The Insurance Marketplace
The rating method which allows insurers to compete with one another by quickly changing rates without review by the state regulators is known as...
Open Competition
Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance?
Oral statements cannot be considered fraud
What is the major difference between a stock company and a mutual company?
Ownership (Mutual companies are owned by policyholders, while stock companies are owned by stockholders)
The Claims Department would be responsible for investigating which of the following?
Possible fraudulent claims by an insured
An insurance agent's responsibilities include all of the following EXCEPT...
Represent the client
An agent decides that he no longer wishes to be licensed in this state. What should the agent do with his license?
Return it to the Commissioner
If a licensee would like to terminate his license and has it in his possession, what would he have to do?
Send the license to the Commissioner for termination
Which of the following statements is the most accurate concerning the Commissioner's term of office?
Serves 4 year terms, limited to not more than two
An insurance application cannot ask about which of the following information about an applicant?
Sexual orientation
If a licensee wants to terminate her agent's license but it is in the possession of her employer, which of the following is true?
She can terminate the license by sending the Commissioner a written notice
Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting?
Stock
Under the file-and-use law, an insurer...
Submits a rate plan to the Commissioner and immediately begins marketing the plan
A form of coverage designed to place risks for which no market is available through the original broker or agency system is called...
Surplus lines coverage
Insurance procured from an unauthorized insurer is called.
Surplus lines insurance
A nonadmitted insurer who provides unique insurance coverage that is not available from an admitted insurer is called a(n)...
Surplus lines insurer
The payor by which policyholders of companies that have gone insolvent can be indemnified for insured claims after the insurer's demise is called...
The California Guarantee Association (CGA)
Which of the following entities may NOT be an insurer?
The Commissioner
In a conservation or liquidation effort, what powers does the Commissioner have?
The Commissioner has all of these powers (The Commissioner has the power to sell the company's assets until all of its creditors are paid, has complete control over the assets of the insolvent company, and has the power to sue the company's officers)
Client pre-selection is the responsibility of which of the following persons?
The field underwriter/agent of the company
An agent can begin to solicit business for a company when...
The insurer signs the appointment form
The Commissioner of Insurance supervises and regulates the insurance affairs in the State of California, and is chosen by...
The people
An agent is a legal person who acts on behalf of...
The principal
Which of the following does NOT apply to Errors and Omissions liability contracts?
They are written for the clients of the producer covered by the policy
No person within the State of California shall transact any insurance on property located or operations conducted within, or on the lives or persons of residents of this State with nonadmitted insurers, EXCEPT...
Through a licensed surplus line broker
What is the main role of a solicitor of insurance?
To aid insurance agents in transacting insurance
What is the purpose of the California laws regulating production agencies?
To provide protection for the clients by requiring producers to maintain professional standards of conduct
Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of...
Twisting
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Twisting
Who is responsible for equitably evaluating insurable risks and selecting and distributing to the insurer those that are profitable to the insurer?
Underwriter
An organization ceases to exist as an entity eligible to hold a license for all of the following reasons EXCEPT...
Upon continuance of only one person from the previous co-partnership to the new co-partnership
ABC Insurance has determined that the premiums that it currently charges for its Safe Driver II plan need to be increased. ABC's underwriters have reevaluated the rate plan and sent the new rate schedule to each managing general agent for distribution to its agents. After two weeks of marketing the new plan, ABC filed the new plan with the Commissioner for approval. This method of rate plan marketing is considered...
Use and file rate laws
When is an insurance license considered inactive?
When no company appointment is in effect for the license
The maximum penalty for failure to print an individual agent's license number on printed documents is...
$1,000
Any licensed agent may submit an application for insurance to an insurer without an appointment. However, the insurer must submit the notice of appointment to the Commissioner within how many days?
14 (In order to validate and legitimatize the agency relationship and the insurance contract, the insurer must submit a notice of appointment within 14 days to the Commissioner)
An applicant for insurance is requesting more information from her agent about a claim that is currently being settled. Within what time period must the agent respond?
15 days
Bob owns an insurance company. How many names (real or fictitious) may his business have?
2
What are the continuing education requirements for life-only agents in California?
24 hours every 2 years
Without obtaining dual licensing, life-only agents may transact all of the following types of insurance EXCEPT...
24-hour care coverage (Only accident and health agents are authorized to transact the 24-hour care coverage)
How many hours of continuing education in ethics must agents complete each licensing term?
3
In order for the California Insurance Code to be changed in any way, what is required?
A bill must be approved by both houses of the California legislature (Once approved by both houses, the bill goes to the Governor for approval or veto, or it may also become law without action, positive or negative, by the Governor)
All of the following would be considered insolvent insurers EXCEPT...
A company that reinsures outstanding risks
Which of the following is NOT a "person" for legal purposes?
A family
What must all property and casualty agents display in their offices?
A license to sell insurance, which must be displayed in a place where it can be seen easily
Every insurer is required to provide all records requested by the Commissioner within...
A period of 30 days following a written request
All of the following are TRUE regarding a property and casualty licensee EXCEPT...
A property and casualty licensee is a person who, for a fee, agrees to make any investigation for the purpose of obtaining the information in the course of participating in the disposal of any claim under a policy of insurance (This is an insurance adjuster)
According to the Law of Agency, a principal is represented by a(n)...
Agent
What documentation grants express authority to an agent?
Agent's contract with the principal
An agent is acting ethically in all of the following situations EXCEPT...
Always representing the insured
Which of the following is an example of an agent's fiduciary responsibilities?
An agent promptly forwarding premiums to the insurance company
Which of the following actions would NOT be considered a form of "adverse underwriting decisions" for a policy involving individually underwritten coverage?
An insurer giving an insured a "preferred" rating due to health and lifestyle conditions
What is a foreign insurer?
An insurer with a home office in another state (A domestic insurer's home office is in this state, a foreign insurer's is in another state, and an alien insurer's is in another country)
The Code defines the term "transact" as all of the following EXCEPT...
Analyzing a contract of insurance
The Commissioner MAY deny an application for license for any applicant who...
Any of these (Felony conviction, lack of qualifications, and a lack of good business reputation are all grounds for nonlicensure)
Records required to be maintained or to be made available by an insurer include all of the following EXCEPT...
Any printed materials generally used by the insurer, either directly or indirectly by its agents
Paula is negotiating a loan from Cal-Bank. The bank requires Paula to purchase insurance from their sister company, We-Got-U Insurance as a stipulation for the loan. According to the California regulations, all of the following would be true EXCEPT...
Any violation of the cease & desist order is a felony (It is a misdemeanor)
Which of the following types of agent authority is also called "perceived authority?"
Apparent
If the information is used only for identification and not for underwriting purposes, which of the following information about the applicant may be listed on a life insurance application?
Birthplace
An insurance company and its agents must notify all applicants and policyholders of information-gathering processes utilized for written application transactions...
Both of these answers are correct (Notice must be made at application when sources other than the applicant, persons under the policy, or public records are used, but at delivery when personal information is only collected from the applicant, an insured under the policy, or public records)
The set of regulations issued by the California Insurance Commissioner that identifies the standards for the insurance code and how it is to be administered is...
California Administrative Code of Regulations
Which of the following entities or individuals evaluates requests for payment by insureds after a loss has occurred?
Claims department
A banker 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
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as...
Coercion
What type of insurance can be obtained through a surplus lines insurer?
Coverage that is unavailable through authorized insurers
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...
Defamation
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injury any person engaged in the business of insurance?
Defamation
Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?
Discrimination
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered...
Discrimination
Each of the following factors are used in determining insurance rates EXCEPT...
Dividends
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT...
Dividends from a mutual insurer
Any person engaged in business as an insurance agent or broker and who participates in the arrangement of a premium financing agreement and receives compensation for such services must...
Do all of the above (Disclose to the insured that compensation was received, disclose the amount of compensation, and maintain records of financing agreements for 3 years)
Which of the following best describes an insurance company that has been formed under the laws of this state?
Domestic
How often must every insurer doing business in California report its financial condition to the Commissioner?
Each year, on or before March 1
Which of the following is NOT a required licensing qualification for a Life and Disability Insurance Analyst in this state?
Employment with an insurance company
Accident and health agents may transact all of the following types of insurance EXCEPT...
Endowments (Only life-only agents are authorized to transact insurance that includes benefits from endowments)
The Commissioner performs all of the duties dictated by the CIC and...
Enforces the execution of all provisions and laws
If an agent unwittingly gives a client incorrect information, what professional insurance would pay for losses or defend the agent against any resulting lawsuits?
Errors and Omissions
All of the following actions can be described as twisting EXCEPT...
Explaining to a client the advantages of permanent insurance over term and suggesting changing policies
Which of the following are the authorities that an agent can hold?
Express and implied
The authority granted to an agent through the agent's contract is referred to as...
Express authority
The Commissioner may, without hearing, suspend an agent's license for all of the following reasons EXCEPT...
Failure to properly identify the insured's risk (This is the underwriter's responsibility)
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?
False advertising
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
False advertising
In the conduct of their business, insurance producers act in what kind of capacity when handling premium funds?
Fiduciary
An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?
Foreign
Intentionally misrepresenting or concealing a material fact to induce an insurance company to make a contract is known as...
Fraud
An insured falsely reports the theft of a valuable item in order to collect payment from the insurance policy. This is an example of...
Fraud (Attempting to collect money by falsifying a claim is a criminal act)
In insurance transactions, fiduciary responsibility means...
Handling insurer funds in a trust capacity
An exclusive agent...
Has a contract with one company
Under the Privacy Rule for HIPAA, protected information includes all individually identifiable health information...
Held or transmitted in any form
Surplus Lines insurance usually involves insurance for which type of individuals?
High-risk individuals
According to the California Insurance Code, every applicant must notify the Commissioner in writing of any change of address...
Immediately
Which of the following persons represents several insurance companies but owns the records of the policies sold?
Independent agent
In California, a person applying for an insurance license is considered to have been convicted of a misdemeanor or felony if the person entered all of the following pleas EXCEPT...
Innocent
Which of the following best describes a misrepresentation?
Issuing sales material with exaggerated statements about policy benefits
Which of the following is true regarding a risk retention group?
It is a liability insurance company owned by its members
What are the consequences of a failure to comply with the Commissioner's office while it is executing a seizure order?
It is a misdemeanor punishable by a fine of $1,000, one-year imprisonment, or both
What happens to a corporation's license if the corporation is dissolved?
It terminates
An insurer received a claim on May 1st. On May 31st, the claim was approved in its entirety. By what date can the claimant expect the payment?
June 30th (Upon acceptance of the claim, insurers are required to provide payment within 30 days)
What list contains the names of all eligible surplus lines insurers?
LESLI (List of Eligible Surplus Lines Insurers)
Which of the following is NOT permitted to charge a fee for any services provided unless he/she has a signed, written agreement with the party being charged, including a statement of the charge or basis on which charges will be made?
Life and disability analyst
Which of the following is NOT a license in the state of California?
Life broker
Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?
Life expectancy
Acting as an agent for a nonadmitted insurer (unless a surplus line broker) is considered a(n)...
Misdemeanor
Transacting insurance without a license is considered a(n)...
Misdemeanor
During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes...
Misrepresenation
According to California Insurance Code, all licensees must prominently display their individual license numbers on all of the following EXCEPT...
Motor club advertisements
An insurance company that is NOT authorized to do business in the State of California is known as a(n)...
Nonadmitted company
ABC Automobile Insurance Company has determined that the increasing cost of postage has made sending policy renewal notices too expensive; therefore, ABC is going to stop sending out the notices in 30 days. To comply with California Insurance Codes regarding renewal of insurance policies in force, ABC must...
Notify each insured that policy renewal notices will no longer be sent prior to policy expiration
According to California Insurance Code, the duties and requirements of solicitor, agent and broker are all distinct from one another. Which of the following is TRUE?
One or more fire and casualty broker-agents can employ a solicitor simultaneously
Which of the following is the closest term to an authorized insurer?
Admitted
When transacting business in this state an insurer formed under the laws of another country is known as a/an...
Alien insurer
Through which branch(es) of the government is insurance currently regulated?
All of the above (Legislative, judicial, and executive)
During a pre-selection interview, an agent is allowed to do all of the following EXCEPT...
Ask questions that are not on the application but that are important for underwriting
An insured noticed that his policy stated that he "shall" keep all flammable liquids at least ten feet from an ignition source and "may" consider storing flammable liquids in another location. Based on the policy language, where must the insured keep flammable liquids in relation to ignition sources?
At least 10 feet away
In this state, what is the primary body of laws established by the state legislature to regulate the business of insurance?
California Insurance Code
In order for an insurer to legally transact insurance, it must obtain which of the following?
Certificate of Authority
Which of the following must an insurer obtain in order to transact insurance within a given state?
Certificate of authority
The public official in charge of the Insurance Department is the...
Insurance Commissioner
When an agent does not hold any active appointments with insurers, what happens to the agent's license?
It becomes inactive
Which of the following is true regarding free insurance issued in this state?
It is illegal
A licensed insurance agent overhears a conversation that leads him to believe a person is committing fraud. If the agent makes a written report to a law enforcement agency and the person is investigated, but it turns out that it was an erroneous accusation, what charge will the agent face?
No charges; the Insurance Code gives the agent legal immunity
Any person who knowingly and willfully obtains information about an individual from an insurance company, agent, or organization supporting insurance under false pretenses shall be fined...
Not more than $10,000, imprisonment not to exceed one year or both
On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are...
Not taxable since the IRS treats them as a return of a portion of the premium paid
What license allows an agent to transact only automobile, personal watercraft, residential property, earthquake, flood, inland marine and umbrella insurance?
Personal Lines
Which of the following statements is INCORRECT with regard to surplus lines insurance?
Policies written by a surplus lines insurer typically contain standard coverages and forms
Who might receive dividends from a mutual insurer?
Policyholders
What is the term for the entity that an agent represents regarding contractual agreements with third parties?
Principal
The Gramm-Leach-Bliley Act was passed to...
Protect private customer information filed with a financial institution (Customers must be given two disclosure notices (one at the onset of business and one before information is disclosed), as well as a yearly updated disclosure notice)
Which type of insurance is based on mutual agreements among subscribers?
Reciprocal insurance
The California Insurance Code is...
Statutes established by the State Legislature
All of the following are fraud prevention systems and agencies EXCEPT...
The Medical Information Bureau (The MIB is a membership corporation owned by member insurance companies that share adverse medical information on insureds)
Which of the following is a characteristic of a Reciprocal Insurance Exchange?
The chief administrator of the insurer is called an "attorney-in-fact" (A "reciprocal" is an unincorporated aggregation of individuals, called subscribers, who exchange insurance risks)
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
Which of the following is NOT a responsibility of an insurance agent?
Underwriting the contract
A man has HIV and was hospitalized for several weeks. His insurance company has delayed paying his claim for 120 days, saying that he is not covered due to a pre-existing condition exclusion in his policy. The insurance company is guilty of which of the following?
Unfair claims settlement practice (Delaying payment in regard to hospital, medical, or surgical claims for persons with AIDS or HIV, for more than 60 days after filing a claim for the purpose of attempting to invoke a pre-existing condition exclusion is an unfair claims settlement practice)
An insurer may discriminate against a person through underwriting if that person has...
A physical handicap that could result in an actuarially predictable loss
Which of the following would NOT be considered a form of direct response marketing?
A sign in an insurer's office (The mass marketing of insurance products is considered direct response marketing)
An insurance agent, who has been in a sales slump for the last 6 months, has decided that she will offer complimentary health insurance for the first year on every life insurance policy she sells for the next 12 months. This practice is an example of...
A violation of the Code
A life agent may use the name of a corporation or association on any stationery or advertisement to identify the relationship in all of the following ways EXCEPT...
"Contracted by..."
According to Insurance Code, it is an unfair or deceptive act in the business of insurance for an insurer to advertise insurance that it does not market. Such action is a violation of the code and will result in a fine up to...
$10,000
Any person who engages in any unfair method of competition or deceptive act is liable to the state for a civil penalty and a fine of $5,000 for each act. In addition, if it is determined that the act is willful the fine will NOT exceed...
$10,000
Any person willfully engaging in an unfair method of competition may be liable for a fine of up to...
$10,000
Obtaining information under false pretenses is a violation. What would be the maximum fine for any agent found guilty?
$10,000
Anyone convicted of committing an insurance fraud may be fined up to the greater amount of double the value of the fraud or...
$150,000
An insured files a fraudulent claim for $100,000. The maximum fine that the insured could be ordered to pay if convicted of insurance fraud is...
$200,000 (The fine could be either the doubled value of the fraud or up to $150,000 - whichever is greater)
The Commissioner has the authority to issue a cease and desist order against any person acting as an insurance agent or broker without being licensed. The Commissioner may also impose a penalty for each day the order is violated in what amount?
$5,000
What is the minimum fine for acting as an agent for a nonadmitted insurer in the transaction of insurance business?
$500
An insurance agent is planning to vie out his business cards to prospective clients to solicit some insurance business. On the business card, the agent's name appears in font size 16, the phone number is in font size 14, and the business address is in font size 10. What font size should be used for the agent's license number?
10
The Department of Insurance contacts an agent about a claim that was settled two months ago. Within what timeframe must the agent issue a complete response?
21 days
A property and casualty agent has been licensed for 7 years. How many continuing education hours must the agent complete this licensing period?
24
Any borrower has free choice of insurer in the state of California. If the borrower fails to provide proof of insurance to the lender, the lender has the right to furnish the needed insurance. How many days before the expiration of the policy must the borrower provide such proof of insurance?
30 days
How many days do insurers have to accept or deny an insurance claim?
40 days
After cancellation or expiration of a policy, insurance agents are required to keep detailed bank and financial records about the transaction for a minimum of...
5 years
The Commissioner may suspend an applicant's license without a hearing if the applicant has had another professional license suspended or revoked within what time period?
5 years
All records relating to insurance application and delivery must be maintained by the insurer for a period of...
5 years after policy delivery or initial application if no policy was issued
An agent whose license is due to expire may submit an application for renewal and pay applicable fees and continue operating under the expired license for a period of...
60 days
Which of the following statements is NOT true regarding an insurance solicitor in California?
A solicitor may act as an insurance agent at the same time
When the California Insurance Code needs to be changed, the legislature must design and pass a bill. Once the bill is passed, it is presented to the Governor and becomes law if not returned to the legislature within what time frame?
A specified period of 12-30 days
According to the Agency Name/Use of Name provision of the California Insurance Code, which of the following names for an insurance producer may be approved for us?
ABC Insurance Services (Cannot imply that they are an underwriter or an insurance company)
Which of the following departments is responsible for developing mortality and morbidity tables?
Actuarial
Rebating is an unfair trade practice and is regulated by law. All of the following would be considered to be rebating EXCEPT...
An agent misrepresents policy benefits to convince a policyowner to replace policies (Using misrepresentation to convince a person to cancel an existing policy and buy a new one is called "twisting")
The definition of a fiduciary is...
An agent/broker who handles insurer funds in a trust capacity
Which of the following is a primary difference between a life and disability analyst and a life agent?
An analyst receives compensation from his client, and the agent receives compensation from the insurance company
A person that DOES NOT work on the behalf of the company for which he or she does business, but rather represents the prospect, insured, or client is called...
An insurance broker
A person who transacts insurance business, other than life insurance, for compensation from and on behalf of another person, but not on behalf of or as a representative of an insurance company for which he has an appointment is called...
An insurance broker
An agent has been hired by a local businessowner to determine what type of personal and professional coverage he needs. The agent has determined the businessowner's needs and recommended policies from 3 possible companies. The agent does NOT have an agency contract with any of these companies. The agent is acting as...
An insurance broker
Because an agent is using stationery with the log of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
Apparent
The agent's authority to transact insurance business for an insurer is effective...
As of the date that the notice of appointment is signed
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be...
Authorized
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an...
Authorized insurer
A producer who fails to segregate premium monies from his own personal funds is guilty of...
Commingling
Every applicant for an insurance license in this state must have filed on his or her behalf a notice of appointment with which authority?
Commissioner
In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting agent is the agent of the...
Company
Of the following, which is NOT considered a general duty or power of State Insurance Commissioners?
Develop and implement laws to regulate the business of insurance (Laws are developed by the State Legislature, the Commissioner enforces the laws)
In order to be paid for his or her services, a Life and Disability Insurance Analyst must do which of the following?
Disclose the fee in writing to, and have it approved by, the client in advance
Which of the following will NOT be considered unfair discrimination by insurers?
Discriminating in benefits and coverages based on the insured's habits and lifestyle
An insurance policy that protects an insurance agent from financial losses that might be incurred if an insured files a lawsuit as a result of that agent either giving incorrect advice or not informing the client of important information is called...
Errors & Omissions Coverage
Which of the following provisions requires an insurer to document all correspondence with an insured?
Errors and omissions
In order to determine whether to test an insurance applicant for HIV or AIDS, the insurer may do which of the following?
Establish minimum uniform standards for testing all applicants for insurance
The requirement that agents must account for all insurance funds collected, and without the expressed consent of the insurance company(ies) are not permitted to co-mingle those funds with their own funds is known as...
Fiduciary responsibility
The requirement that agents not commingle insurance monies with their own funds is known as...
Fiduciary responsibility
To make sure that an agent's license stays active, the agent of an insurer must see that all of the following are done EXCEPT...
File a surety bond with the Commissioner
An insurer submits a rate plan to the Commissioner's office on the first of the month and immediately implements this new rate plan the next day prior to receiving the Commissioner's approval. This type of rate plan is known as...
File and Use
An agent may continue operating under an expired license for a period of 60 days provided that the agent has...
Filed an application for renewal and paid the renewal fee on or before the expiration date
Which state law was enacted in California to protect persons age 65 or older from insurance agent dishonesty?
Financial Elder Abuse Statutes
The insurance solicitor is only found in which field of insurance?
Fire and Casualty
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
Which of the following criminal activities would be sufficient violation to warrant rejection, revocation, or suspension of an insurance agent's license?
Forgery (Upon conviction of a felony, a producer's license will be revoked by the Commissioner)
A deceptive act or practice committed by a person with the intent to secure an unfair advantage or unlawful gain is known as...
Fraud
Al tells a client that she is guaranteed to be approved for LTC insurance if she pays the full year's premium at the time of application. The client applies for LTC insurance and writes a check for the annual premium to Al's agency. Al issues a Binder of Insurance but does not send the application to the insurer and intentionally uses the premium for personal expenses instead. Al is guilty of...
Fraud
An insurance company assures its new policyholders that their premium costs will not increase for a period of at least 5 years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next 2 years. What term best describes this act?
Fraud
All insurers doing business in California must maintain a department to investigate possible...
Fraudulent claims by insureds
In the state of California, who selects the Insurance Commissioner and for how long?
General election, for no more than two four-year terms
An agent with an active license CANNOT act as a broker unless...
He does not have an appointment with the company that he is brokering
An applicant has just received his property and casualty broker license. His office is so small that he can barely sit down at his desk without bumping the wall. Displayed just above his head is a frame with his new license. When asked why he had that big frame in such a small office, the broker stated that...
He was directed by law to have the license prominently displayed in the office
According to the California code, all of the following are TRUE regarding binding authority for excess and surplus lines insurance EXCEPT...
If more than one person is assuming the obligation, the risk will always be equally shared (The policy itself will identify the proportion of sharing for that particular policy)
Under what circumstances may an agent charge extra service fees?
If the extra service means the policy's premium would no longer cover the cost of issuing and servicing it
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?
Illegal (It is illegal to participate in any boycott, coercion, or intimidation that is intended to restrict fair trade or create a monopoly)
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?
Illegal under any circumstances (When a company criticizes the financial situation of another company with the intention of injuring that company, it has committed an illegal trade practice called defamation)
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?
Implied
Which of the following would be considered false advertising?
Implying that the agent is the insurer
An insurance company was able to meet its financial obligations to the policyowners; however, it does not own enough additional assets to equal at least the amount of paid-in capital. That company may be deemed...
Insolvent
If an insurer's legal reserve funds are found to be less than the minimum required by law, the insurer is...
Insolvent
Under California law, an insurance solicitor is a natural person employed to aid a(n)...
Insurance agent or broker
Martha claims to have injured her back at work. She tells the doctor that she cannot bend, lift, or even sit comfortably without great pain. Based on Martha's statements, the doctor certifies her disability and she begins to receive disability benefits from the insurer. If it can be shown that Martha did not suffer the injury she has claimed or that she is not suffering the effects she is claiming, she will be charged with...
Insurance fraud
All of the following must be included in the ad over the internet EXCEPT...
Insurance premium quotes
The insured provides a proof of claim to the...
Insurer
When agents are acting within the scope of their contract, their actions will be assumed to be the acts of the...
Insurer
Which of the following is NOT true regarding a Certificate of Authority?
It is issued to group insurance participants
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
All of the following are TRUE statements regarding the agent responsibilities in connection with the completion of the application EXCEPT...
It is the insurer's responsibility to make certain that the application is filled out completely, correctly, and to the best of their knowledge (It is the agent's responsibility)
An "insurance agent" in the state of California is able to transact business in all classes of insurance EXCEPT...
Life insurance
An insurance agent may NOT transact...
Life insurance
Which of the following is authorized to transact insurance on human lives?
Life-only agent
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?
Making comparisons between different policies
Which of the following best describes the unfair trade practice of defamation?
Making derogatory oral statements about another insurer's financial condition
According to California Insurance Code, the term "shall" describes what kind of actions?
Mandatory
Which operating division of an insurer is responsible for advertising, promoting, and distributing the insurer's products to the public?
Marketing and sales
After a cease and desist order is final, if the Commissioner finds that the person has continued to willfully violate the insurance code, what penalty may be applicable in addition to initial penalties?
Maximum $55,000
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of...
Misrepresentation (Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal)
An independent agent may have contracts with which of the following?
More than one insurer
After an insurance contract has been delivered to an insured who is under 60 years of age, if any changes to the coverage are being made, a notice of the changes...
Must be in writing, signed by an officer of the insurer, and may be mailed to the insured's last known address
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?
Mutual
Applications for insurance may contain information about a person's race, religion, ancestry, or color...
Never
A person applying for an insurance license in California was previously found guilty in a trial in which he entered a plea of "nolo contedere." What does "nolo contedere" mean?
No contest
The legal term "nolo contendere" means...
No contest
Applicants for insurance who are blind may be rated substandard for life insurance...
Only on the basis of information unrelated to their blindness
All of the following are true about a Life and Disability Analyst EXCEPT...
Performs the same duties as a life agent
An insured who signs a fraudulent claim form may be guilty of...
Perjury
An example of "adverse underwriting decisions" in a policy involving individually underwritten coverage would be...
Placing coverage with a residual marketing mechanism such as an unauthorized insurer that offers other than preferred and standard rates (Coverage that is placed with an other-than-standard insurer constitutes an adverse underwriting decision)
Which of the following is NOT a typical characteristic of an ERRORS & OMISSIONS policy?
Policies have numerous exclusions to limit or avoid fraudulent claims
In California, which system is used to approve or disapprove rate filings?
Prior (In California, rates are generally subject to prior approval rules, which means they may not be used until approved by the department or until a given time has passed after the filing without having been disapproved)
Pertaining to insurance, what is the definition of a fiduciary responsibility?
Promptly forwarding premiums to the insurance company
Which of the following can an insured submit to the insurer that would provide evidence of a claim and illustrate how severe the loss is?
Proof of claim
What is the purpose of errors and omissions insurance?
Protect agents against charges that they didn't properly serve a client
Within 30 business days from the date of receipt of a written request from an individual to correct, amend or delete any recorded personal information, the agent or company must meet all of the following requirements EXCEPT...
Provide the corrected information to any person who in the last 5 years received such information (It should be 2 years)
All of the following are true regarding rebates EXCEPT...
Rebates are allowed if it's in the best interest of the client
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
Giving a client an inducement to a sale not stated in the policy is an unlawful practice known as...
Rebating
What kind of insurers offer rates for insurance coverage to insureds who have an average or better-than-average loss exposure?
Standard market insurers
The McCarran Act stated that the federal government would not regulate insurance as long as an adequate job of regulating the industry was done by the...
States
A recordkeeping system that lists all policies, including the inception and expiration dates with a purpose of tracking policies for renewal is known as...
Suspense system
Which of the following is an example of a producer being involved in an unfair trade practice of rebating?
Telling a client that his first premium will be waived if he purchased the insurance policy today
Which of the following actions will NOT cause a discontinuance of an agent's appointment with an insurer?
The agent does not meet his commission goals
The Commissioner may deny a license application without a hearing for which of the following reasons?
The applicant had a previous license suspended or revoked for cause within the immediate 5-year period
To be licensed as a Life and Disability Analyst in the State of California, an applicant must meet all of the following requirements EXCEPT...
The applicant must be at least 21 years of age (It should be 23)
All of the following statements are true regarding an application by an insurer for a rate change EXCEPT...
The application will be deemed approved 60 days after public notice unless the proposed adjustment exceeds 10% for personal lines or 25% for commercial lines (It should be 7% for personal lines or 15% for commercial lines)
If any individual submits a written request to an insurance company requesting access to his/her own recorded personal information, all of the following requirements are true EXCEPT...
The company will forward all necessary correspondence within 60 business days from the date a request is received (It should be 30 days)
Who is responsible for notifying the Commissioner of a licensee's change of address?
The licensee
The authority to transact insurance under an appointment becomes effective as of the day...
The notice is signed by the insurer
In a life settlement contract, whom does the life settlement broker represent?
The owner
Which of the following best defines the owner in a life settlement contract?
The owner of the life insurance policy
An insurance partnership can continue with new partners as long as...
The partnership files notice with the Department within 30 days and the change is approved
If an insurance premium is paid by the policyowner to the agent, and the agent fails to remit that premium to the insurer, which of the following statements is true?
The policy will not lapse since payment to the agent is the same as payment to the insurer
On all printed documents placed before the public, what size print should be used for the agent's license number?
The same size print as the agent's address or telephone number
Which of the following is NOT true of life settlements?
The seller must be terminally ill
Which of the following is a specific law for people selling real estate regarding insurance?
They must not require the buyer to secure insurance through a specific agent or company
An agent has completed 30 hours of continuing education by the end of a license period instead of the required 24 hours. What will happen to the 6 hours in excess?
They will be carried over into the next licensing period