code quiz 3

For an insurer to be solvent they must have enough assets to cover: a.All of these b.reinsurance c.paid-in-capital d.liabilities

a.All of these

Which of the following statements are true with regards to rate approval in the State of CA? a.Insurers are required to deliver evidence that the rates are reasonable and fair. b.If the Commissioner fails to respond within 30 days then the rate is considered approved. c.The Commissioner has a maximum of 90 days to approve or reject the rates. d.The CA DOI uses the Open Approval system for rates.

a.Insurers are required to deliver evidence that the rates are reasonable and fair.

Public Law 15 exempted insurers from most federal regulation is known as: a.McCarran-b.Ferguson Act Gramm-Bliley Act c.ERISA Regulations d.Kennedy Act

a.McCarran-b.Ferguson Act

The specific classifications which cannot exist include the following except: a.Nicotine use b.Sexual orientation c.Ancestry d.Religion

a.Nicotine use

What type of Valuation would this statement be: An appraised $200,000 house burns and is a total loss? The insurance company pays $230,000 to rebuild the house. a.Actual Cash Value b.Replacement cost value c.Market Value d.Valuation Value

b.Replacement cost value

All of the following are true regarding the Gramm-Leach-Bliley Act except: a.The GLB act gives authority eight federal agencies. b.The GLB includes provisions to protect consumers against insurance companies financial failure. c.The GLB is also know as the Financial Modernization Act of 1999. d.The GLB allows the administration of the Financial Privacy Rule and the Safeguards Rule.

b.The GLB includes provisions to protect consumers against insurance companies financial failure.

California Privacy Act established standards concerning insurance for: a.All of the above b.collection of information c.use of information d.disclosure of information

a.All of the above

#7 An Insurance Claims Analysis Bureau shall perform the following functions: a.All of the above b.Promote training c.Disseminate information d.Gather information

a.All of the above

#27 Which of the following is not true with regards to Surplus lines? a.Surplus lines insurers are admitted insurers who specialize in offering insurance to the high risk market b.Most states require that Surplus lines insurers be on the state's approved list. c.Surplus lines insurers are unregulated but operate under each state's Surplus lines laws d.The type of business Surplus lines insurers offer is referred to as Excess Lines Insurance

a.Surplus lines insurers are admitted insurers who specialize in offering insurance to the high risk market

#28 The following are true in regards to the California Insurance Guarantee Association except: a.The Association is directed by a 9 member Board of Governors who are elected by voters for a two year term b.The maximum claim covered would be $500,000 or the policy limit c.The purpose of the association is that each member be provided with insolvency insurance d.The association is funded by its member insurers

a.The Association is directed by a 9 member Board of Governors who are elected by voters for a two year term

Since CA uses the Prior Approval system in filing rates, what happens if the Commissioner fails to respond within 60 days? a.The company may use the filed rates and may consider them approved b.The company may not use the filed rates until the Commissioner has either approved or rejected the rates c.The company must not use the filed rates since no response by the Commissioner means: rates not approved d.The company must file a request to receive the reasons why the filed rates are being rejected and resubmit new filing.

a.The company may use the filed rates and may consider them approved

Which of the following statements with regards to the CIGA is true? a.The maximum claim covered is $500,000. b.Covered claims do include claims of $100 or less. c.The Association is directed by a ten member board of governors. d.The Association is funded by premium payments of the consumers.

a.The maximum claim covered is $500,000.

What regulates trade practices in the insurance business accordance with the intent of Congress? a.Unfair Practices Article b.Uniform Insurers Rehabilitation Act c.The California Administrative Code of Regulations d.Public Law #15

a.Unfair Practices Article

#3 Advising a client to obtain the services of an attorney is considered to be: a.acceptable b.both a violation and unfair practice c.an unfair practice d.a violation

a.acceptable

#32 The follow are all responsibilities of the Commissioner of Insurance except: a.Oversee the DOI, directing all its affairs and staff in compliance with the code b.Authority to change the code but may not write new laws c.Appoint people to negotiate settlements with agents or insurers who have violated the code d.Issue regulations that establish how the DOI intends to interpret and enforce the law

b.Authority to change the code but may not write new laws

#9 Every company in California is required to report its financial condition to the Commissioner: a.Every month b.Every year, on or before March 1st c.Every quarter d.Every year, by Dec 31st

b.Every year, on or before March 1st

A Special Surplus Line broker may transact all of the following except: a.Insurance on property that engage in interstate commerce thru railroad operations b.Insurance on antique automobiles c.Insurance on property being exported by land or water d.Aircraft insurance

b.Insurance on antique automobiles

#23 The following are fair discriminations which would allow an insurer to increase the insured's auto rate except? a.Insured has caused 2 accidents b.Insured has been divorced c.DUI on their driving record d.Insured has only be driving for 1 year

b.Insured has been divorced

All of the following are types of Valuations used by insurers except: a.Stated Value b.Market Value minus the depreciation. c.Agreed Value d.Replacement Cost Value

b.Market Value minus the depreciation.

#33 This law recognized that state regulation of the insurance industry was in the public's best interest and EXEMPTED the insurance industry from the federal regulation required for most interstate commerce industries. a.Paul vs. Virginia 1869 b.McCareen-Ferguson Act of 1945 c.Public Law 25 d.SEUA Case of 1944

b.McCareen-Ferguson Act of 1945

#16 What is the main role of the Commissioner and the Department of Insurance? a.Administer the California Insurance Code b.Regulate the conduct of agents and insurers in California c.Regulate the business of insurance in California d.Make sure consumers are not abused or taken advantage of by the companies and agents with whom they do business

b.Regulate the conduct of agents and insurers in California

#21 A unwillful violation of Unfair Practice can be fined up to: a.$1,000 per violation b.$10,000 per violation c.$5,000 per violation d.$20,000 per violation

c.$5,000 per violation

Which of the following statements are not true? a.If convicted of insurance fraud the fine could be twice the amount of the fraud. b.If convicted of insurance fraud the fine can be up to $150,000. c.Full repayment to victims can be required instead of the fine amount. d.Insurance prosecutors may prosecute insurance fraud as a misdemeanor.

c.Full repayment to victims can be required instead of the fine amount.

In order to purchase P/C insurance, you must be able to show insurable interest. Which of the following would not meet the insurable interest requirement? a.Jason owns a beach home as a secondary residence and wants insurance b.Jason obtained a loan so he could buy a car for his sister who drives it 100% of the time and he wants insurance c.Jason wants insurance for his father's home d.Jason wants insurance on a car which he sold to his best friend but Jason still carries the bank loan on the car

c.Jason wants insurance for his father's home

#4 Which of the following means Insolvency? a.Being able to provide for all its liabilities and for reinsurance of all outstanding risks b.An insurer must also possess additional assets equivalent to such aggregate c.The inability of the insurer to meet its financial obligations when they are due d.Not being able to meet the many financial, technical, and legal qualifications that must actually be met by the code

c.The inability of the insurer to meet its financial obligations when they are due

#1 The penalties for the insurer for unfair discrimination violation determined to be a general business practice is: a.$15,000-$50,000 b.$25,000-$50,000 c.$5,000-$25,000 d.$15,000-$100,000

d.$15,000-$100,000

#31 Which of the following CIGA claims would be covered and paid in full? a.A property damage claim in the amount of $600 on a policy that has a $500 deductible b.A bodily injury claim in the amount of $1000 on a policy that has a $1000 deductible c.A homeowners claim in the amount of $750,000 on a policy that has a $1000 deductible and a limit of $500,000 d.A workers' compensation claim in the amount of $90.

d.A workers' compensation claim in the amount of $90.

No rate shall be approved or remain in effect that contains all of the following except: a.Violation of the California b.Insurance Code Inadequate c.Unfairly discriminatory d.Excessively higher than the competition

d.Excessively higher than the competition

#5 The insurance Commissioner is elected at the same time as the: a.State Senators b.President c.State Representatives d.Governor

d.Governor

#12 Which one of the following would be considered an acceptable actuarial classification for discrimination? a.The color of someone skin b.The national origin someone might be from c.The religion someone might practice d.How much someone weighs

d.How much someone weighs

Cal-GLBA affects many aspects of agents business EXCEPT: a.How client files are secured. b.How firm markets, collects, and shares information. c.An Opt in and Opt out system. d.How the agent services, defends, and pay claims.

d.How the agent services, defends, and pay claims.

This law was the first to recognize that state regulation of the insurance industry was in the public's best interest. a.United States vs. Southeaster Underwriters Association b.McCarren-Ferguson Act c.Public law #5 d.Paul vs. Virginia

d.Paul vs. Virginia

CIGA protects policyholders against insolvency of all the following, except: a.Auto Insurers b.Burglary insurance c.Marine Insurers d.Self-insurers

d.Self-insurers

#25 According to the Code the fastest growing area of fraudulent activities is: a.workers comp fraud b.health insurance fraud c.None of the above d.auto insurance fraud

d.auto insurance fraud

HIPPA addresses how licensees must protect clients: a.None of these b.personal information c.financial information d.medical information

d.medical information