Chapter 10-Insurance Regulation
Who establishes the fees that must be paid in conjunction with an application for an insurance license
director
Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor what is this called
discrimination
Insurers are classified according to their domicile. What are the three types of insurers?
domestic, foreign, alien
The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility
fiduciary
What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?
misrepresentation
If the Director requests information regarding a claim, within how many days must the insurer provide a response?
21 days
What is controlled business
Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Twisting
What are the most common penalties for violations of insurance statutes
A cease and desist order, a fine, and license suspension or revocation
Who is an insurance agent
A person authorized to sell, solicit and negotiate insurance contracts
Who is considered a nonresident agent
An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state
If an insurer holds a Certificate of Authority, it is known as what type of insurer?
Authorized or admitted
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?
Authorized or admitted
If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?
Cease and desist order
A state-issued document empowering an insurance company to become an admitted insurer is called what?
Certificate of Authority
Which of the following terms best describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance
Defamation
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
What type of insurer is formed under the laws of another state
Foreign
In general, who can be excluded from producer licensing and examination requirements?
Insurance company officers, directors, or any other employees who do not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive or clerical)
Which of the following best describes the concept of company solvency
Maintaining capital or surplus in excess of the required amount
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 what is the company guilty of
Misrepresentation
Who may share in the commission from the sale of a life insurance policy?
Only producers properly licensed for the type of insurance transaction
An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?
Rebating
The federal fair credit reporting act
Regulates consumer reports
Who owns stock companies
Stockholders
Who must be notified of a producer's change of address?
The Department of Insurance (Commissioner/Director/Superintendent)
Who establishes the fees that must be paid in conjunction with an application for an insurance license
The director
Who is responsible for the costs associated with the examination of insurers
The insurer who is being examined
To whom may a certificate of authority be issued?
To an insurer authorized to transact business in this state
When would a misrepresentation on an insurance application be considered fraud?
When it is intentional and material
When can the Commissioner or Director examine insurers?
Whenever deemed necessary, but at least once every few years (please check your state regulations for specific time requirement)
What type of licensee represents the insurance company?
agent
Which of the following would not be considered an unfair and deceptive practice
controlled business
If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?
defamation
If the director finds a licensee in violation of the insurance code on unfair practices or methods of competition he/she will issue a
Cease and desist order
What document is required for an insurance company to transact insurance
Certificate of Authority
What are the producers required to do in order to renew their license
Complete continuing education hours and pay a renewal fee
Which of the following is licensed solely to advise about their policies
Consultant
What is the purpose of a cease and desist order
To prevent a producer or insurer from further violating laws for transacting insurance
How long must insurers keep records of transactions under the license
3 years after the policy expiration
If a licensee has been convicted of certain crimes while licensed, he or she is required to submit a supplementary application to the Director. Within what time period must this be done?
30 days after the date of the final judgment
All of the following events will terminate a producers certificate of appointment except
A new director is put into oddice
Which of the following would be required to be licensed as an insurance producwr
A salaried employee who advertises and solicits insurance
Which of the following best describes misrepresentation
Issuing sales material with exaggerated statements about policy benefits
A producers 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 producers new license
The director may accept the application provided that the producer pays twice the amount of regular renewal fees and satisfies his continuing education requirements