Insurance Regulation

Fine for nonwillful violations of the Insurance Code

$1,000

Fines for violating producer licensing requirements

$500-$2,500

Producer Regulation

-Must be licensed in the line of authority for which the producer transacts insurance -Must be appointed by an insurer to transact business for the insurer -Avoid unfair trade practices ANCESNTORY IS NOT RELEVANT

Insurer Regulation

-Must maintain solvency -Appointment of agents -Avoid unfair claims settlement practices and unfair trade practices

For an insurer to respond to claimants' questions

10 business days

For insurers or producers who adjust claims to notify insured that claim was received

10 business days

For an insurer to respond to Department of Banking inquiries

15 buisness days

Insurers must file notice of producer appointment

15 days

Insurers must notify the affected producer of appointment termination

15 days

Maximum duration of a temporary license

180 days

Term of a producer's license (expires in odd numbered years)

2 years

commissioner's term of office

2 years

Required CE hours every 2 years

24 hours

Maximum duration of an interim license

24 months (2 years)

Extension of CE requirements

6 months

Date of a producer license expiration

April 1st

Insurers wishing to transact insurance in Vermont must make application to the Commissioner for a

Certificate of Authority.

Coercion

is to require, as a condition to a loan, that the applicant purchase insurance from a specific insurer.

Maximum fine per willful violation of the Insurance Code

$10,000

Fine for willful noncompliance with Fair Credit Reporting Act

$2,500

Licensing Process

-18 years of age -Complete prelicensing education -(varies by state) -Pass examination -Submit application and fees

Minimum age to apply for an individual producer license

18 years old

The Commissioner may issue a temporary insurance producer license for a period not to exceed ___days without requiring an examination if the Commissioner deems that the temporary license is necessary for the servicing of an insurance business in the following cases:

180

Licensing

Be at least 18 years old; Be competent, trustworthy, financially responsible, and of good personal and business reputation; Have paid the appropriate fees; Have successfully passed all required examinations for that license; and Have not committed any act that is a ground for denial, suspension or revocation of a license.

A producer is a member of the Army Reserves. He is called upon to serve during a peacekeeping mission. In order to keep his business going, what may his designee do? AFile for federal aid designed for this situation BHire a temporary producer to run the business during the producer's absence CObtain a temporary license DSuspend operations Correct! A temporary license can be issued to the designee of a licensed producer if the producer enters active duty in the armed forces of the United States.

C

An insured has just gotten a divorce and is considering changing the terms of his life insurance policy. He would like to get an expert's opinion about what his options are and which one of those options would be the best for him to choose. Which of the following people are licensed to advise in such cases, in exchange for a fee? APolicy provisions specialist BBroker CConsultant DAdvisor

C

Controlled business

any coverage written on a producer's own life, health or property, and/or that of the producer's immediate family or business associates A licensee is not allowed to collect commissions on controlled business above the state-specified limit. if the Commissioner finds that during any 12-month period the aggregate commissions earned from controlled business has exceeded 25% of the aggregate commissions earned on all business written by the applicant or licensee during the same period.

Types of Licenses

-Individuals: resident and nonresident -Business entities -Temporary license - valid for 180 days; issued to maintain the existing business

Fair Credit Reporting Act

-Protects consumers against circulation of inaccurate or obsolete personal financial information

Reporting of change of business/residental address

30 days

Time period for a producer whose appointment was terminated to respond

30 days

To report administrative action or criminal prosecution against producer

30 days

Which of the following would NOT be considered a misrepresentation on the part of the insurer? ABackdating policies to secure a lower premium for the insured BImplying that term insurance has cash value CEmbellishing the benefits provided in the policy DOverstating returns on policy dividends

A

The Commissioner has the authority to:

Issue subpoenas; Conduct examinations and investigations; Conduct hearings; Administer oaths; Examine papers and records.

interim licenses

Not valid for more than 24 months the qualifications, requirements and fees for an interim license will be the same as for a regular license in the same line except that the written exam testing professional competence will be of a lesser degree of difficulty than the written exam for a regular license. An interim license will not be renewable once it has expired.

Fair Credit Reporting Act became law on April 25, 1971

The act established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used. The law also protects consumers against the circulation of inaccurate or obsolete information.

Investigative Consumer Reports

are similar to consumer reports in that they also provide information on the consumer's character, reputation, and habits. The primary difference is that the information is obtained through an investigation and interviews with associates, friends and neighbors of the consumer.

The prohibited information includes

bankruptcies more than 10 years old, civil suits, records of arrest or convictions of crimes, or any other negative information that is more than 7 years old.

Rebating

defined as any inducement offered to the insured in the sale of insurance products that is not specified in the policy. Both the offer and acceptance of a rebate are illegal.

Consumer Reports

include written and/or oral information regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources.

Limited Lines Producer

means a person authorized by the commissioner to sell, solicit or negotiate limited lines insurance.

"Insurance producer

means a person required to be licensed under the laws of Vermont to sell, solicit or negotiate insurance.

"Surplus lines insurance broker"

means an individual who solicits, negotiates or procures a policy of insurance in an insurance company not licensed to transact business in Vermont which cannot be procured from insurers licensed to do business in this state.

"Consultant"

means an individual, resident or nonresident who, for a fee, holds himself or herself out to the public as engaged in the business of offering any advice, counsel, opinion or service with respect to the benefits, advantages or disadvantages promised under any policy of insurance that could be issued in Vermont.

"Adjuster"

means any person who investigates claims and negotiates settlement of claims arising under policies of insurance in behalf of insurers.

Appraiser

means any person who investigates claims and negotiates settlement of claims arising under policies of insurance in behalf of the insured.

Public adjuster

means any person who investigates claims and negotiates settlement of claims arising under policies of insurance in behalf of the insured.

Examination of insurers who receive annual audits

5 years

Commissioner/Director of Insurance

-Regulates the internal affairs of the -Department of Insurance -Does not write laws -Examines all authorized insurers APPOINTED BY GOVERNOR

Nonresident individuals may receive a nonresident producer file if the following requirements are met:

-The person is currently licensed as a resident and in good standing in his or her home state; -The person has submitted the proper request for licensure and has paid the required fees; -The person has either submitted to the Commissioner the application for licensure that the person submitted to his or her home state, or a completed Uniform Application; and -The person's home state awards nonresident producer licenses to residents of this state on the same basis (called reciprocity).

Maximum commissions earned from controlled business in a 12-month period

25%

Required CE in ethics

3 hours

Examination of domestic insurers

3 years

For Commissioner to approve policy forms, applications, riders and renewal forms before delivery

30 days

For Commissioner to hold hearing after license request because of license denial or nonrenewal

30 days

Insurers must inform the Commissioner of termination of producer appointment

30 days