General Insurance 2
Claims forms are required to include the following statement related to fraudulent claims:
"Any person who knowingly presents a false or fraudulent claim for the payment of a loss is guilty of a crime and may be subject to fines and confinement in state prison."
An MGA acts as an agent and produces and underwrites gross direct written premium equal to or more than 5 percent of the policyholder surplus as reported in the insurer's last annual statement and either:
Adjusts or pays claims in excess of an amount determined by the Commissioner, or; Negotiates and binds ceding reinsurance on behalf of the insurer
The CIC defines "insurance" as
a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event.
Any situation that presents the possibility of a loss is known as
a loss exposure.
In order to transact insurance (sell insurance),
agents must hold at least one insurer appointment.
An insurance company that is based in Canada and doing business in California is an
alien insurer.
Dividends received by policyholders of a mutual insurer
are not taxable.
People under age 60 who buy life insurance
are required to receive a minimum 10-day free look.
A representation may be altered or withdrawn
before the insurance is effected, but not afterwards.
The process whereby a mutual insurer becomes a stock company is called
demutualization.
The Doctrine of Utmost Good Faith allows
each party to rely on the representations made by the other party.
An insurance company based in Utah that is selling in California is a
foreign insurer
Before making a sale, the first thing an agent should do is
identify the client's overall financial objectives.
The Insurance Commissioner shall be elected by the people
in the same time, place and manner as the Governor.
Neither party to a contract of insurance is bound to communicate, even upon inquiry,
information of his own judgment upon the matters in question.
An intentional concealment entitles the
injured party the option to rescind the contract.
Either intentional or unintentional concealment entitles an
injured party to rescission of a contract.
The Principle of Indemnity is most closely associated with
insurable interest.
Each authorized insurer is required to establish a division within the insurer to
investigate fraudulent claims.
A nonparticipating policyowner will not receive dividends. Nonparticipating policies are
issued by stock insurers.
The following information does not need to be communicated in a contract:
known information information that should be known information which the other party waives information that is not material to the risk
An MGA (managing general agent) can be any person, firm, association, partnership, or corporation that
manages all or part of an insurer's business (including a separate division, department or underwriting office).
Under federal law, upon conviction, a "prohibited" person
may be imprisoned 10 to 15 years and fined up to a maximum of $50,000 per violation.
The State Insurance Guarantee Fund provides protection to policyholders whose insurer becomes insolvent (financially impaired). This fund only covers
member insurers (licensed insurance companies).
The interpretation of policy provisions is
not a primary objective of insurance regulation.
Providing free insurance coverage in connection with the sale of services as an inducement for completing the transaction is
not legal.
Financial exposure is
not one of the three major types of loss exposures.
There are specific duties of a partnership whose membership has changed. To return the old license with signatures of the original members to the Commissioner is
not one of those duties.
You must be able to identify who may be an insurer:
person, association, organization, partnership, business trust, limited liability company or corporation.
A representation in an insurance contract
qualifies as an implied warranty.
An insurance company that has enough reserves to pay for all its liabilities is
referred to as a solvent insurer.
It is a misdemeanor to
refuse to deliver any books, records, or assets to the Commissioner once a seizure order has been executed in an insolvency proceeding.
A primary insurer is the insurance company who transfers its loss exposure to another insurer in a
reinsurance transaction.
A person age 60 or older who buys life insurance in California is
required to receive a 30-day minimum free look.
Stock insurers pay dividends to
stockholders, not policyholders.
In life insurance, the measure of liability is the
sum or sums payable as provided in the policy to the person entitled thereto.
If an agent issues a binder for a company they are not appointed by
the Commissioner can suspend or revoke the agent's license.
Life insurance creates an immediate estate upon the death of the insured in that the death benefit will be paid to
the beneficiary upon their death.
Dividends are declared by
the board of directors and cannot be guaranteed.
A representation is false when
the facts fail to correspond with its assertions or stipulations.
Under Section 770 of the CIC,
the insurance Commissioner will usually issue a cease and desist order for a violation of more than one transaction if the violation dealt with loans on the security of real or personal property.
If an insured signs a fraudulent claim form,
the insured may be guilty of perjury.
Policies issued by Mutual insurers pay dividends to policyholders. The dividend option is selected by
the policyholder on the insurance application.
In a life insurance policy illustration "nonguaranteed elements" means
the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue.
The price of insurance for each exposure unit is called
the rate.
If the insurer discovers the insured has violated a material warranty,
they can rescind the contract (void the policy).
Life Insurance policy illustration regulations
were not created to eliminate disclosure.
In life insurance, insurable interest must exist
when a policy is first issued.
Under federal law, a "prohibited" person is a person
whose activities affect interstate commerce and who knowingly, with the intent to deceive, makes any false material statement or financial report to any insurance regulator for the purpose of influencing their actions.
A "prohibited" person may not engage in the business of insurance without the
written consent of the Commissioner.
