Insurance Regulation

Insurance producer licenses are the property of

The state

In order to comply with continuing education regulations in South Dakota, licensees must fulfill specific requirements every

2 years

Once the Director issues a Cease and Desist order, a hearing must occur no later than how many days after the date of the order?

20

When a producer is making the mandatory report for any administrative action taken against an insurance license by any governmental agency, the report must include

A copy of the order, consent to order, or other relevant legal documents

Which of the following must a domestic insurer applying for its certificate of authority have to prove its solvency?

Capital stock

Which of the following is NOT used to determine if an insurer's operation is likely to cause trouble?

Consumer complaints

How many hours of continuing education requirements must producers with one license complete every 2 years?

10

Which of the following would NOT be considered a misrepresentation on the part of the insurer?

Backdating policies to secure a lower premium for the insured

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

A producer may obtain a loan from a client

If there is a written contract that includes terms for repaying the loan

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?

Illegal

In which of the following situations is it legal to limit coverage based on marital status?

It is never legal to limit coverage based on marital status

On its advertisement, a company claims that is has funds in its possession that are, in fact, not available for the payment losses or claims. The company is guilty of

Misrepresentation

South Dakota offers producers licensed in another state the same privileges that the other state offers South Dakota producers requesting nonresident licenses. What term is most closely associated with this?

Reciprocal licensing

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 purchased the insurance policy today

Which of the following entities established the Do-Not-Call Registry

The Federal Trade Commission

What is the maximum amount that an insurer may be assessed for the Insurance Fraud Prevention Unit Fund?

$250

If a person is suspected of violating insurance laws, what can the Director issue that would order the person to stop violating the violations?

Cease and Desist Order

A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of

Coercion

Which of the following reports will provide the underwriter with the information about a consumer's credit?

Consumer report

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

Illegal under any circumstances

A producer in Ohio wants to become a producer in South Dakota. The Director will waive certain examination requirements, provided that Ohio would waive these same requirements if a South Dakota producer sought licensure in Ohio. What term is used to describe this phenomenon?

Reciprocity

It is suspected that a producer is consistently violating insurance laws. Which of the following entities is responsible for making sure that the producer stops committing these violations?

Director

A South Dakota producer wants to obtain a producer's license in another state. This state waives the written examination requirement, assuming that the producer has passed an examination in South Dakota. If a producer from that state has passed that state's exam and wants to apply for a nonresident license in South Dakota, what will most likely happen?

The written examination requirement will be waived

All of the following are reason that the Director of Insurance may issue a temporary insurance producer license EXCEPT

To the designee of a licensed insurance producer entering reserved status in the armed forces of the United States

A producer's license must be renewed every

Year

An insurer has appointed a producer to be its agent. How long does the insurer have to file a notice of the appointment?

15 days

Which of the following persons is required to hold a producer license?

A person who negotiates insurance contracts

What is the maximum percentage of continuing education hours a licensee may receive from 1 insurance company's courses?

50%

All else being equal, which of the following will NOT be considered unfair discrimination by insurers?

Discriminating in benefits and coverages based on the insured's habits and lifestyle

Tim and Tom are twins. When they applied for life insurance form Company A, the insurance company found that while neither of them smoked and both had avery similar lifestyle, Tim was in a much stronger financial position than Tom. Because of this, the company charged Tim a higher rate for his insurance. This practice is called

Discrimination

When do authorized insurers re-evaluate their rates according to the impact of fraud prevention?

Every 3 years

All of the following actions can be described as twisting EXCEPT

Explaining to client the advantages of permanent insurance over term and suggesting changing policies

Insurance producers in South Dakota must provide a notice about the insurer's privacy policies and practices to customer

Initially when dealing with them, annually, and when obtaining a new policy and the notice has been revised since last given

The money penalty for any case in which the director has the power to deny an application, revoke, refuse to renew, or suspend the license of any insurance producer, solicitor, or administrator or the certificate of authority of any insurance company

May not exceed $5,000 for an insurance producer or $25,000 for an insurer, administrator, or health maintenance organization for each offense

In any case in which the Director has the power to deny an application, revoke, ruse to renew, or suspend the license of any insurance producer, solicitor, or administrator or the certificate of authority of any insurance company or health maintenance organization, the Director may

Permit an applicant or licensee to elect in writing to pay a specified monetary penalty within a specified time in lieu of a license suspension or other permitted action

A producer's license must be renewed annually for how many years, at which time the license will expire?

Producer's licenses are perpetual (A producer's license is perpetual, as long as the appropriate fee is paid each year and the license has not been suspended, revoked, or otherwise terminated)

Once a person applies, the Director determines if the person is eligible to be an insurance producer. Which of the following is NOT something the Director verifies?

The applicant's educational background

One of the officers of an insurance corporation is convicted of violating a state insurance law, and his license is revoked. What is the worst possible effect that this could have on the corporation?

The corporation's license could be revoked

The Director has asked a producer's client to offer testimony in an investigation involving the producer's insurance company. The client and the producer have always had a very good relationship, and the client likes the work the producer has done with him.

The producer should not attempt to influence the client in any way

An insurance company assures its new policy holders 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

If an insurance license is terminated, what must the ex-producer do with the license?

The producer must return the license to the Director

An insurer has terminated an agent's appointment. How soon must the insurer inform the Director?

30 days

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of

Misrepresentation

The Director of Insurance may issue a temporary insurance producer license without requiring an examination for a period

Not to exceed 180 days

A producer in another state wants to become a producer in South Dakota. The other state gives the same privileges to South Dakota producers wanting to be licensed in that state as it does its own producers. South Dakota therefore extends privileges of its producers to the prospective producer of the other state. What is this called?

Reciprocity

Under the Fair Credit Reporting Act, if the consumer challenges the correctness of the invocation contained in his/her report, the reporting agency must

Respond to the consumer's complaint

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

Twisting

If a producer has administrative action taken against his license, he must report such action

Within 30 days of the final disposition on such action