silence, the woman asked if the company was a reliable company. The producer asked, "Have you received any financial statements regarding their solvency?" This producer was:

Engaging in defamation

What consequences does an insurer's or producer's use of unfair marketing or unfair claims habits have for the company or agent?

The State Commissioner of Insurance can issue a cease and desist order.

A local insurance company has worked closely with an area real estate firm in writing mortgage insurance as well as other insurances such as health and accident policies to newcomers in a small university town. Recently one of the town's oldest and most reliable banks has become cautious about making mortgage loans, and both the realtors and the insurance company have lost business as a result. They agree to change their own accounts to a newer bank with a more liberal lending policy and to encourage their clients to follow their course. Since it is a small town with a sizable number of newcomers who visit the real estate firm for rentals or home purchases, their combined action is likely to affect the older, more conservative lender. The practice in which they are engaging is:

Boycott

The practice of using misrepresentation to induce a policyholder to replace a policy issued by the insurer the producer represents is called:

Churning

Mr. Norris, an insured, submits a claim and proof of loss for medical expenses covered by his major medical policy. According to the time-of-payment-of-claims provision, how soon must the company pay the claim?

Immediately

All of the following acts are considered unfair trade practices, EXCEPT:

Replacement

What consequences does an insurer's or producer's use of unfair marketing or unfair claims habits have for the company or agent?

The State Commissioner of Insurance can issue a cease and desist order

It is illegal to do any of the following, EXCEPT

To readjust premium rates, made retroactive for the policy year, for group insurance policies based on loss or expense

Making a misleading statement to induce a person to lapse, surrender, or convert an insurance policy is known as:

Twisting

The Unfair Trade Practices Act is divided into which two parts?

Unfair Marketing practices and Unfair Claims practices. Question 9 Question text What consequences does an insurer's or

An example of an unfair claim settlement practice would include: a. Denying the payment of a claim because it does not meet the conditions of the insurance contract b. Delaying the payment of a claim while it is investigated for possible fraud c. Advising a claimant of the possibility that, should the claimant reject a settlement offer, an arbitration award might be less than the offer d. Denying the claim because it occurred after the cancellation of the policy

Advising a claimant of the possibility that, should the claimant reject a settlement offer, an arbitration award might be less than the offer

Defamation occurs when

An individual or entity makes false, derogatory statements about an insurer's financial condition that are calculated to injure the insurer's business

Circulation of a maliciously critical statement about any insurer's financial condition to injure the insurer is called:

Defamation

Which of the following is considered an unfair claims practice? a. Splitting a commission with a prospect b. Failing to affirm or deny coverage within a reasonable time after receiving proof of loss c. Convincing a policyholder to lapse or surrender an existing policy to sell another policy d. Making any oral or written statement that is false, maliciously critical, or calculated to injure a competing producer

Failing to affirm or deny coverage within a reasonable time after receiving proof of loss

Presented with a completed claim form, an insurer wrote to the insured claimant requesting a preliminary claim report from the physician. Upon receipt of that report, the insurer required the subsequent submission of a proof-of-loss form. Was this insurer acting within its legal and ethical rights?

No, the two forms provide the same information. This is a delaying action and thus illegal.

In the underwriting of insurance policies, some amount of discrimination is:

Present in many cases, because of differing levels of risk

In discussing a potentially lucrative group policy with a business owner who had purchased a business and just moved into the community, an established producer jokingly remarked, "Well, would it sweeten the pot if I could assure you membership in the country club?"The producer added, "I'm on the membership committee and while we're not accepting new application right now, I'm sure something could be worked out." These remarks constituted

Rebating

Which of the following is NOT considered to be an unfair claims settlement practice?

Replacing one insurance policy with another

Don, an insurance agent, told a member of his church who had recently experienced several personal and financial losses that he could see that she got a more favorable rate on her insurance policies than her health and general circumstances would warrant. The woman had been his kindergarten teacher and was a pillar in the community's life. He wanted to help her. Which of the following is FALSE?

The agent was engaging in twisting.