insurance regulation questions (property)
what is the purpose of the Fair Credit Reporting Act?
the fair credit reporting act established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used. the law also protects consumers against the circulation of inaccurate or obsolete information. the acceptability of a risk is determined by checking the individual risk against many factors directly related to the risk's potential for loss. besides these factors, an underwriter will sometimes request additional information about a particular risk from an outside source. these reports generally fall into 2 categories: consumer reports and investigative consumer reports. both reports can only be used by someone with a legitimate business purpose, including insurance underwriting, employment screening, and credit transactions. consumer reports include written and/or oral information regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit records, and other public sources. investigative consumer reports are similar to consumer reports in that they also provide information on the consumer's character, reputation, and habits. the primary difference is that the information is obtained through an investigation and interviews with associates, friends, and neighbors of the consumer. unlike consumer reports, these reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested. the consumers must be advised that they have a right to request additional information concerning the report, and the insurer or reporting agency has 5 days to provide the consumer with the additional information. the reporting agency and users of the information are subject to civil action for failure to comply with the provisions of the fair credit reporting act. a person who knowingly and willfully obtains information on a consumer from a consumer reporting agency under false pretenses may also be fined and/or imprisoned for up to 2 years. an individual who unknowingly violates the fair credit reporting act is liable in the amount equal to the loss to the consumer, as well as reasonable attorney fees incurred in the process. an individual who willfully violates this act enough to constitute a general pattern or business practice will be subject to a penalty for up to $2,500. under the fair credit reporting act, if a policy of insurance is declined or modified because of information contained in either a consumer or investigative report, the consumer must be advised and provided with the name and address of the reporting agency. the consumer has the right to know the identity of anyone who has received a copy of the report during the past year. if the consumer challenges any of the information in the report, the reporting agency is required to reinvestigate and amend the report, if warranted. if a report is found to be inaccurate and is corrected, the agency must send the corrected information to all parties which they had reported the inaccurate information within the last 2 years. consumer reports cannot contain certain types of information if the report is requested in connection with a life insurance policy or credit transaction of less than $150,000. the prohibited information includes bankruptcies more than 10 years old, civil suits, records of arrest or convictions of crimes or any other negative information that is more than 7 years old. as defined by the act, negative information includes information regarding a customers delinquencies, late payments, insolvency or any other form of default.
what is a certificate of authority, and who needs to obtain one?
before an insurance company can legally transact insurance, it must first obtain a certificate of authority from the commissioner. this certificate indicates that the commissioner has examined that business and found it to be financially stable and organized in accordance with the insurance code.
if a producer moves into a different house, how soon must the commissioner be notified?
every licensee must notify the commissioner of any changes to the licensee's residential, mailing, business, or e-mail address or phone number within 10 days of the change. the same regulation applies to changes in the licensee's name.
describe what a cease and desist order does and who can issue one.
if the commissioner has determined that a producer is guilty of engaging in an unfair trade practice or other deceptive act, the commissioner can issue a cease and desist order. this order specifies the practice in violation and legally requires the person to stop committing it. any person who violates the commissioners cease and desist order may be subject to a monetary fine or license suspension or revocation.
what is controlled business, and how much can be legally transacted?
it is illegal to use a producer's license for the sole purpose of writing controlled business. controlled business is insurance that covers the producer or the producer's immediate family or employer. if, during any 12-month period, the aggregate commissions earned from controlled business have exceeded 25% of the aggregate commissions earned on all business written by a producer during the same period, then the commissioner will determine that the license has been used solely for writing controlled business.
how long do temporary licenses last, and who would be eligible for one?
a temporary producer's license may be granted under specific circumstances. there licenses last for 180 days; after that, the person needs to take a producer's exam and receive a standard license. a temporary license may be issued to the following individuals: *the surviving spouse, next of kin, or employee of a licensed insurance producer who is deceased or disabled (mentally or physically). the temporary license would be granted to allow adequate time for the sale of the insurance business, for the return of the producer to the business, or to provide for the training and licensing of new personnel to operate the business *a member or employee of a business entity licensed as an insurance producer, upon the death or disability of an individual designated in the business entity application or the license *the designee of a licensed insurance producer entering active service in the US armed forces *any other person deemed fit by the commissioner the commissioner may require temporary licensees to be monitored by a sponsor that may revoke the license at any time. the license automatically expires when the owner disposes of the business.
what is the difference between a consumer report and an investigative consumer report?
consumer reports include written and/or oral information regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit records, and other public sources. investigative consumer reports are similar to consumer reports in that they also provide information on the consumer's character, reputation, and habits. the primary difference is that the information is obtained through an investigation and interviews with associates, friends and neighbors of the consumer. unlike consumer reports, these reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested. the consumers must be advised that they have a right to request additional information concerning the report, and the insurer or reporting agency has 5 days to provide the consumer with the additional information.
describe the monetary penalties that can be imposed on a producer for violating the insurance code.
if a producer is suspected of acting in violation of the insurance code, the commissioner may request a legal hearing. if someone who is aggrieved by the alleged violations demands a hearing, the hearing must be conducted within 30 days of the demand. the hearing may be postponed by mutual consent of the parties, but may not be held more than 60 days from the date of the original demand for the hearing unless all parties agree to that. the commissioner (or a designated representative) has the power to subpoena individuals, administer oaths, and examine the business, conduct, or affairs of any company that is subject to the rules of the insurance code. this examination may include interrogation of individuals and the review of any relevant documents if a person fails to obey the commissioner's subpoena or fails to produce records as required without reasonable cause, the person will be fined at least $100 and no more than $2,000 at the discretion of the court. a person who fails to appear and testify as ordered by the court is subject to fine and imprisonment.
how often must continuing education be completed, and how many credit hours are required?
all insurance producers licensed in the state of Louisiana must complete 24 hours of approved continuing education (CE) instruction or self-study prior to each license renewal. at least 3 hours must be on ethics. these requirements apply regardless of the line or number of lines of insurance for which the producer is licensed. producers licensed to write property, casualty, property and casualty, or personal lines insurance must also include 3 credit continuing education hours on flood insurance. up to 10 hours of unused continuing education credits may be carried forward to the next renewal period for producers licensed in any combination of the lines of life, health and accident, property, casualty, or personal lines. at the commissioner's discretion, a licensed agent or broker who is a member of, and actively participates in, a state or national insurance association may be granted 4 CE credits. the following producers may be exempt from CE requirements in this state: *a producer is 65 years old or older as of Jan 1, 2012. and has at least 15 years of experiences as a licensed producer, and who is either no longer actively engaged in the insurance business or who represents a licensed insurer in this state. *a producer who is currently serving a term as a member of the legislature *nonresident producers who have met CE requirements in their home state *individuals renewing their resident producer licenses for the first time after initial issuance.
how often do producer licenses have to be renewed, and what conditions must be met in order for renewal to be granted?
producers need to submit a license renewal application every 2 years. if the application is received after the stated deadline, then a $25 late fee will be charged. as part of the license renewal process, producers must comply with the state continuing education requirements.
what constitutes rebating?
rebating is defined as any inducement offered to the insured in the sale of insurance products that is not specified in the policy. rebates may include, but are not limited to, the following: *rebates of premiums payable on the policy *special favors or services *advantages in the dividends or other benefits *stocks, bonds, securities, and their dividends or profits both the offer and acceptance of a rebate are illegal.
how often must the commissioner examine insurance companies?
the commissioner has the power to examine and investigate the affairs for every person engaged in the business of insurance, in order to determine whether the person has been or is engaged in any unfair trade practices. these examinations may occur at any time. the commissioner can examine insurers for solvency and compliance with the insurance code is frequently as deemed necessary, but at least once every 5 years. newer insurers may be examined more frequently. if the commissioner has received at least 3 complains about a producer within a 30-day period, the commissioner will most likely investigate the producer's business practices. the commissioner can conduct such examinations, however, whenever he/she deems appropriate. every insurer being examined, its officers, employees, and representatives must be able to provide the commissioner with all relevant accounts, records, documents, and files. foreign and alien insurers licensed in LA do not have to be examined by the commissioner. instead, the commissioner may accept an examination report on the company as prepared by the insurance department of the company's state domicile or port-of-entry state, provided that proper protocol is followed.
what are the major duties of the commissioner? how long is the commissioner's term of office?
the commissioner of insurance is responsible for making sure that the provisions of the LA insurance code are enforced properly. the primary goal of this office is to protect that public welfare where the insurance is concerned. to that end, the commissioner is in charge of the following: *conducting legal hearings, regarding suspected violations of the insurance code *issuing cease and desist orders *examining insurers for solvency *issuing, renewing, suspending, and revoking licenses the commissioner is elected for a term of 4 years