Chapter 10 Insurance Regulation
Licensees must make a report of any action taken against them in another jurisdiction or by another governmental agency in Pennsylvania within how many days of the final disposition of the matter?
30
_______ days To report, notify, correct, or provide a response of any change such as address, criminal conduct, & department inquiry
30
Which of the following terms 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
License fee for nonresident insurance producers
$110
Lapsed license fee
$165
Licensing Process
-Complete prelicensing education -Pass examination -Submit application and fees -Submit fingerprints
Types of Licenses
-Individuals: resident and nonresident -Business entities -Temporary license - valid for 180 days; issued to maintain the existing business
New insurance licenses are issued for a period of....
2 years.
A producer sold an insurance policy. Subsequently, his license was suspended. In this case, how much of the commission will the producer receive?
All
An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act?
Fraud
A producer has become disabled. In order to keep his business going, what may his designee do?
Obtain a temporary license
In which of the following situations would punishment include imprisonment?
Omission of a material fact with intent to embezzle funds
Paul is a producer in Ohio and wants to become a producer in Pennsylvania. The Commissioner will waive certain examination requirements, provided that Ohio would waive these same requirements if a Pennsylvania producer sought licensure in Ohio. What term is used to describe this phenomenon?
Reciprocity
A licensee serving in the military is unable to fulfill her continuing education requirement. What would the licensee have to do to renew the license?
The licensee may submit a request to the department to have requirements and fees waived. The department will then determine if the request is permissible.
Inducement -
an offer that attempts to influence the other party
Limited Lines Insurance
any other type of insurance as determined by the Commissioner.
Property insurance
coverage for the direct and consequential loss or damage to property of every kind;
Life insurance -
coverage on human lives
Variable life and variable annuities
coverage under variable life and/or variable annuities;
Aggrieved
injured party; someone entitled to begin a lawsuit or request a hearing
The purpose of producer licensing is to .....
make sure that producers have adequate knowledge of insurance when selling insurance to customers on behalf of insurers in this state.
Personal Lines Insurance
noncommercial property and/or casualty coverage;
It is not unlawful to sell insurance out of state with a ....
nonresident license.
Commissioner
the head of the state Department of Insurance
Waiting period before rate filings go into effect
30 days
Licensees must make a report of any administrative action taken against them in another jurisdiction or by another governmental agency within
30 days of the final disposition of the matter.
After moving to Pennsylvania for nonresident to become licensed as a resident
90 days
If a licensed person is moving to Pennsylvania, he or she may become licensed as a resident by submitting a completed application within
90 days of establishing residence in Pennsylvania with proof of licensing or a letter of clearance from the prior home state, and pay the appropriate fees.
In order for a foreign insurer to do business in this state, it must apply for and obtain
A certificate of authority.
Which of the following would be required to be licensed as an insurance producer?
A salaried employee who advertises and solicits insurance
An individual was just caught acting as an exclusive general agent - even though he is not properly licensed. Assuming that this occurred in a single day, what is the maximum penalty he faces?
A third degree misdemeanor and a $1,000 fine
NOT be considered an unfair and deceptive practice
Controlled business
30 days
For Commissioner to approve or disapprove changes to a form
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?
The Fair Credit Reporting Act
Which of the following entities established the Do-Not-Call Registry?
The Federal Trade Commission
Exclusive General Agents
a licensee which has been granted sole authority to act directly or indirectly as an insurance producer for a domestic insurer with respect to a specific portion of the insurer's business or within a specific territory
Reciprocity/Reciprocal -
a mutual interchange of rights and privileges
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 days
Commissioner will examine each insurer
5 years
If a licensed person is moving to Pennsylvania, he or she may become licensed as a resident if they submit a completed application within how many days of establishing residence in Pennsylvania with proof of licensing from their prior home state?
90 Days
Which of the following includes information regarding a person's credit, character, reputation, and habits?
Consumer report
Casualty Insurance
Coverage against legal liability;
If an insurer appoints a producer, which authority must be notified?
Department of Insurance
Which of the following regulatory authorities participated in creating the National Do Not Call Registry?
FTC
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
Fair Credit Reporting Act
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
False advertising
10 days
Hearing on rate filing after insurer is informed of disapproval
Which of the following best describes a misrepresentation?
Issuing sales material with exaggerated statements about policy benefits
Which of the following licensees is classified as a representative of the insurance company and not allowed to represent an insured or claimant?
Producer
Privacy: Gramm-Leach-Bliley Act
Rules regarding disclosure of nonpublic personal information to nonaffiliated third parties
The National Do Not Call Registry was created to regulate
Telemarketers.
Which of the following is an example of a producer being involved in an unfair trade practice of rebating?
Telling a client that his first premium will be waived if he purchases the insurance policy today
Which of the following entities must approve all continuing education courses in this state?
The Commissioner
If a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur?
The change must be reported to the Commissioner.
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 report's data.
Respond to the consumer's complaint.
Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must
Statute -
a formal written law enacted by legislature; insurance statutes can be found in the state Insurance Code
A producer's license must be renewed
biennially (every 2 years).
Accident and Health Insurance
coverage for sickness, bodily injury or accidental death, and disability income;
Credit Insurance
debt insurance (limited line)
Statutory -
enacted or regulated by a statute
Managers
is a person that negotiates and binds ceding reinsurance contracts on behalf of a domestic insurer or manages all or part of the insurance business of an insurer and does not act as an agent for that insurer.
Civil penalty for each intentional violation of insurance laws regarding unfair methods of competition
$5,000
What is the minimum age for obtaining an insurance producer's license in this state?
18
Reciprocity
occurs when the state in which the person resides accords the same privilege to residents of Pennsylvania.
If a licensee moved out of state, they must give up their Pennsylvania resident license.
they must give up their Pennsylvania resident license.
Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?
Discrimination
Motor vehicle rental insurance
auto rental insurance (limited line)
Coercion
forceful act or threat aimed to influence a person to act against his or her will
Even though a prospective licensee passes the state exam, ....
he or she cannot sell insurance until the license is actually issued.
Aggregate penalties for intentional violations within 6 months
$50,000
License fee for resident insurance producers
$55
To correct the violation if a person failed to respond to the Department's inquiry within 30 days
15 day to respond
To obtain a license, a prospective licensee must be at least ...
18 years old, complete prelicensing training and pass the exam, pay applicable fees, and have not committed any prohibited acts.
Prior to license renewal, all insurance producers must successfully complete a minimum of
24 credit hours of CE.
Pennsylvania requires ____ of prelicensing training prior to taking an insurance exam.
24 hours
A producer has successfully completed 52 hours of CE. How many hours can the producer apply to her current reporting period, and how many hours can she carry forward to the next reporting period?
24 hours will be applied to the current reporting period, and 24 can be applied to the period immediately following. The excess 4 hours may not be carried over.
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
Ethics education included in prelicensing education requirements
3 hours
An insurance producer who has the authority to sell annuities must complete at least
4 CE credits in an approved annuity training course.
Which of the following criminal activities would be sufficient violation to warrant rejection, revocation, or suspension of an insurance producer's license?
Forgery
Written notice of a hearing for a person suspected of prohibited behavior
10 days
Civil penalty for each unintentional violation of insurance laws regarding unfair methods of competition
$1,000
Aggregate penalties for unintentional violations within 6 months
$10,000
What is the civil penalty for violating a cease and desist order of the Commissioner?
$10,000
Fine per day for failure to correct any violation
$100
Nonresident Producer
An individual or business entity currently licensed as a resident producer in another state, may apply to the Department for a nonresident producer license, for line of authority equivalent to their existing license.
Producer
An insurance producer is a person who sells, solicits or negotiates contracts of insurance. It is unlawful to act as a producer without a license
Which of the following authorities is authorized to issue a temporary insurance producer's license?
Commissioner
After a hearing, if the Commissioner finds that a licensee is in violation of the state insurance laws, the Commissioner can NOT
Imprison the licensee.
If another governmental agency takes legal action against a licensee, whose responsibility is it to report the action?
The licensee
Temporary producer licenses may be granted for
up to 180 days.
Cease and desist
to stop or discontinue
When applying for insurance producer licenses, business entities must
-Have one or more designated licensees, in good standing with the Department; -Apply for licensure in the same lines of authority held by the designated licensees; -Have not committed any prohibited acts; -Be owned, operated, and managed by persons possessing general fitness, competence, and reliability; -Pay all applicable fees; and -Meet any other criteria established by the Department.
Agent Regulation
-Only one license of the same type is allowed per agent -Must be licensed in the line of authority for which the agent transacts insurance -Avoid unfair trade practices
Fair Credit Reporting Act
-Protects consumers from circulation of inaccurate and obsolete personal financial information -Consumer reports and investigative consumer reports
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce
Without receiving written consent from an insurance regulatory authority.
Commission
payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium
The licensing examination will not be required, if the applicant is a business entity or a person who
-Has professional designations -requirements are waived by the Commissioner -Is licensed in another state as an insurance producer for the lines of authority for which the person is seeking a resident license—is applying for limited line credit insurance, or any other limited line of insurance; -Will be licensed in domestic mutual fire insurance, appointed to an insurer that does not sell automobile insurance; or -Will be appointed with a fraternal benefit society.
To reinstate a lapsed license with current effective date
1 year
Insolvent -
unable to meet financial obligations
Home office (domicile) -
a state in which an insurer is organized and has its main place of business
Line of authority -
a type of insurance a producer or a business entity is authorized to transact
Insurer Regulation
-Must obtain Certificate of Authority -Responsible for agent appointments -Must meet solvency requirements -Avoid unfair trade practices or unfair claim settlements
Do Not Call List
-National Do Not Call Registry -Strict telemarketing rules -Insurers must consult the current registry every 31 days
