Chapter 2

Temporary License

Issued upon death, disability, or military leave of a producer, to another to act on their behalf 3 months but can extend by the supper intended of Insurance.

Home State

where a producer is licensed maintains there primary Residence or business

Rebating / Gift

Tangible Value has to be a 15 dollar or less Name of the producer or insurer printed on it

Redlining

Only illegal for Auto Policy refusing auto Insurance sole on based on geographic location

Captive Exclusive Agent

Only represents on insurance Company

Domestic Insurance

Organized or incorporated in NY Stated

Alien Insurer

Organized or incorporated outside the US

Stock Insurance

Owned by share holders, share in the profit and losses

General Compensatory

Pain and suffering

Special Compensatory

Pays Bills

Acting like a prodcucer when your not one

Untill you are physically holding your license your not considered a producer.

Producer

Any License or Broker sells solicits or negotiates insurance

Co Mingling

Mixing Premiums with any othere account is illegal

Compensatory Damages

These indemnify the injured party

Misrepresentation

Written or verbal lie of a material Fact

Consumer Privacy

(Graham Leach Bliley Act) 1 Must clearly disclose there privacy police and Practices 2 Must give the policy holder the option to opt out of having there information Shared on an annual Bases

Fraternal Benefit Society

(type of mutual) owed by the policy holders, only available to members of certain organizations. They have the right to asses the additional premium at the end of the year to cover there Losses

Producer licensing Renewal

1 All Licenses renew on your birthday of every year depending odd or even 2 Renewal app must be submitted in 60 Days prior to 3 licensing expiration if your application is late you pay a 10 dollar late fee

Reasons License Can be suspended

1 Misrepresentation on licensing application 2 Comitting fraud or Dishonest Practice 3 Incompetence 4 Untrustworthy 5 Financial Irresponsibility 6 Any felony Conviction 7 Insurance license denied or Suspended in another Stated Cheating on any Insurance Exam

Unfair Claims Practices

1 Misrepresentation when related to claims 2 Fail to acknowledge of Communications 3 Failure to Initiate suitable turn around of Claims 4 Bad Faith Litigation Compelling a claimant to institute legal action when its not necessary 5 Failure to disclose coverages and other relevant information 6 rejecting a claim w out written Notice 7 Making a claim payment with out explanation 8 Not responding to a NY Department Inquiry with in 10 Days

Process To be Licensed

1 Must be 18 2 Pass a min of 40 hour Licensing Class 3 Pass the NY stated licensing Exam an pay the fee 3 Complete the licensing application and pay the 80 dollars licensing Fees 4 Be Trustworthy

Agent Duties

1 Underwrite and Supply the insurance company with underwriting information 2 Prepare the quote and sell the policy 3 Create a binder 4 Counter sign and issue the policy 5 Collect Premiums 6 Provide a link between insurance companies and the insured by servicing the policy

Continuing Education Obligation

1 You have to complete 15 hours of continue education following your first two years 2 There is a 10 dollar filing fee for continuing education obligation 3 Baggage agents do not need to complete continuing education

Consultant License

1 a license producer that sells there advice by making recommendations. 2 Don not represent the insurance company 3 Do not earn Premiums 4 all consultant contracts must by keped for 3 years

Superintendent of Department of Financial Services (Super Intended of Insurance)

1) Appointed by the govener of NY 2) Term is congruent with that of the govener, and he service a 4 year term 3)Runs the NY department of financial Services which is now comprised of the banking Department, and the insurance Department 4)Directly responsible for issuing, revoking and suspending insurance licenses 5)conducts investigation of suspected law violations 6) Ad-minsters NY involentery program

Insurane Fraud Prevention Act

1) This Law defines insurence fraud as a criminal act 2) Allows a miximum of 5,00 dollars in Civil Funds 3) Establishes a fraud buero (Investigates the reports on Insurane fraud) 4) Superintendent can sapina for witnesses and Documents 5) Buero can submit its findings to law inforcement agencies 6) by 3/15 of every year the Fraud report is due (this details the superintendets campain against Fraud 8/1 The special Fraud Studies report is do, An analysis of Insurance Fraud Trends 7) All Auto Insurance must have a fraud Disclaimer on there application and Claim Form 8)All insurance companies must maintain a seperate department aimed at admitagating fraud Losses 9) All producers must reprt suspected Fraud with in 30 Days to the Frauds Buero 10) This Provides an imunity from law suits if someone is suied for reprting Insurance Fraud

Name and Address Change

All Producers must notify department of insurance if you change your name or address with in 30 days No longer Maintain a residence in NY your license is Automatically terminated

Foreign Insurer

A company that is organized or incorporated out of NY but with in the US

Special Compensation

Any payment other then a commission licensed producers may charge additional compensation for Evaluation Recommending, Advising, Examining, Appraising, Reviewing only if the following is done. 1 Keep the contract signed by both parties for three years 2 Specifies in the contract the amount of the special Compensation

Contractual Liability

Assumed under contract making your self legally liable that your normally not libel for Hold Harmless Contract

Solicit

Atempting to sell insurance or asking a person to apply for insurance

Express Authority

Authority given to the agent by the Principal either orally or writing

Punitive Damages

Awarded by a judge over compensatory to punish Gross negligence or recklessness only ordered by a judge

Comparative Neglagence

Blame the victim accused pays a percent, and the victim pays a perecent

Contributory Negligence

Blame the victim and the victim pays 100 perecent

Bsiness Entity

Business license to sell insurance Include Corporations general Partnerships Sole Proprietors LLC and Corporations

NY Departmentof Insurance

Certificate of Authority (license for an insurance company to do business) Before an insurance company can do business in Ny it mus apply for and receive a certificate of authority ( they are considered admitted or Authorized) Policy Holders of an admited insurence company are protected by the State Guarentee act

Termination of Agent Appointment

Certificate of appointments are valid until terminated by appointed insurance company or if the agent license is suspended, revoked or expires or is non renewed

Risk Retention Group

Companies need insurance they create and form there own insurance company the company formed is called the Captive- and that provides insurance to its owners.

Reciprocal

Companies that need insurance agree to insure each other

Purchase Group

Companies that need insurance form an agreement and Purchase together. for usually a discounted rate

Negotiate

Conferring or offering advise to an insured in regards to benefits insurance terms or Conditions

Monitors Solvency of Insurers

Department has the right to monitor books and records at any time 2) March 1 of every year an annual statement 3) Maintains minimum standard for record book Keeping 4) All producers are expected to report any insolvency to the insurance department Financial rating by others then the NYSDOI Am Best Duff And Felts Moodys Standard And Poors

Ratificiation of Policy Forms and Rates

Department has to approve all Policy forms and rate Changes (File and use - insurance company must final the change and then they can use it MUST IN NY) Use and File - can change the rate and then use it

False Advertising

Distribution or circulation of false information indicating that the insurer or producer has authority to take action or write types of insurance that they are not authorized to do includes making misleading claims and using deceptive wording

Adjuster License

Estimated the amount of damages after a loss all adjusters are licensed

Sell

Exchange of money for an Insurance Contract

Negligence

Failuar to use proper care to keep others from harm. Duty to protect injured party Breach of legal Duty owed Proximate cause Actual injury

Twisting

Form of Misrepresentation where the producer convinces the client to cancel there insurance policy and to by there insurance policy which is detriment to the client

Waiver 1033 and 1034

Fraud Conviction, if a person has been previously convicted of fraud they can only hold an insurance license or hold a position in the insurance industry need the written consent of the superintendent

Involentery Program

Government program the designed to Provide insurance for those that could not get it other wise. (example: medicade)

Penalties

Guilty plea 1 Cease and desists order- that you stop and no longer do the illegal action you were doing

Apparent Authority

If the customer who is dealing with the agent believes that the agent has the authority to act the insurance company is bound by the agents actions

Unfair Discrimination

Illegal to discriminate based on race color cread nation oragin mental or physical disability or domestic violence if there infomration is protectyed and they have an order of protection

Jail Time

In Ny State Jail Time Varries Federal Crosses state lines 15 years or 50 thousand dollar fine

Display of Licenses

In any location where business is conducted the license of the Supervising producer must be Displayed

Appointment of Agent

In order to represent an insurance company that insurance company must appoint the agent

Agent

Independantly licensed producer 1 they represent the insurance company there for they combined policy and make policy changed 2 Earned Comissions on Earned Premium only 3 Authority of the agent extends to the agents employees 4 Notice of loss to an agent is the same as it is to the insurance company 5 May or may not owen there owen there owen experation dependent on the contract the they negotiate with there insurance

Government Insurance

Insurance provided directly by the state or federal Government (flood Insurance, Medicare, Medicaid)

Non Resident License

Issued to a non resident of ny state who is licensed in their home state and it allows them to sell policy in NY stated

Deformation of Insurer

Making a misleading statement of the solvency of another insurance Company

Damages

Money

Reporting Criminal Charges

Must be resorted to the NY state Department of Insurance with in 30 Days of a pre trial hearing

Reporting Actions

Must report any action taking against you by a government agency against professional license, actions would include fines suspensions warnings

Implied Authority

No written or verbal communication specifying what there allowed or not allowed to do

Commission and Compensation

Only Licensed producers 1 Producers may split there commissions with others licensed producers

Fines

Per Offense 500 Per hearing is 2500 Failuar to Respond to Inquiry after hearing per Day 500, 10,000 Max False Advertising 5,000 Insurance Fraud Prevention Act 5.000 Deformation of an insurer and 1 year in jail 1,000 Not paying any fine with in 20 days license revoked or suspended Guilty of 5 or more civil penalties within five years 50,000

Fiduciary

Person in the position of trust all producers are Fiduciary because there trusted with othere peoples money

Regulation 194

Producers must be transparent in regards to the compensation they are receiving all discloses on file for 3 years

Assumed Names

Producers must only use there legal names as reported to the department of insurance Not Alieses

Maintains Complaints Bureau

Recieves complaints from the public regarding producers and companies (they forward the complaints to the insurance companies, every complain must be answered, and the insurance company must keep detailed complaint records for 6 years)

Fair Credit Reporting Act

Regulates the Collection Distribution and use of Consumer Reports. 1 Protects the consumer Privacy 2 Promotes Accuracy 3 Allows for the promt correction of errors Legal reasons to Run Credit Reports In connection with credit transaction Housing related transactions underwriting Insurance Employment Purposes Government Agency's that issue licenses and benefits Child Support investigation Agency In response to a court Order National Security Purposes 4 Must inform the applicant before we run the report 5 Must advise the applicant as to where they could uptain a copy of the report

Public Adjuster

Represent the policy holder in the negotaion and setalment of the claim

Broker

Represents the Policy Holder Independently Licensed Producer which means there self Employed Does not have the Authority to binde or to Modify the insurance Policy Broker Deals with Many insurance agency Earned there full commission once the policy issued and the premium has been payed Broker always owns there owned Experation which is the right to renew an insurance Policy Brokers Keep the Float

Agent/ Independent Agent

Represents two or more insurance Companies

Sarbaines Oxly Act

Requires and Regulates Financial Institution and insurance companies to report there financial information.

Company Adjuster

Salaried by the insurance company to investigate and settle claims

Independent adjuster

Self employed adjusters who lent there services to insurance company not salaried paid by the job

Direct Writer Company Employee

Similar to a captive agent except is salary and commission by the agent * ie Geico Employees

Assumption of Risk

The injured party new the risk but took the chance any way

Hearings

The superintendent will provide 1 At least 10 Days notice when calling to a hearing written 2 the accused can be represented by councel 3 Superintendent will provide written notice of his finding follwing the hearing

Excess Lines Broker

This Producer is Licensed to Place Specialized risks w a none admitted insurer when that risk can not be written w any admitted insurer. 2 the Producer must first be licensed as a broker befor becomin an excess lines broker 3 Excess lines broker app is 400 Dollars

Deffense Against Liability

To get out of payin anything or to lesson the amount

Suspensions Revocations and None renewals

Usually only suspended after a hearing but if the Superintend feels you are serious threat to public well fair he can immediately suspend license and then call a hearing. 1 year to Get license back

Negligence Per Se

When some one violates a law and as a result someone is injured the law breaker is automatically liabel

Strict or Absolute Liability

You are Liabel no matter what only specialize situation Dangers Animals, tunnelin excavation, explosive Principal to Policies written by the agent

Lloyds

a market for insurance where individual insures underwrite Risks

Statute of Limitation

law suits must be filed with in a specific time of claim

Vicarious Liability

one party i responsible for another party Parents are liable for there children employer always legally liable for the employees

Mutual Insurance

owned by there policy holders, and the policy holders share in the profit and the losses

Marketing Distribution System

the way that they get there buisness in