CHAPTER 5

Agent licensing requirements

-18 years or older -pass exam -submit app and pay license fees -submit to background check/be of good character -keep address current (most notify commissioner of change in 30 days) -if you get a felony, you have 30 days to report it

maintaining a license

-2 yr license -24 hrs continuing education every licensing period -renewal fees -current name and address -reinstatement fees

requirements for Texas commissioner

-citizen of Texas -well informed and qualified in the field of insurance and insurance regulation -have at least 5 years of experience in the administration of business or government or as a practicing attorney, or certified public accountant

penalties if activities affect interstate commerce:

-fine -imprisonment (10-15yrs)

Unfair

After filing a claim, an insured tells the insurer that there is more than one insurance policy in force. That insurer sets aside the claim until it hears what the other company will pay. The insurer's action will be classified as

5 years

All authorized insurers must be examined by the commissioner at least once every ______

Suggesting negotiations in settling the claim

All of the following are unfair claims settlement practices EXCEPT

Domestic insurer

An insurance company that conducts business in the state of incorporation.

$25,000.

Anyone who violates the Insurance Code of Texas may be fined up to

0

How many hours of continuing education can be carried over from one licensing period to the next?

Authorized or admitted

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Controlled business

Insurance on the producer's own life or property, or the lives or the property of the producer's family or business associates

mutual companies

Owned by the policyowners and issue participating policies; policyholders are entitled to dividends (not guaranteed)

the commissioner

The chief executive and administrative officer of the Insurance Department.

commissioner

The head of the state department of insurance.

Fiduciary

The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?

An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state

Who is considered a nonresident agent?

Complete continuing education hours and pay renewal fee

What are producers required to do in order to renew their license?

The agent

What type of licensee represents the insurance company?

Controlled business

When an individual obtains an insurance license for the primary purpose of writing insurance on him- or herself, or for members of his or her immediate family, or business, this is called

Only producers properly licensed for the type of insurance transaction

Who may share in the commission from the sale of an insurance policy?

Policyholders

Who might receive dividends from a mutual insurer?

moral turpitude

conduct that is contrary to community standards of justice, honesty or good morals

unfair discrimination

discrimination in rates, premiums, or benefits

misrepresentation

false, misleading, or deceptive statements about policy terms or benefits

coercion

forceful act or threat aimed to influence a person to act against his or her will

Alien insurer

insurance company that is incorporated outside the united states

home office

insurer's headquarters, principal place of business

false or fraudulent statements

knowingly making false oral or written statements pertaining to any aspects of insurance or insurers

exempt

not subject to a duty or obligation

domicile

the location where an insurer is incorporated, not necessarily where the insurer conducts business

cease and desist

to stop or discontinue

insolvent

unable to meet financial obligations

false advertising

untrue, deceptive or misleading statements in insurance advertising

Unauthorized or Nonadmitted

Insurers who have not been approved to do business in the state.

stock companies

Owned by the stockholders who provide the capital necessary to establish and operate the insurance company and who share in any profits or losses; nonparticipating policies, in which policy holders do not share profits or loss

"Not taxable" since the IRS treats them as a return of a portion of the premium paid.

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are

True

TRUE OR FALSE. At least 25% of a licensee's total volume of premiums in a calendar year must be from business other than controlled business.

restitution

restoration to the original condition or repayment

True

TRUE OR FALSE. Agents may hold more than one appointment.

True

TRUE OR FALSE. It is illegal to advertise protection with Insurance Guaranty Association when selling insurance products.

True

TRUE OR FALSE. The department of insurance does NOT set premium rates or establish fines and penalties.

Foreign

When doing business in this state, and insurance company that is formed under the laws of another state is known as which type of insurer?

defamation

maliciously critical statements about a person or company

Draft insurance laws

The Commissioner has full power and authority to do all of the following EXCEPT

commission

payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium

30 days

The Commissioner of Insurance issues a cease and desist order to an agent. If the agent wishes to contest the charges in court, how many days after the order was issued does the agent have to make the request?

twisiting

misleading comparison of policies to persuade insured to cancel or switch policies

rebating

offering benefits or services not specified in the policy

powers duties of department of insurance

-control and supervise all insurance business in the state -enforce insurance laws -issue license and certificates of authority -approve policy forms -conduct examinations, investigations, and hearings -impose penalties

Nonresident license

-different home state -licensed to transact in resident and nonresident states

temporary license

-issued for continuation of existing business -a short period of time, usually no longer than 180 days -approved by the department of insurance -not renewable

insurance guaranty association

-nonprofit legal entity -protects insureds against insolvent insurers -funded by member insurers -pays up to specified limits

types of licenses

-producer (agent) -business entity -nonresident -temporary

producer (agent) license

-represents the insurance company -appointed to transact on behalf of insurer -type of license we are getting

Certificate of authority

A state issued document empowering an insurance company to become an admitted insurer is called what?

Illegal under any circumstances

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?

When it is intentional and material

When would a misrepresentation on an insurance application be considered fraud?

It is issued to group insurance participants.

Which of the following is NOT true regarding a Certificate of Authority?

The trust that a client places in the producer in regard to handling premiums

Which of the following is an example of a producer's fiduciary duty?

Twisting

Which type of misrepresentation persuades and injured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

The Department of Insurance

Who must be notified if a producer changes their address?

Business Entity license

a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity; must have a designated agent

statute

a formal written law enacted by legislature; insurance statutes can be found in the state Insurance Code

reciprocity

a mutual interchange of rights and privileges

inducement

an offer that attempts to influence the other party

fraud

any misrepresentation of a material fact, made knowingly and with the intent to deceive; an act of deceit or cheating

The Commissioner

appointed by the government for a 2yr term ending on Feb 1 of each odd numbered year