CH#8 Insurance Regulation Q&A

Misrepresentation

During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes A) Twisting. B) Coercion. C) Misrepresentation. D) Defamation

Reinstatement fees may be double the unpaid renewal fee

Which of the following is true about license reinstatement A) Lapsed licenses cannot be reinstated. B) To reinstate a license, a producer must pass a written examination. C) Reinstatement fees may be double the unpaid renewal fee. D) A license can only be reinstated within 6 months from the renewal date

Rebates are allowed if it's in the best interest of the client

All of the following are true regarding rebates EXCEPT A) Rebates are only allowed if specifically stated in the policy. B) Rebating can be anything of economic value, given as an inducement to buy. C) Dividends are not considered to be rebates. D) Rebates are allowed if it's in the best interest of the client

30 days

An insurance producer moves into a new house. How many days does he have to notify the Director of his address change A) 30 days B) He does not need to notify the Director because the change of address involves his residence, not his business. C) 10 days D) 15 days

3

How many hours of Ethics must a producer complete as part of continuing education every 2 years A) 2 B) 3 C) 4 D) 5

Apply and pay a fee to a nonresident state that reciprocates

In order to get a nonresident license in this state, producers must A) Surrender their license in their state of residence. B) Apply and pay a fee to a nonresident state that reciprocates. C) Pass the nonresident state exam and satisfy their continuing education requirements. D) Represent an agency located in this state

Promote the public welfare

The purpose of insurance regulation is to A) Keep producers honest. B) Make insurance companies pay taxes. C) Promote the public welfare. D) Make insurance statutes uniform between states

Fiduciary responsibility

The requirement that producers must account for all insurance funds collected, and are not permitted to commingle those funds with their own funds (without the expressed consent of the insurance company) is known as A) Accepted accounting principal. B) Fiduciary responsibility. C) Premium accountability. D) Fiscal responsibility

Defamation

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) Nothing, unless the remarks were in writing B) Defamation. C) Misrepresentation. D) Discrimination

Making derogatory oral statements about another insurer's financial condition

Which of the following best describes the unfair trade practice of defamation A) Issuing false advertising material B) Refusing to deal with other insurers C) Making derogatory oral statements about another insurer's financial condition D) Assuming the name and identity of another person

Consumer report

Which of the following includes information regarding a person's credit, character, reputation, and habits A) Insurability report B) Agent's report C) Consumer report D) Consumer history

Making comparisons between different policies

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 producer promptly forwarding premiums to the insurance company

Which of the following is an example of a producer's fiduciary responsibilities A) A producer helping clients to file claims B) A producer doing a review of his client's coverage C) A producer offering additional coverage to his client D) A producer promptly forwarding premiums to the insurance company

Consultant

Which of the following is licensed solely to advise insureds about their policies A) Actuary B) Consultant C) Agent D) Broker

Controlled business

Which of the following would NOT be considered an unfair and deceptive practice A) Defamation B) Misrepresentation C) Controlled business D) Rebating

A producer's retirement

This state provides for a temporary license for all of the following EXCEPT A) A producer's time in the military service. B) A producer's retirement. C) The death of a producer. D) A producer's disability

Fraud

An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act A) Unfair discrimination B) Errors and omissions C) Fraud D) Defamation

Notify the DOI within 30 days

If a producer changes locations, what must be done A) Notify the DOI within 30 days B) Notify the DOI within 15 days C) Notify the appointing agency D) Nothing

21 days

If the Director requests information regarding a claim, within how many days must the insurer provide a response A) 3 days B) 10 days C) 21 days D) 31 days

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

Rebating is an unfair trade practice and is regulated by law. All of the following would be considered to be rebating EXCEPT A) An agent offers tickets to a baseball game as an inducement to buy insurance. B) An agent misrepresents policy benefits to convince a policyowner to replace policies. C) An agent offers the use of his lake house to person as an inducement to buy. D) An agent offers to share his commission with a policyholder

Must be informed of the source of the report

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

Backdating policies to secure a lower premium for the insured

Which of the following would NOT be considered a misrepresentation on the part of the insurer A) Embellishing the benefits provided in the policy B) Overstating returns on policy dividends C) Backdating policies to secure a lower premium for the insured D) Implying that term insurance has cash value

10 years

Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to A) 3 years. B) 5 years. C) 10 years. D) 12 years

3 years after the policy terminates

How long must records associated with an insurance policy be kept A) Until the insurance company is no longer in business B) 10 years C) 3 years after the policy terminates D) 5 years after the policy terminates

Any attorney-at-law may be considered a consultant

Which of the following is NOT true about an insurance consultant in the State of Oregon A) Consultants offer advice for a fee. B) Individual may act as consultants in both life and health, and property and casualty insurance. C) A consultant must hold a valid license. D) Any attorney-at-law may be considered a consultant

Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered

Which of the following would be considered an unfair claims settlement practice A) Requesting the insured swear under oath concerning the facts of the claim B) Delaying the settlement of a claim for 30 days in order for the insured to conduct an investigation C) Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered D) Requesting the insured to submit a signed proof of loss statement, after the insured has already verbally advised the insurer of the claim

The Director may accept the application provided that the producer pays twice the amount of regular renewal fees and satisfies his continuing education requirements

A producer's Life and Health license expired on December 31, 1997; however, his renewal application was not received until March 13, 1998. Which of the following is true regarding the producer's license renewal A) The Director will accept the renewal application because the producer submitted it within 1 year of expiration. B) The Director will not renew the license. C) The Director will renew the license provided that the producer pays the regular renewal fees and passes the licensing exam. D) The Director may accept the application provided that the producer pays twice the amount of regular renewal fees and satisfies his continuing education requirements

Controlled

Bob the insurance producer just sold an insurance policy to his sister. What kind of business is this A) Controlled B) Internal C) Fraternal D) Familial

Nothing

If a nonresident producer for this state changes his or her home address, what must the producer do to comply with the Oregon rules A) Notify the Oregon Department of Insurance within 30 days B) Notify the NAIC within 30 days C) Nothing D) Notify the Oregon Department of Insurance within 10 days

The producer must notify the Director within 30 days of the final disposition of the matter

A producer became subject to an administrative action by a governmental agency (not the state Department of Insurance). Which of the following would be considered an appropriate action A) The director must suspend the producer's license. B) The producer must notify the Director within 30 days of the final disposition of the matter. C) The producer doesn't have to do anything since the administrative action is initiated by an entity other than the Department of Insurance. D) The producer must surrender his or her license within 90 days

Ancestry

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) Ancestry. B) Credit history. C) Habits. D) Prior insurance

Defamation

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance A) Undercutting B) Twisting C) Slandering D) Defamation

A salaried employee who advertises and solicits insurance

Which of the following would be required to be licensed as an insurance producer A) An insurance company director who performs executive, administrative and managerial duties B) A salaried employee who advertises and solicits insurance C) A person whose activities are limited to producing insurance advertisements D) A salaried full-time employee who furnishes information for group insurance

The Director of the Department of Consumer and Business Services

What authority issues a Cease and Desist Order A) Federal Board of Insurance Fraud B) The Director of the Department of Consumer and Business Services C) Law Enforcement Officials D) National Association of Insurance Commissioners (NAIC)

18

What is the minimum age requirement for applicants for an insurance license A) 19 B) 18 C) 21 D) 16

Cease and Desist Order

If the director finds a licensee in violation of the Insurance Code on unfair practices or methods of competition, he/she will issue a A) Complaint record. B) Rebate. C) Criminal penalty. D) Cease and Desist Order

Misrepresentation

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 A) Concealment. B) Unfair claim practice. C) Rebating. D) Misrepresentation

No later than 30 days

Producer A is prosecuted for a crime. He must notify the Director within what time frame after the initial pretrial hearing date A) No later than 30 days B) 3 months C) Immediately D) 10 days

Director

Which of the following entities is in charge of making sure that producers follow the Insurance Code properly A) Governor B) NAIC C) Director D) State law enforcement

Suggesting negotiations in settling the claim

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

90

Bob was issued a temporary insurance producer's license 90 days ago. The license will expire in how many days A) 0 B) 10 C) 60 D) 90

3 years after the policy expiration

How long must insurers keep the records of transactions under the license A) 5 years after policy issue B) 7 years C) Permanently D) 3 years after the policy expiration

A producer who handles insurer funds in a trust capacity

Concerning insurance, the definition of a fiduciary is A) A retail clerk. B) A producer who handles insurer funds in a trust capacity. C) A person who handles assets or money belonging to others. D) All of the above

If a nonresident producer changes her residence address

To comply with Oregon rules and regulations, producers are required to communicate all of the following changes to the Department of Insurance EXCEPT A) If a nonresident producer changes her residence address. B) If a resident producer changes her business address. C) If a producer decides to close his business. D) If a resident producer changes his business telephone number

12 months

Within what time period can a producer reinstate a lapsed license without having to pass a written examination A) 6 months B) 3 years C) 12 months D) 90 days

7

Notice of a hearing for a cease and desist order must be given at least how many days in advance A) 30 B) 7 C) 10 D) 15

3 days

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

Dividends from a mutual insurer

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT A) An offer of employment. B) Stocks, securities, or bonds. C) An offer to share in commissions generated by the sale. D) Dividends from a mutual insurer

Without receiving written consent from an insurance regulatory authority

Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce A) Without receiving written consent from a Federal Judge. B) Without receiving written consent from an insurance regulatory authority. C) Under any circumstances. D) Unless they have served an appropriate prison sentence.

3

Insurers must keep records associated with a given policy for how many years after the policy expiration A) 20 B) 3 C) 5 D) 10

Claims must be either paid or acknowledged within 30 days of notification

Which of the following is true regarding payment of claims by an insurer A) Upon an inquiry, the insurer must furnish a response to the Director within 30 days. B) If a claim investigation is extended beyond the initial period, the insurer must keep the claimant informed of the progress every 30 days. C) Claims must be either paid or acknowledged within 30 days of notification. D) Insurers must investigate all claims within 30 days of the receipt of notification

3 years

The Insurance Director shall examine every authorized insurer. How long must insurers keep records pertaining to the insurance transactions under the license A) 5 years B) 7 years C) 1 year D) 3 years

30 days

In Oregon, how long does a producer have to notify the Director of a change in location or name A) 7 days B) 10 days C) 30 days D) 45 days

A new Director is put into office

All of the following events will terminate a producer's certificate of appointment EXCEPT A) A producer's license expires and is not renewed. B) A termination is issued by the appointing insurer. C) A producer's license is suspended or revoked by the Department of Insurance. D) A new Director is put into office

Illegal under any circumstances

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act A) Illegal until endorsed by the Guaranty Association B) Legal, provided that the other insurers are paid royalties for the usage of their names C) Illegal under any circumstances D) Legal, provided that the information can be verified

Every 2 years

How often must a producer renew his or her insurance license A) Every 3 years B) Every 10 years C) Annually D) Every 2 years

Quit the actions stipulated in the order

If a Cease and Desist Order is issued, what must the violator do A) Quit the actions stipulated in the order B) Suspend all insurance transactions until the insurer can be investigated for possible violations C) Quit selling insurance D) Quit all insurance transactions

Reciprocity

Paul is a producer in Washington and wants to become a producer in Oregon. The Director will waive certain examination requirements, provided that Washington would waive these same requirements if an Oregon producer sought licensure in Washington. What term is used to describe this phenomenon A) Fair exchange B) Equanimity C) Reciprocity D) Equality

Regulates consumer reports

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

$1,000

What is the maximum civil penalty for individual producers for violating the Insurance Code A) $500 B) $1,000 C) $5,000 D) $10,000

A person who negotiates insurance contracts

Which of the following persons is required to hold a producer license A) A person who negotiates insurance contracts B) A person who creates insurance advertisements C) A person who takes messages related to claims D) A person who administers employee benefits

Confirming future dividends in a life insurance proposal

Which of the following would be considered an illegal inducement to purchase insurance A) Listing the insurance companies the agency represents in a letter B) Inviting prospective clients to the grand opening of the producer's new office C) Confirming future dividends in a life insurance proposal D) Mailing an agency brochure to a prospective client

Producer C uses her license to write uncontrolled business only

Which of the following would not be a violation of State insurance regulations A) Producer C uses her license to write uncontrolled business only. B) Producer D collects premiums due on policies and deposits the funds in his own personal account. C) Producer A uses her license to write only insurance for herself and her immediate family. D) Producer B charges his clients, in addition to the premium, a consulting fee

The Director

Who establishes the fees that must be paid in conjunction with an application for an insurance license A) A group of reinsurers B) The Director C) The insurer D) A group of producers