Chapter 10: Insurance Regulation
A state-issued document empowering an insurance company to become an admitted insurer is called what?
Certificate of Authority
What is the civil penalty if you ignore a cease & desist order
$10,000 fine
Cost of renewal for non residents
$110
The fee for a lapse renewal license?
$165
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
$2,500
Cost of renewal for residents
$55
How long can revocation last?
1 year
A licensed producer moving to Pennsylvania may become licensed as a resident if the producer submits a completed application within how many days of establishing residence in Pennsylvania with proof of licensing from their prior home state?
90 days
Twisting
A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage.
What is the main purpose of a temporary license, and how long can it be in effect?
A temporary license may be issued for the continuation of business in the event of the producer's death, disability, or military service, and it may remain in effect for 180 days.
Exemption from licensing
An insurance producer license is not required of any officer, director or employee of an insurer or organizations employed by insurers, provided they are not directly or indirectly involved with the actual sale of an insurance contract and do not receive any commission.
The state insurance code does not identify what act to be grounds for suspension, revocation, or denial of an insurance producer license?
Committing a misdemeanor
If an insurer appoints a producer, which authority must be notified?
Department of Insurance
What authority monitors the financial strength of insurers?
Department of insurance
Representative of the consumer
Do not have company appointments and also known as a broker
Unfair Claims Settlement Practices
Failing to approve or deny coverage of a claim within a reasonable period after a proof-of-loss statement has been completed,
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
What does a producer not have the ability to do?
Issue policies
A policy condition that states if a policy is broadened with no additional premium than the expanded coverage will be automatically applied to all policies of the same type is known as
Liberalization
lines of authority
Life & Health P & C Variable life Personal lines
A manager is
Person that negotiates and binds ceding reinsurance contracts on behalf of a domestic insurer not acting as an agent
The term "fiduciary capacity" refers to a producer's?
Position of financial trust to clients and insurance companies
Fiduciary Capacity
Position of trust, employer-employee
A producer's fiduciary duty requires that
Premiums are forwarded to the insurer on a timely basis
Premium rates
Price for a unit of insurance.
What are the four types of licenses?
Producer/agent Business entity Non resident Temporary: 180 days
Personal Lines Insurance
Property and casualty noncommercial insurance for an individual
The Gramn-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 filed with a financial institution.
How can the guarantee association help with a conservator?
Providing money to pay claims and un-used premiums but ONLY specified limits
A producer licensed in another state wants to become a producer in another state. The other state gives the same privileges to PA producers wanting to be licensed in that state as it does own agents. PA then fore extends the privileges.
Reciprocity
Commision of Insurance Duties
Supervise Monitor licensing Approve Policies & Forms Enforce insurance law & impose penalties Conduct examinations, investigations, & hearings
Which act created a federal program that would share the risk of loss from potential terrorist attacks with the insurance industry?
TRIA (Terrorism Risk Insurance Act)
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 reports data.
Which entity established the do not call registry?
The federal trade commission
Commissioner
The head of the state department of insurance appointed by government.
How does the department of insurance verify an individual's licensing status?
Through producer database maintained by NAIC
What is the purpose of insurance guaranty association?
To protect against insolvent or bankrupt insurers
Ceast & Desist
To stop/discontinue
Conservator
a court-appointed person given authority to manage the financial affairs of an incompetent person
inducement
an offer that attempts to influence the other party
What constitutes rebating?
any inducement offered to the insured in the sale of insurance products that is not specified in the policy
A manager is a person that negotiates?
binds ceding reinsurance contracts on behalf of domestic insurer
In order for a foreign insurer to do business in this state, it must apply for and obtain
certificate of authority
Who approves all continuing education courses? ?
commissioner
which of the following authorities is authorized to issue a temporary insurance producer's license?
commissioner
Variable Life Insurance
coverage under variable life or annuities
If an agent makes maliciously critical statements about another insurer what is this practice called
defamation
Aggrieved
distressed, wronged, injured
How often must continuing education be completed?
every 2 years
In insurance transactions, fiduciary responsibility means
handling insurer funds in a trust capacity
If a producer lapse his renewal what happens
has 1 year to get reinstated by submitting re-newel form with fee of $165 and verify continuing education
When applying for insurance producer licenses, business entities must
have at least 1 license in good standing Not committed wrongful acts Be owned, operated, and managed w/ fitness, competence Pay fees and other criteria
According to the privacy of consumer financial information regulation, if a consumer decides to opt out, this means
not to disclose information to a third party
What kind of situation would deem for imprisionment?
omission of a material fact with intent to embezzle funds
Twisting
persuading to cancel, lapse, or change
Who may share in the commission from the sale of a life insurance policy?
producer
Exclusive General Agent produces and underwrite what?
produces 1 year amount of premium equal to or more than 25%
What do you not have do in order to renew a license?
renewal examination
Insurance producers that do not have company appointments are considered an
representative of the consumer
what is the process of renewing a producer's license?
submit proper forms Pay fees provide proof of CE Fingerprints if needed
insolvent
unable to pay debts owed
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?
10 years
What is the penalty for fraud or fraudulent statements?
10-15-year imprisonment
A producer has completed 52 hours of continuing education. How many hours can the producer apply to her new current reporting period, and how many hours can she carry towards the next reporting period?
24hrs to current and 24 hr to next period because a max of 24 hrs can be carried over only
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the form will be obtained?
3 days
line authority
A type of insurance a producer or a business entity is authorized to transact for direct and consequential loss or damage to property.
Limited Lines of Insurance are
Any type of insurance as determined by commissioner
What entity established the do not call registry?
Federal Trade Commission
The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?
Fiduciary
What type of licensee represents the insurance company?
Fiduciary
under what circumstance can financial institutions share insurance coverage information with third parties for the purpose of soliciting the purchase of insurance?
If a consumer does not sign and return the notice of disclosure within 30 days
How does the insurance guaranty association get funded?
Usually through insurance companies through their total amount of unused premiums in that state paid up to specified limit's
When would a miss representation on an insurance application be considered fraud
When it is intentional and material
When is controlled business legal?
When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state)
Can agents have more than one apointment?
Yes
If you do not earn commission are you exempt from licensing
Yes
conservator
a court-appointed person given authority to manage the financial affairs of an incompetent person
What is the difference between a consumer report and an investigative consumer report?
a licensee which has been granted sole authority to act directly or indirectly as an insurance producer for a domestic insurer
How long does a producer have to notify the commissioner of a change of address?
telephone or mail within 90 days
Exclusive General Agents Requirement
underwrites in any 1 yr. amount with 25% surplus.
Reciprocity
waiving insurance licensing terms for non resident if state awards licenses to producers on the same basis
What does the department of insurance do?
• Licenses and regulates insurance companies. (There is a whole list, know basic)
If name changes or address how many days do you have to notify?
30
How many days do you have to report administrative actions against themselves?
30 days
Punishment if caught acting as a unlicensed person
3rd degree misdemeanor and $1,000 fine each day
If a producer has authority to sell annuities how many credits of CE do you need?
4
Insurer Responsibilities
Appoint producer to act as agent File notice of agent appointment Pay appointment fees
How is the commissioner selected for the office?
Appointed by the governor
When must the commissioner examine ensures books and records?
As deemed necessary at least once every few years
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 days
For the purpose of examination by the department, insurers must keep a record of all financial files for at least
5 years
Within how many days do you have to have license reinstated retroactively?
60
What are the examination of insurances required to do by law?
Audit every few years (Check number for PA)
Aggregate limit for intentional violations?
$50,000
Maintaining a license
-CE every 2 years -renewal fees -current name, address -reinstatement within 12 months
When can one reinstate their license after a lapse
1 year
Hearing on rate filing after insurer is informed of disapproval
10 days
Written notice of a hearing for a person suspected of prohibited behavior
10 days
Fine per day for failure to correct any violation
$100
How many days do you have to correct the violation of a person who failed to respond to department of inquiry within 30 days
15 days
Number of ethics hours
3
How many days for a commissioner to approve or disapprove changes to a form?
30 days
How many days to you have to provide a response to the department of inquiry?
30 days
Waiting period before rate filings go into effect?
30 days
Commissioner will examine each insurer within
5 years
Who is exempt from the licensing requirement in this state?
Officers, directors, or employees of an insurer or of an insurance producer who do not receive commission on policies written or sold.
Exclusive General Agent
a licensee which has been granted sole authority to act directly or indirectly as an insurance producer for a domestic insurer w/n specific territory and has authority to bind coverage on behalf of insurer
The commisioner is
a person sent to meet with others to plan and make official decisions
National Association of Registered Agents and Brokers
amends Gramn-Leach-bliley