10 practice questions insurance regulations
A producer didn't realize that he had committed an act in violation of the Insurance Code. How much would he probably be penalized?
$1,000 ***Statutes limit the fine to 'up to $1,000', unless the person knew the act was in violation, in which case it may be increased to as much as $25,000.
the minimum fine for violating the insurance code is
$1,000 **Statutes limit the fine to 'up to $1,000', unless the person knew the act was in violation, in which case it may be increased to as much as $25,000.
What is the fine for using an unapproved assumed name by a producer?
$250
Up to _____ hours of unused continuing education credits may be carried forward to the next renewal period for producers licensed in any combination of the lines of life, health and accident, property, casualty or personal lines.
10
A producer has been notified by the Commissioner to stop using an unapproved trade name. How many days does the producer have to change the trade name before having to pay an additional fine?
10 days
A producer has completed 40 hours of continuing education this licensing period. How many credit hours may be carried over to the next licensing period?
10 hours
a producer has completed 40 hours of continuing education this licensing period. how many credit hours may be carried over to the next licensing period?
10 hours **up to 10 hours of unused continuing education credits may be carried forward to the next renewal period for producers licensed in any combination of the lines of life, health and accident, property, casualty, or personal lines.
To appoint a producer as its agent, the appointing insurer must file a notice of appointment within ____ days from the date the agency contract is executed.
15
the widower of an agent was issued a temporary license 30 days ago. how much longer can he legally serve under this license?
150 days **a temporary license is good for 180 days 180-30=150
A temporary license is good for
180 days
Licenses in Louisiana must be renewed every ___ years. Licensees must submit a renewal application, pay the required fees, and complete continuing education requirements.
2
Producers need to submit a license renewal application every ___ years.
2
Producers need to submit a license renewal application every ___ years. License renewals must be completed by the _____ day of the producer's birth month.
2 Last
Continuing education requirements must be met every
2 years
If a license has been lapsed for more than how many years, the producer must apply for a new license?
2 years
Producers who allow their license to lapse may reinstate the same license within how many years, upon proof of fullkling all continuing education requirements through the date of reinstatement, and by paying all overdue fees ?
2 years
a licensee just renewed his license. how much time will pass before he will have to renew it again?
2 years
continuing education requirements must be met every
2 years **All licensed insurance producers must complete 24 hours of continuing education every 2 years.
All insurance producers licensed in the state of Louisiana must complete ____ hours of approved continuing education (CE) instruction or self-study prior to each license renewal. At least 3 hours must be on ethics.
24
If authorized to write life and property and casualty insurance, how many hours of continuing education instruction are producers required to complete every 2 years?
24
Producers in Louisiana are required to complete ____ hours of continuing education every 2 years, regardless of the number of lines for which the producer is licensed.
24
The limit on controlled business is
25% ****Controlled business must not exceed 25% of a producer's transactions.
An insurance producer using a name that has not been approved will be subject to a fine up to $______
250
All insurance producers licensed in the state of Louisiana must complete 24 hours of approved continuing education (CE) instruction or self-study prior to each license renewal. At least ___ hours must be on ethics.
3
The Commissioner can examine insurers for solvency and compliance with the Insurance Code as frequently as deemed necessary, but at least once every 5 years. Newer insurers may be examined more frequently: every 6 months for the first ____ years, and once a year for years 4 through 6.
3
What is the minimum required number of continuing education credits in ethics every licensing period?
3
A nonresident producer who moves from one state to another state or a resident producer who moves from this state to another state must file a change of address and provide certification from the new resident state within ___ days of the change of legal residence. No fee or license application is required.
30
Every licensee must notify the Commissioner of any changes to the licensee's residential, mailing, business, or e-mail address or phone number within _____ days of the change. The same regulation applies to changes in the licensee's name.
30
The Commissioner, upon receiving this notice, has ______ days to make sure that the producer is suitable for appointment. If the producer is determined to be ineligible for appointment, then the Commissioner must notify the insurer within ______ days of making the determination.
30 15
A nonresident producer moves to another state. The producer must notify the Department of Insurance of the address change within how many days?
30 days
If a person demands a hearing, the Commissioner of Insurance must set the hearing within
30 days
Individual producers engaged in the sale of any annuity products must complete a one-time, ____ hour training course. This requirement is separate and distinct from the CE (continuing education) requirements for a licensee, and applies to both resident and nonresident producers.
4
The commissioner is elected for a term of how many years?
4
At a minimum, all original records must be maintained by the insurer for a period of ___ years, or until the Commissioner's next examination-whichever is later.
5
Insurers will be examined at least every ___ years or more often if based on the recommendation of the Louisiana Insurance Guaranty Association.
5
Insurers will be examined at least every _____ years or more often if based on the recommendation of the Louisiana Insurance Guaranty Association.
5
Existing and replacing life insurers are required to keep copies of all summaries, notices, and statements used in sales transactions until the conclusion of their next examination by the Insurance Department, or for a period of at least
5 years
Insurer examinations must occur no less frequently than every
5 years
What is the maximum amount of time that could pass before an insurer's financial stability would be examined?
5 years
existing and replacing life insurers are required to keep copies of all summaries, notices, and statements used in sales transactions until the conclusion of their next examination by the insurance department, or for a period of at least
5 years **Louisiana insurance laws require insurers to keep such records for a minimum of 5 years
If the producer continues to use the name for 10 or more days after being notified by the Commissioner to stop using the unapproved name, the producer will be subject to an additional fine of up to $_____
5,000
Failure to file an address change within the required time will result in a $____ penalty per violation.
50
These 3 scenarios illustrate exceptions to the CE requirements:
A 67-year-old producer who sells life insurance policies for a licensed insurer A nonresident producer who only completed continuing education in his own state A producer who is serving a term as a member of the legislature
All of the following events will terminate a producer's certificate of appointment EXCEPT
A new Commissioner is put into office. ****An appointment by an insurer is based upon the person maintaining a valid insurance license. Though the appointment is made by the head of the Insurance Department, that person leaving the office does not terminate existing appointments. True- A termination issued by the appointing insurer. A producer's license is suspended or revoked by the Department of Insurance. A producer's license expires and is not renewed.
Which of the following persons would be required to hold a license?
A person who negotiates insurance contracts
A temporary license is not available for what?
A producers retirement
This state provided for a temporary license for all of the following EXCEPT
A producers retirement True- The death of a producer. A producer's disability. A producer's time in the military service.
All of the following are penalties for violating the statutes pertaining to sharing of commissions EXCEPT
Additional continuing education in ethics. True- Fine up to $5,000. Imprisonment for up to 2 years. License revocation. ****Any person who violates the state statutes pertaining to sharing of commissions, upon conviction, may be fined an amount between $1,000 and $5,000, and/or imprisoned for a maximum of 2 years. The producer's license will also be suspended or revoked.
A producer's license has been revoked a SECOND time for violating the Insurance Code. When can the producer apply for a new license?
After the revocation period ***If a producer commits another violation after the license has been reissued following a revocation, the producer's licensed will be revoked for up to 5 years. If the license is revoked a second time, the producer cannot apply for a new license during the revocation period.
___________________ licensed in the state of Louisiana must complete 24 hours of approved continuing education (CE) instruction or self-study prior to each license renewal. These requirements apply regardless of the line or number of lines of insurance for which the producer is licensed.
All insurance producers
Which of the following individuals must be licensed as an insurance agent?
An employee of an insurer who receives commissions only on a few policies a year. ****Receipt of commissions requires a license as an insurance agent.
Insurance companies can terminate the appointment of a producer at ___________. Notice must be given to the Commissioner within 30 days after the termination.
Any time
The Commissioner of Insurance is elected to a 4-year term, while the Deputy Commissioner is what?
Appointed
When a company appoints a producer, it must first apply for the ____________ with the Commissioner. The Commissioner then has 30 day to make sure that the producer is fit to transact insurance with that company.
Appointment
If the Commissioner believes that a producer may be in violation of an insurance law or regulation, what may be issued?
Cease and desist
When a producer could be in violation of an insurance law or regulation, the Commissioner will issue a
Cease and desist
The Insurance Department has received complaints about a particular producer regarding policy-selling conduct. What can be issued that would legally force the producer to stop the acts in violation?
Cease and desist order
A France-based insurer would like to do business in Louisiana. What document must it first receive?
Certificate of Authority
All insurers, regardless of the state in which they are chartered, must obtain a ____________________ from the Louisiana Insurance Department before they can transact insurance in the state.
Certificate of Authority
A California insurer wants to transact business in Louisiana. What document must it first receive?
Certificate of Authority **All insurers, regardless of the state in which they are chartered, must obtain a Certificate of Authority from the Louisiana Insurance Department before they can transact insurance in the state.
Any payment to a producer from an insurer that is contingent on the sale of an insurance policy or contract is called a
Commission.
If an insurance company cancels a producer's appointment, the
Commissioner must be notified within 30 days.
Producers are normally compensated by _____________ where a percentage of the premium is paid to the producer by the insurance company.
Commissions
Each state is responsible for the ___________ of insurance within that state.
Conduct
In Louisiana, the Commissioner of Insurance is
Elected by the voters of the State for a period of four years.
How can a person become the Commissioner?
Election
The Commissioner of Insurance is responsible for making sure that the provisions of the Louisiana Insurance Code are what?
Enforced properly
How often must producer licenses renew in Louisiana?
Every 2 years
Bill made his living as an insurance producer at one time but is no longer licensed. Under which of the following circumstances would it be acceptable for him to accept a commission?
If he receives a deferred commission from insurance that he transacted while he was licensed
It is ________ for a formerly licensed producer to accept commissions if the transaction that produced the current commission was made while the producer was properly licensed.
Legal
There are exclusions for those who are required to be licensed; generally, persons who work with insurers but do not participate in the sale, solicitation, or negotiation of insurance contracts are not required to be what?
Licensed
What was created to keep telemarketers from calling consumers who do not wish contacted?
National Do Not Call Registry **The National Do Not Call Registry was created to allow consumers the choice to not be contacted by telemarketers
ABC Insurance Company wishes to begin transacting business in Louisiana. Before it can do so, it must do which of the following?
Obtain a certificate of authority
A producer was originally licensed on April 1st, 2001. The producer's birthday is on October 17th. The producer last renewed her license in 2012. By what date must the producer renew her license again?
October 31st, 2014
Examples of violations of Louisiana insurance regulations :
Producer A uses her license to write only insurance for herself and her immediate family. Producer B charges his clients in addition to the premium, a consulting fee. Producer D collects premiums due on policies and deposits the funds in his own personal account.
Which of the following would NOT be a violation of Louisiana insurance regulations?
Producer C uses her license to write uncontrolled business only ***The purpose of a license is to primarily write business that is not controlled business.
Under agency law, ____________ legally represent the insurance company with which they are contracted.
Producers
The purpose of insurance regulation is to
Promote the public welfare.
The Gramm-Leach-Bliley Act was passed to
Protect private customer information filed with a financial institution. ***The Gramm-Leach-Bliley Act was passed to protect private customer information that is 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.
A producer in another state wants to become a producer in Louisiana. The other state gives the same privileges to Louisiana producers wanting to be licensed in that state as it does to its own producers. Louisiana, therefore, extends the licensing privileges to the prospective producer of the other state. What is this called?
Reciprocity
The purpose of the ___________________ is to protect the public's interest in matters concerning insurance.
State insurance department
All of the following are unfair claims settlement practices EXCEPT
Suggesting negotiations in settling the claim True- (these are types of unfair claims settlement practices) Refusing to pay claims without conducting a reasonable investigation. Failing to adopt and implement reasonable standards for settling claims. Failing to acknowledge pertinent communication pertaining to a claim.
If a company wants to appoint a producer, which entity must it notify?
The commissioner
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?
The customer's associates, friends, and neighbors provide the report's data. **Both consumer reports and investigative consumer reports provide additional information from an outside source about a customer's character and reputation, and both types of reports are used under the Fair Credit Reporting Act. The main difference is that the information for investigative consumer reports is obtained through an investigation and interviews with associates, friends and neighbors of the consumer.
An insurer conducts business in Louisiana without a certificate of authority. Hundreds of policies are sold, and claims start rolling in. Which of the following is true?
The insurer will have to pay the claims anyway. ****if an insurance company decides to transact insurance illegally, it still will be responsible for paying any claims that are filed under its fraudulent policies.
A producer is charged with committing several crimes in Louisiana. Who is required to report the charges to the Commissioner?
The producer
The regulation of the insurance industry primarily rests with
The state
What is the main justification for the existence of the State Insurance Department?
To protect the public
A producer's license has been revoked for a violation of the Insurance Code. When can the producer apply for a new license?
Within 1 year of the revocation ****if a producer license has been revoked, the producer may file another license application within 1 year from the effective date of revocation, or within 5 years from the date of final court order if judicial review of revocation is sought.
If a resident producer or solicitor has a change of residential or business address, how soon must the licensee notify the Commissioner?
Within 30 days
Which of the following producers will be required to complete continuing education hours to renew his license?
a producer licensed 4 years ago who holds only one line of authority
forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
coercion **for example, 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.
if an insurance company cancels a producers appointment, the
commissioner must be notified within 30 days. **TERMINATION OF APPOINTMENT- insurance companies can terminate the appointment of a producer at any time. if an insurer terminates a producer's appointment, the commissioner must be notified within 30 days after the effective date of the termination.
Reciprocity
occurs when the state in which the person accords the same privilege to residents of Louisiana. • The producer's home state awards nonresident producer licenses to residents of Louisiana on the same basis
the purpose of insurance regulation is to
promote the public welfare
The primary goal of the commissioner's office is to?
protect the public welfare where insurance is concerned.
Charla wants to serve as a producer for Commissions Galore Insurance Company. In addition to obtaining her producer's license, what else must happen before she can officially transact insurance for CGIC?
she must be appointed specifically by CGIC ****Before a producer can serve as an agent for a given insurance company, the producer must first be appointed by the company.
an insured is dissatisfied with her insurance policy and wants to negotiate certain provisions of the contract. what entity would her producer represent?
the insurer **under agency law, producers legally represent the insurance company with which they are contracted.
a temporary license may be issued without examination to all f the following, except
the spouse of a retiring insurance producer true- the spouse or legal representative of a deceased insurance producer. the designee of a licensened insurance producer who enters active duty in the US Armed Forces or Navy. the employee of a disabled licensed a producer.
If an agent changes his residence address, within how many days must the agent notify the Commissioner of the change? If a resident producer or solicitor changes his residence or business address, how soon must the licensee notify the commissioner?
within 30 days **failure to notify the commissioner within 30 days could result in a $50 fine
