(2) Life, Health & Accident Licenses Exam Study-Series 103
Unfair Trade Practices
1) Misrepresentation 2) False Advertising 3) Twisting--replacement policy to client that did not need it. 4) Churning--replacing policy to competitor client that did not need or benefit the person. 5) Defamationoral or written statements trying to injure a person or entity is prohibited, especially when it is critical of the financial status of a person or insurer 6Boycott, coercion, and intimidation - illegal acts intended to stop fair trade or monopolize insurance business are prohibited. 7) False financial statements 8) Unfair discrimination 9)Rebating - Offering and accepting any incentives for buying a policy, including money, unauthorized discounts or money back, special favors or personal services, are all illegal acts.
Continuing Education Requirements
24 hours of CE every renewal period 2 even years Up to 10 hours excess can go to next renewal period does not apply to specialty or limited licenses
Hearings
30 days hearing must be held 10 days all parties notified 30 days commissioner to make final decision 30 days for producer to appeal
Stop and Desist
30 days hearing must be held 10 days all parties notified 30 days commissioner to make final decision 30 days for producer to appeal don't stop, fines 25,000 to 250,000. & suspension and revocation of license
Certificate of Authority
An insurer must first get a certificate of authority from the Commissioner to sell insurance products in this state This makes them a ADMITTED INSURER.
Chapter 1 Producer's License
Be at least 18 years of age ii) Reside in or work mainly from an office located in Louisiana iii) Complete pre-licensing education iv) Paid their fees and submitted an application v) pass their required exam with 70% or higher*
Duties and powers of the Commissioner
Commissioner is James Donelon 4 year term 1) Issuing and revoking Licenses 2) Hire employees and examine records 3)Subpoena and hearings 4) Cease and desist orders Note: Commissioner can examine records of a producer or insurer at any time.
Reporting of Actions
Court action against producer producer must report this final disposition or ruling to the Commissioner within 30 days of the disposition Producer to send copy to commissioner within 30 days
Change of Address
Department must be notified within 10 days or face a $50 fine.
producer that is not licensed in Louisiana that moves to Louisiana from a state where they held a license
First time application and Letter of Clearance within 90 days of the date established legal residency 75.00 per line of authority
A producer that is licensed as a nonresident of Louisiana who changes to a resident Producer of Louisiana
First time application and Letter of Clearance within 90 days of the date established legal residency 75.00 per line of authority If not met will have to take pre-licensing and exam
Insurance Fraud
Fraud is the intent to deceive a) Preparing false information b) Knowingly selling policies and products for a bankrupt insurance company c) Hiding assets of an insurer to keep it away from the Commissioner d) Diverting insurer funds in any way e) Putting false information in any document or statement F) Impersonating a ins co or representative or impersonating any person or entity to have authority to direct healthcare treatment for the purpose of executing a scheme. g) Receiving money or any other thing of value for criminal purposes
Chapter 2
General Insurance Concepts
Insolvency
If company finds themselves in financial problems the commissioner can take control, he will try rehabilitation if not will liquidate.
Non-Resident License
Individuals not living in Louisiana and those without an office in Louisiana may get a Non-Resident license States that have reciprocal laws and privileges, meaning that the laws in both states are similar, A producer moving from one state to another has 90 days after establishing legal residence to become a resident licensee. and after 90 days of cancellation of their previous license
Appointments
Insurer files notice with Commissioner within 15 days Commissioner lets insurer approved within 30 days of notice If not approved Commissioner send notice to insurer in 15 days Renewal appoints Due March 1 every year Renewal fee 20.00 Rep'd after March 1, $10 late fee Insurer has 30 days to notify the commissioner of a termination of an appointment That time reduces to 15 days for fraud producer can send comments to commissioner within 30 days of the termination
Advertising
Insurer's Ads cannot be misleading and cannot have illustrations that are considered deceptive
Licensing - Term and Renewal
Licenses expire every 2 years The renewal fee is $50.00., Even numbered years for LH&A by the last day of your birth month, then late
Shared Commissions
NO license, NO commission $1,000 and $5,000 and/or receive a maximum of 2 years in jail.
Louisiana Insurance Guaranty Association
No insurer is allowed to say that policies are guaranteed by the existence of the Louisiana Insurance Guaranty Assoc. Guaranty Association Disclaimer: the Louisiana Life and Health Insurance Guaranty Associate is in place to protect consumers from bankrupt insurers within limits. If a company becomes insolvent, the association helps affected policy owners.
A Producer that was licensed as a resident of Louisiana and changes to a non-resident of Louisiana and moves back to become a resident of Louisiana
State to State Transfer Form, Letter of Clearance, return license card and $15.00. If the license is expired then a reinstatement application, Letter of Clearance and $115.00 fee is required
A producer who is licensed as a nonresident in Louisiana moving from one state to another state (i.e.: Arizona to Texas)
State to State Transfer form and Letter of Certification within 30 days Lic not current $15 and return licenses If not within 30 days Submit new application 75. for each line of authority
producer who is licensed as a resident of LA and moves to another state
State to State Transfer form and Letter of Certification within 30 days Lic not current $15 and return licenses If not within 30 days Submit new application 75. for each line of authority
Licensing - Temporary
Temporary licenses are valid only for 180 days and may be granted the following three circumstance Death Disability Active Military Service
State Regulation Examination of records
The Commissioner can examine anyone in the business of insurance in the state at anytime. Commissioner will examine Ins Co every 5 years for financial stability. 3 complaints in 30 days on a producer will be investigated
Commissioner approval
The final approval to renew a license rest with the commissioner.
Privacy of Consumer Financial Information
This Privacy regulation states that no information can be accessed by insurers without the person's consent and prevents insurers releasing this information to anyone without consent from the insured. Clients have the right to review a record of any disclosure made of their personal information
Unfair discrimination
Tying --can not say you need to buy this policy to get another policy. Tying does not include the joint sale of group life and group health coverages , such in benefit packages with employer.
National Do Not Call Registry
a) Co. established bus relationship with consumer may call up to 18 months, later fined 16,000. b) Consumer makes inquire, company can call up to 3 months from inquuiry c)Consumer # not on registry as co to put them on the co's do no call list. d) If comparer is on registry, but the co established relationship, purchase, transaction, payment. Co can call up to 18 months. d) Consumer can give company permission to call them even if they are on the National Do Not Call Registry.
Fair Credit Reporting Act (FCRA) - This federal law was enacted in 1971 and is administered by the Federal Trade Commission.
consumers have the right to know what information is being circulated about them and that the information is accurate and relevant for purposes that it is being accessed. Reports under this act are divided into two categories: a) Consumer Reports b) Investigative Consumer Reportsinterviews with friends and neighbors and affiliatesof the consumers and cannot be made without consent within 3 days of the request. If consumer want a copy must send within 5 days If don't comply 50,000 fine If decline, consumer must get a copy of report Also consumers have a right to know name and address of agency.
Licensing - Violations charge fines up to $500 per violation or $10,000 for all violations per calendar year per person for these violations:
i) Failure to comply with state or federal laws for licensees ii) Giving false information on any licenseiii) Not accounting for or sending in premium money or commingling fundsiv) Committing fraud or practicing dishonesty vi) Falsifying a contract, bindervii) Unfair trade practices with regard to insurance xiii) Getting a licensed solely to do controlled businessx vii) Failing to pay court imposed child support xviii) Failing to pay state income taxes
Illustrations
is a proposal of a life insurance policy and its fundamental parts, guaranteed and non-guaranteed, in performance over a certain period of years. Includes: Rules and disclosures Not part of policy statement Kept in a customer's file but is not a part of official contract Non-guaranteed values must be clearly marked.
Controlled business
producer only gets into the insurance business in Louisiana to sell only to themselves, their family and employer, they are writing controlled business and that is illegal. Commissioner can examine 12 months of producers book of business. If more than 25% of commission is from family and friends
Licensing - Reapplication
producer's license is revoked he may apply to the Commissioner for permission to reapply for a license after one year. if producer appeals and it is held and/or revoked he must wait 5 years to reapply for license
Gramm-Leach-Bliley Act (GLBA), officially titled the Financial Services Modernization Act of 1999,
removed the barriers between commercial banking, investment banking, and insurance. First, the company's policies regarding customer information have to be disclosed at the beginning of the relationship. Second, any customer records to be shared with related companies or others must be disclosed to the consumer prior to releasing the information and allowing them to "opt-out" Health information rules are stricter, requiring the consumer to actually "opt-in" before health information can be shared.
Gramm-Leach-Bliley Act (GLBA)
requiring states to meet guidelines for uniform and reciprocal licensing regulations have affected the La Ins Code of Law. Commission has instituted numerous changes to our pre-licensing and CE requirement to conform with other states ins laws (Producer licensing Model Act)--i.e birth month renewals, more CE hours, self study/classroom ed.
McCarran-Ferguson Act of 1945
said the federal government had the right to regulate insurance only to the extent it is not regulated by state law. In effect, the insurance industry is exempt from most federal anti-trust laws
Fraud and false statements The Violent Crime Control and Law Enforcement Act of 1994
states that anyone working in insurance that affects interstate commerce This act makes it illegal for anyone convicted of crimes involving dishonesty or breach of trust to work in the business of insurance without fulfilling this requirement first. A felon violating this Act can be imprisoned up to five years.
Assumed Names
they must notify the Department in writing BEFORE using that name while doing business in this state they will be fined $250. The Commissioner will notify this producer to stop using this unapproved name, but if they continue to break this rule, they can be fined up to $5,000
Payment to unlicensed entities
unlicensed business entity paying or accepting illegal commissions will be fined between $2,000 and $50,000 and/or receive a maximum of 3 years in jail.
