Insurance Regulations

What is the maximum duration of a temporary license? A. 365 days B. 30 days C. 180 days D. 90 days

C. 180 days The Director may issue a temporary insurance license for a period not to exceed 180 days.

The Federal Fair Credit Reporting Act A. Regulates consumer reports B. Protects customer privacy C. Regulates telemarketing. D. Prevents money laundering

A. Regulates consumer reports

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? A. Defamation B. Illegal C. A legal advertising strategy D. Unfair discrimination

B. Illegal It is illegal to participate in any boycott, coercion, or intimidation that is intended to restrict fair trade or create a monopoly.

A producer must report to the Director any criminal prosecution of the producer taken in any jurisdiction within how many of the initial pretrial hearing date? A. 10 days B. 30 days C. 45 days D. 90 days

B. 30 days

An insurer may be fined for nonwillful or for willful violations of insurance laws with which of the following respective fines: A. $5,000/ $10,000. B. $20,000/ $30,000. C. $15,000/ $30,000. D. $10,000/ $20,000.

C. $15,000/ $30,000

All of the following would be considered rebating EXCEPT A. An agent misrepresents policy benefits to convince a policyowner to replace policies. B. An agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him. C. An agent offers to share his commission with a policyholder. D. An agent offers tickets to a baseball game as an inducement to buy insurance.

A. An agent misrepresents policy benefits to convince a policyowner to replace policies

All of the following are requirements for a nonresident license EXCEPT A. Passing this state's licensing examination. B. Submitting a proper application and paying the fees. C. Submitting a licensing application from the home state. D. Holding an active license in the same line of authority in the home state.

A. Passing this state's licensing examination Licensing examination is not required for nonresident producers applying for the same line of authority as held in the home state. All the other conditions listed above are required.

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? A. $100 per violation B. Revocation of license C. $2,500 D. $1,000

C. $2500 An individual who willfully violates this Act enough to constitute a general pattern or business practice will be subject to a penalty of up to $2,500.

All of the following are requirements for a nonresident license EXCEPT A. Submitting a proper application and paying the fees. B. Submitting a licensing application from the home state C. Holding an active license in the same line of authority in the home state. D. Passing this state's licensing examination

D. Passing this state's licensing examination Licensing examination is not required for nonresident producers applying for the same line of authority as held in the home state. All the other conditions listed above are required.

Anyone who willfully violates a cease and desist order can be fined what maximum amount per day? A .$50 B .$100 C. $200 D. $500

B. $100 Any violator of a cease and desist order can be fined up to $50 per day. Willful violators of cease and desist can be fined up to $100 per day.

When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of A. Misrepresentation. B. Discrimination. C. Nothing, unless the remarks were in writing D. Defamation.

D. Defamation

A licensed producer may be fined for nonwillful and for willful violations of insurance laws with the following respective fines: A. $15,000/ $30,000. B. $2,500/ $5,000. C. $10,000/ $20,000. D. $5,000/ $10,000

B. $2500/ $5000 A licensed producer can be fined up to $2,500 for nonwillful violations and up to $5,000 for willful violations of insurance laws.

When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, its financial health is terrible, and the company will soon have to file for bankruptcy. Which of the following terms best describes the advertisement? A. Twisting B. Rebating C. False financial statement D. Defamation

C. False financial statement

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? A. Disclosure rule B. Fair Credit Reporting Act C. Consumer Privacy Act D. Conditional receipt

B. Fair Credit Reporting Act

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 A. Send an actual certified copy of the entire report to the consumer. B. Respond to the consumer's complaint. C. Defend the report if the agency feels it is accurate. D. Change the report.

B. Respond to the consumers complaint The consumer has the right to request the information on the report, the reasons for turn down and any adverse underwriting decisions. The reporting agency is required to respond to the consumer's complaint, and, if necessary, to reinvestigate the report.

Once the Director issues a cease and desist order, how soon must an insurer comply with the order? A. Within 3 days B. Within 10 days C. Within 15 days D. Within 30 days

D. Within 30 days After receiving a cease and desist order from the Director, the issued party must cease all errant business practices within 30 days.

The Director of Insurance has all of the following duties EXCEPT A. Make regulations to carry out the laws relating to the business of insurance in this state. B. Report to the Attorney General or other appropriate law enforcement official any criminal violations of the laws relating to the business of insurance in this state. C. Supervise and regulate the rates and services of every insurer in this state. D. Make laws relating to the business of insurance in this state.

D. Make laws relating to the business of insurance in the state.

All of the following are unfair claims settlement practices EXCEPT A. Failing to acknowledge communication pertaining to a claim B. Suggesting negotiations in settling the claim C. Refusing to pay claims without conducting an investigation D. Failing to adopt and implement standards for settling claims

B. Suggesting negotiations in settling the claim

How soon must nonresident producers notify this state's Director of change of address? A. 60 B. 90 C. 10 D. 30

D. 30

When a producer's appointment is canceled by the company, the Department of Insurance must be notified within A. 15 Days B. 10 Day C. 24 Hours D. 30 Days

D. 30 Days Companies must notify the Department within 30 days after they cancel a producer's appointment.

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? A. Making comparisons between different policies B. Stating that the insurance policy is a share of stock C. Exaggerating the benefits provided in the policy D. Stating that the competitors will arbitrarily increase their premiums each year

A. Making comparisons between different policies

A producer was issued a temporary license 30 days ago. How much longer can the license remain in effect? A. 335 days B. 150 days C. Today is the last day D. 90 days

B. 150 days False financial statements are made when insurance companies attempt to hide their financial troubles from the public and government officials.

If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's A. Prior Insurance B. Ancestry C. Credit history D. Habits

B. Ancestry

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? A. 7 days B. 10 days C. 3 days D. 5 days

D. 5 days Consumers must be advised that they have a right to request additional information concerning investigative consumer reports, and the insurer or reporting agency has 5 days to provide the consumer with the additional information.

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report A. Must be informed of the source of the report. B. Are entitled to obtain a copy of the report from the party who ordered it. C. Must be advised that a copy of the report is available to anyone who requests it. D. May sue the reporting agency in order to get inaccurate data corrected.

A. Must be informed of the source of the report. Under the Fair Credit Reporting Act, if an insurance policy is declined or modified because of information contained in a consumer report, the consumer must be advised and provided with the name and address of the reporting agency.

A producer failed to complete the required continuing education credit hours for this compliance period. Within what time period after the deadline may the license be reinstated? A. 30 days B. 3 months C. 6 months D. 12 months

C. 6 months A producer who allows his or her license to lapse for failure to comply with the continuing education requirements may reinstate the same license within 6 months from the deadline if the continuing education requirements have been met by November first of the compliance period, and if a penalty fee has been paid.

When a producer is suspected of being in violation of an insurance law or regulation, which of the following would require the producer to stop committing the act of violation? A. An executive order B. A hearing C. A cease and desist order D. A license suspension

C. A cease and desist order

Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as A. Rebating B. Misleading advertising C. Defamation D. Coercion

D. Coercion These are all considered to be Unfair Trade Practices, which are major violations that can lead to heavy penalties. Coercion, for example, is when the bank won't give you an auto loan unless you agree to buy auto insurance from them.

How many hours of continuing education in Ethics are required each compliance period? A. 3 B. 5 C. 8 D. 10

A. 3

An insurance producer has not been appointed to an insurance company. Who is the producer considered to represent? A. The Department of Insurance B. The insurer C. The client D. The state's Guaranty Fund

C. The client

The Director must conduct an examination of each insurer in this state at least A. Every 5 years or as often as deemed appropriate. B. Every 10 years, and not more often C. Once a year D. Every 2 years, but not more often than once per year.

A. Every 5 years or as often as deemed appropriate. The Director must conduct an examination of an insurer at least every 5 years or as often as the Director considers appropriate.

In order to transact insurance business in this state, an agency must meet all of the following requirements EXCEPT A. Obtain an insurance agency license. B. Pay the required fees. C. Designate a licensed producer to ensure compliance with insurance laws. D. Submit the Uniform Business Entity Application to the Department.

A. Obtain an insurance agency license An agency acting as an insurance producer is required to obtain an insurance producer, not an agency, license, and submit the Uniform Business Entity Application to the Director. The agency must also designate a licensed producer to oversee compliance with state insurance laws and regulations.

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? A. $1000 B. $100 per violation C. Revocation of license D. $2500

D. $2500 An individual who willfully violates this Act enough to constitute a general pattern or business practice will be subject to a penalty of up to $2,500

How often are producers in South Carolina required to pay the license renewal fee? A. Biennially B. Every 3 years C. Every 5 years D. Annually

A. Biennially All producers licensed in South Carolina (except those with travel/baggage authority only) must renew their license biennially.

A producer's license may be revoked or suspended by the director for all of the following EXCEPT A. Failure to meet sales quotas set by insurer. B. Willful deception of or unjust dealings with the citizens of this state. C. A conviction of a crime of moral turpitude. D. A plea of nolo contendere of a crime of moral turpitude.

A. Failure to meet sales quotas set by insurer

An insurance company's license to transact business in this state is known as A. Certificate of Participation. B. Certificate of Authority. C. Certificate of Business. D. Certificate of Insurance.

B. Certificate of Authority The company's license is a Certificate of Authority, which is granted by the Director.

Which of the following statements is INCORRECT about appointment of producers? A. Companies must notify the Director of the appointment before the producer solicits any risks or transacts any business. B. An official or licensed representative of the insurer must vouch that the producer is of good character, is trustworthy, and is qualified to act as an agent of the insurer. C. A Certificate of Authority is the license given by the insurer to its producers. D. Companies may appoint any number of producers.

C. A Certificate of Authority is the license given by the insurer to its producers

According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT A. Late payments. B. Failure to pay off a loan. C. Disputes regarding consumer report information. D. Tax delinquencies.

C. Disputes regarding consumer report information As defined by the Act, negative information includes information regarding a customer's delinquencies, late payments, insolvency or any other form of default. Customer disputes are not considered negative information, and, in fact, must be included in consumer reports.

When the director finds that a license has been obtained by fraud or misrepresentation, he may suspend the license A. In 30 days. B. Immediately, but not for more than 30 days. C. Immediately, but not for more than 2 years. D. In 10 days.

C. Immediately, but not for more than 2 years

How many hours of CE must be completed every 2 years? A. 30 total hours, including 15 hours approved for the line of license that the producer holds B. 20 total hours, including 10 hours approved for the line of license that the producer holds C. 24 total hours, including 12 hours approved for the line of license that the producer holds D. 24 total hours, including 8 hours approved for the line of license that the producer holds

D. 24 total hours, including 8 hours approved for the line of license that the producer holds.

What type of licensee represents the insurance company? A. Consultant B. Agency C. Broker D. Producer

D. Producer A producer is a person who is authorized by an insurer to represent it and to sell, solicit, negotiate, or receive and deliver insurance policies on behalf of the insurer.

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? A. 3 days B. 5 days C. 10 days D. 14 days

A. 3 days Investigative consumer reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested.

Any payment to a producer from an insurer that is contingent on the sale of an insurance policy or contract is called a A. Commission. B. Regular fee. C. Charge fee. D. Service fee.

A. Commission

In the transaction of insurance, which of the following is considered to be representing the client? A .The broker B .The Commissioner C. The agent D. The insurer

A. The broker A broker, who is an insurance producer not appointed by an insurance company, is a representative of the client in matters of insurance.

In order to become licensed as a nonresident producer in this state, a person must do which of the following? A. Be licensed as a resident producer for at least 3 years prior to applying in this state B. Spend at least 25% of his or her working time in this state C. Pass a written examination and pay the required fees D. Show proof of a valid license for the same line of authority in the home state

D. Show proof of a valid license for the same line of authority in the home state A person may become a nonresident producer in this state if the person is licensed as a resident for the same line of authority and in good standing in his or her home state; has submitted the proper request for licensure and has paid the required fees; has submitted or transmitted to the Director the application for licensure that the person submitted to his or her home state; and the person's home state awards nonresident insurance producer licenses to residents of this state on the same basis.