Texas Insurance Chapter 5 - Texas Statutes and Rules Common to All Lines
What is the maximum allowed value of a gift that an agent can give to an insured without violating the regulation on rebating?
$25 - merchandise, promo materials, gifts that have redeemable value of $25
Maximum fine for violating the Insurance Code
$25,000
Fine for willful violation of the Fair Credit Reporting Act
$2500
Maximum agent licensing fee
$50
How many hours of continuing education can be carried over from one licensing period to the next?
0 - all CE hours must be completed during the reporting period
__ days after receiving the request for Commissioner to hold the hearing
10 days
Results of the licensing examination are valid for..
12 months
Minimum required age for licensing
18
Commissioner's term of office
2 years
Duration of agent's license
2 years
Duration of reporting period
2 years
Whats is the minimum percentage of a licensee's total volume of premiums in a calendar year that must come from business other than controlled business?
25%
If an agent suspects that insurance fraud is being commited, within how many days must the agent motify the Insurance Fraud Unit of the Department of Insurance?
30 days
The Commissioner of Insurance issues a Cease and Desist Order to an agent. If the agent wishes to contest the charges in court, how many days after the order was issued does the agent have to make the request?
30 days
___ days for agents to request a hearing after receiving a cease and desist order
30 days
How long must producer maintain records of continuing education course completion?
4 years
Administration, attorney, or CPA experience required before applying to become the admissioner
5 years
After felony conviction for breach of fiduciary duty before another license application can be filed
5 years
After license revocation or denial before another license application can be filed
5 years
No more than one temporary license issued per person
6 months
After license renewal date for agents to pay fees and complete CE before license expires
90 days
An agent's license will terminate within how many days from the due date of obligatory fees and continuing education requirements?
90 days
Maximum duration of temporary license
90 days
Which of the following persons is required to hold a producer license?
A person who negotiates insurance contracts
An individual licensed as an Insurance Service REpresentative may be employed by which of the following?
A property and casualty agent
When transacting business in this state an insurer formed under the laws of another country is known as a/an
Alien insurer
All of the following statements about the continuing education requirement in this state are true EXCEPT
All licensed agents must comply by January 1 of even-numbered years
Which of the following applicants will be able to obtain an adjuster's license without taking the state examination?
An applicant who is renewing a license
Commissioner of Insurance
Appointed by the governor for 2 years - Regulates the internal affairs of the Department of Insurance - Does not write laws - Examines all authorized insurers
24 hours
CE to be completed during each reporting period
To legally transact insurance in this state, and insurer must obtain which of the following?
Certificate of Authority
Company Regulation
Certificate of Authority - Domestic/foreign/alien - location of incorporation - ownership: stock or mutual - avoid unfair trade practice or unfair claims settlements
A bank is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of...
Coercion
Which of the following actions is NOT in violation of the Unfair Claims Settlement Practices Act?
Denying an unsubstantiated claim
If a licensed agent in Texas receives a criminal conviction, that information must be reported to
Department of Insurance
The requirement that agents not commingle insurance monies with their own funds is known as
Fiduciary Responsibility
Types of Licenses
Individuals: resident and nonresident Temp license - valid for 90 days; issued to maintain the existing business
A participating insurance policy may do which of the following?
Pay dividends to the policyowner
For which of the following actions can an agents license be suspended or revoked?
Rebates of premiums
An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of
Rebating
All of the following are considered unfair trade practices in the business of insurance EXCEPT
Sharing commissions
A nonadmitted insurer who provides insurance coverages that are not available from an admitted insurer is called..
Surplus lines insurance
Disciplinary actions
Suspension, revocation, cease and desist orders, and/or fines
An agent discovers his newest client was the result of a referral. To show his thanks to the referring customer, the agent could
Thank the customer - unless the customer is also an insurance agent / former agent, it is illegal for the agent to pay or offer to pay for referrals
Commissioner
The head of the state department of insurance.
All of the following statements apply to temporary licenses EXCEPT
They may be renewed
statute
a formal written law enacted by legislature; insurance statutes can be found in the state Insurance Code
reciprocity
a mutual interchange of rights and privileges
Inducement
an offer that attempts to influence the other party
moral turpitude
conduct that is contrary to community standards of justice, honesty or good morals
In Texas, the state's continuing education requirement
consists of completing 24 hours of CE each biennium
Permitting individuals of the same class to be charge a different rate for the same insurance is the unfair trade practice of
discrimination
Two individuals are in the same risk and age class; yet, they are charge different rates for their insurance policies due to an insignificant factor. What is this called?
discrimination
Coercion
forceful act or threat aimed to influence a person to act against his or her will
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?
foreign
Home office
insurer's headquarters principal place of business
All of the following are types of adjusters licenses availible in this state EXCEPT
life and health claims adjuster
2 hours
minimum requirement for ethics training
Continuing education
must be completed every reporting period
Maintenance and Duration
must be renewed every two years - can be reinstated within a short period of time after lapse
Exempt
not subject to an obligation
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
Licensing Process
pass examination submit application and fees
Who might recieve dividends from a mutual insurer?
policyholders
restitution
restoration to the original condition or repayment
Life Insurance Counselor
someone who, for a fee or commission, offers to examine a life insurance, an annuity, or pure endowment policy and gives advice, recommendations or information regarding the policies terms, conditions, benefits, coverage or premium
Cease and desist
to stop or discontinue
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT
dividends from a mutual insurer
Mutual Insurer
has no stock, is owned by the policyholder - dividends received by a policyholder of a mutual insurer are not taxable
To become a Texas Insruance agent, an individual must
have passed a licensing exam within the 12 months before applying
Who do agents represent?
the insurance company
Insolvent
unable to meet financial obligations
rebating
when producers give or promise anything of value that is not specified in the policy
Which of the following is an example of a producer's fiduciary duty?
The trust that a client places in the producer in regard to handling premiums
No one whose license has been revoked can receive another license in Texas for
5 years
The Insurance Commissioner may examine the affairs of any insurer as often as necessary, but not less frequently than once every...
5 years
The commissioner must conduct annual examination of authorized insures every
5 years
What percentage of continuing education hours must be in a classroom setting>
50 %
Fiduciary duty
an agent acts in a fiduciary capacity,based upon trust and confidence, when handling the financial affairs of their customers, including the handing of premiums
Commission
payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium
Certificate of Authority
Issued by the commissioner, must hold one in order to transact insurance business in Texas
In which of the following situations is it legal to limit coverage based on marital status?
It is never legal to limit coverage based on marital status