Module 1

Surplus Lines Insurance

A special line of coverage that's not filed with state insurance departments. Typically includes risks that are very large/unusual, such that most companies will not provide coverage. Carriers of this coverage may be out of state/out of country.

Insolvency

-For insurance regulation, an insurer is generally considered insolvent when unable to pay its obligations when due -Liabilities include, but not limited to, reserves required by statute/superintendent's rules

Certificate of Authority

-If the superintendent finds that the company is properly organized, a certificate of authority entitling the company to transact insurance business and issue policies will be issued -In Ohio, an insurance company can't transact any insurance without certificate -Renewed anually

Obtaining a license: Individual

-Minimum age of 18 -U.S citizen/ legal authorization to work (basics) -the applicant has submitted the required application, paid the required fee, and applied for the license within 180 days of passing the exams.

Superintendent of Insurance: Examination Records

-Must examine the financial affairs of every domestic company at least once every 3 years and may defer the examination to a maximum of 5 years -Will consider financial statement analyses & rations, changes in management/ownership, actuarial opinions, CPA reports, and other important criteria when determining the frequency, nature, and scope of an examination -No officer, director, or employee of an insurer/producer shall knowingly obstruct, interfere/refuse an examination and the superintendent may suspend/revoke the license of any insurer/producer who violates this section -The cost of the exam is paid by the company/producer being examined

Obtaining a license: Nonresident Agents

-The superintendent of insurance agent license to an application who doesn't reside in Ohio if all of the following exist: -The application is currently licensed and in good standing in his home state -The applicant has submitted the paper application to the state to be a nonresidential agent -The applicant hasn't committed any act that's grounds for denial, suspension/revocation of a license -The applicant hasn't committed any act that's grounds for denial, suspension/revocation of a license -The applicant's home state will issue a nonresidential agent license to agents from Ohio on the same basis

Consent Agreement

-The superintendent under a settlement agreement to which a person has contested in writing for the purpose of assuring the person's correction of a series of offenses and future compliance with the laws of this state relating to the business of insurance, may impose a single penalty in whatever amount the parties determine to be justified under the circumstances. -That the respondent shall not engage in any unbecoming conduct, as determined by the dept., subsequent to the signing of the consent agreement -That if the respondent is indicted, convicted/pleads guilty/no contest to any offense other than a minor misdemeanor/ a traffic offense/is accepted into a diversion/treatment in lieu of conviction, he/she shall notify the dept. within 14 calendar days -That a copy if consent agreement will be sent to his/her former employee and that it shall be his/her responsibility to provide a copy of consent agreement to any new, potential, employer before hire for the duration of the terms of consent -That the consent agreement shall be considered a public record.

Acts Constituting Insurance Transactions: Negotiating

Involves conferring/offering advice to a purchaser of a particular insurance policy about its substantive benefits, terms, or conditions, provided that the person conferring or offering the advice either sells insurance/obtains insurance from insurers for purchasers.

Injunctive Relief

(Ohio Insurance Regulations): A court-ordered act/prohibition against an act/condition which has been requested in a petition to the court.

Solicitor

(Ohio Insurance Regulations): A person who finds insurance prospects for an agent/broker. This person may represent an angel, but doesn't represent a particular company.

Insurance Fraud

(Ohio Insurance Regulations): An action committed by anyone who knowingly/purposefully gives false/erroneous information to an insurer/agent for the purpose of obtaining insurance/while filing a claim.

Proctored Exam

(Ohio Insurance Regulations): An exam that's monitored by an impartial person to ensure the security and integrity of the exam process.

Insolvency

(Ohio Insurance Regulations): The inability to pay obligations when due.

Revocation

(Ohio Insurance Regulations): The permanent withdrawal of an agent's license.

Financial Requirements

-An insurance company may not be issued a certificate of authority until the superintendent has certified to the sec. of state that the company provides before transacting any insurance business

Unfair Claims Practices

-Failing to maintain files and record documentation for a minimum of years/ until the completion of the next financial examination conducted by the state -Misrepresenting facts/policy provisions -Attempting to settle/compromise claims for less than the amt. which the insurers had been led reasonably to believe they were entitled to, by written/paid advertising material accompanying/made part of an application -Failure to act promptly on claim communications. The insurer should contact the insured within 15 days of notification of loss and must inform the insured of all required documents and forms that are needed to review the claim and provide them if necessary -The insurer must reply within 21 days on any inquires made by the dept. -Failing to adopt reasonable standards for prompt investigations -Failing to notify the claimant the need to investigate the claim if the claims remains unsettled within 90 days and every 90 days thereafter if more time is needed -Refusing to pay claims without conducting a reasonable investigation -Failing to confirm/deny coverage within a reasonable time. If after contacting the insured, the insurer has all the necessary information required to settle the loss, the loss must be accepted/denied within 21 days. -If additional info. is required from the insured/other involved parties, the insurer must settle/deny the claim within 21 days of receipt of all required additional info. -Failing to pay an amt. finally agreed upon in settlement of all part of any claim not later than 5 days from the receipt of such agreement

Superintendent of Insurance: Cease and Desist Orders

-If a violation of insurance regulations is about to cause substantial and material norm, the superintendent may issue a cease & desist order. It must specify the act/practice that's subject to order -The person must stop the activity immediately upon receipt of the other. Failure to honor the order will result in a civil penalty of up to $10,000 - The notice shall set a date, not more than 15 days after the date of the order, for a hearing on the continuation/revocation of the order -The agent may also appeal the final order in writing

Superintendent of Insurance: Responsibilities

-Is the chief executive officer of the department of insurance -Will see that the laws relating to insurance are executed and enforced -Has the authority to adopt, amend, promulgate, and rescind any rules necessary to discharge the duties and exercise the powers of the dept. of insurance -May adopt rules that set forth requirements and procedures for the issuance, refusal for issuance, revocation and surrender of an agent's license -May establish requirements for agent prelicensing education, examination, and continuing education -May establish procedures for certifying an insurer's appointment of an agent -When a violation of law relating to insurance is reported, the superintendent shall take the testimony in writing and under oath of all persons who have knowledge of such violation -When it appears that any person is about to/engaged in any practice declared to be illegal the superintendent can: Require a written statement under oath regarding the matter, administer oaths, summon or compel by subpoena the attendance of witness to testify at a hearing on the matter; in cases where there is no administrative procedure in place to resolve the matter, ask the attorney General to request a declaratory judgment by the court w/ respect to the matter; initiate criminal proceedings by presenting evidence of the commission of any criminal offense relating to insurance to the prosecuting attorney to prosecute the offender on behalf of the state.

Viatical Settlement Broker

-License fee for a broker is $200 -Provider fee is $1,000 -Expiration of the license is the last day of March after the continuance -License renewal fee is $100 for a broker and $500 for a provider -Viatical providers must post a $250,000 surty bond with the state -Life and health agents w/ at least 5 yrs. of experience can act as a viatical settlement broker as long as the viatical settlement activities are incidental to the agent's insurance business

Policy Loan Interest Rates

-Policies issued in Ohio on/after April 1, 1982 shall provide for a policy loan interest rates as follows: -A max. interest rate of up to 8% yearly -An adjustable max. interest rate established from time to time by the life insurer as permitted by law if corresponding adjustments are made in policy premiums, dividends/ other benefits

Temporary License

-Surviving spouse/court-appointed personal representative of a licensed insurance agent who dies/becomes mentally/physically disabled, to allow adequate time for the sale of the insurance business owned by the agent/for the recovery/return of the agent to the business/to provide for the training and licensing of a new personnel to operate the agent's business -A member/employee of a business entity licensed as an insurance agent, upon the death/disability of the sole/remaining licensed insurance agent -The designee of a licensed insurance agent entering active service in armed forces -Any other person if the superintendent determines that the public interest will best be served by the issuance of the license -A temp. license issued under the guidelines of this section shall remain in force for a period not to exceed 180 days. However, a temp. license may not continue in force under any of the circumstances described after the owner of the business/the owner's personal rep. disposes of the business

Licensing Timelines

-The exam registration and certificate of approval for course completion are good for 180 days. Note that it's 180 days. If the test isn't taken within the 180 days, the applicant must retake the applicable course. The exam may be taken as many times in that period as needed in order to pass. -Once a license is issued, it must be renewed biennially and stays in force until the license is either surrendered/the superintendent suspends/revokes the license

Obtaining a license: Business Entity

-the business entity is domiciled in Ohio and maintains its principal place of OH. -The entity has designated a licensed insurance agent who will be responsible for the entity's compliance w/ insurance laws of this state -Business hasn't committed any acts of denial -Business has submitted application and paid and submitted all other required documents -This includes limited lines agents and surplus lines brokers. Resident surplus line brokers are required to obtain a $25,000 bond as a part of the licensing process

Licensing Review: Persons Required to be licensed

Agent: Any person, in order to sell, solicit/negotiate insurance must be licensed. This includes limited lines agents, variable life insurance agents, and surplus lines brokers. The person must take and pass a written examination fo reach line of authority requested and pay the applicable non-refundable fee for each examination

Prelicensing Education Requirements

Applicants are required to complete 20 hrs. of prelicensing education courses for each area before sitting for the licensing exam -Life, accident and health, property, casualty, personal lines, security bail bonds

Acts Constituting Insurance Transactions: Soliciting

Is an attempt to sell insurance or to ask or urge a person to apply for a particular kind of insurance from a particular insurer.

Acts Constituting Insurance Transactions: Selling

Refers to the exchange of an insurance policy by any means, for money/ its equivalent, on behalf of an insurer.

Policy Loan Interest Rates

The adjustable max. interest rate and on a policy loan must not exceed the greater of the following: -The published monthly avg. for the calendar month ending two months before the date on which the rate is determined -The rate used to compute the cash surrender values under the policy during the applicable period plus 1% annually

Suspension

The temporary withdrawal of an agent's license.

Restitution

(Ohio Insurance Regulations): Restoring something to a person that he was unjustly deprived of.

Policy Loan Interest Rates

-A policy loan includes any loan made under an insurance policy made to pay one/more premiums that weren't paid to the life insurer as they fell due

Hearings

-Before denying, revoking, suspending/refusing to issue any license/imposing any penalty under this section, the superintendent shall provide licensee/applicant with notice and an opp. for hearing as provided in chp.11 of the revised code.

Policy forms and rates

-Every insurer must file with the superintendent every policy form, endorsement, rider, manual of classifications, minimum class rates, rating schedule, rating plan, and every other rating rule, and every modification of any of them, which it proposes to use -To be approved a filling encourages reasonable competition and uniformity in insurance rates, rating systems, rating plans/practices -A filling and any supporting information shall be open to public inspection after the filling becomes effective -Stock, mutual, reciprocal fire and marine, and title insurance: Each filing will be on file for a waiting period of 30 days before it becomes effective, the superintendent may approve/disapprove a filing before the expiration of the waiting period