INSURANCE REGULATION STUDY GUIDE - DEFINITIONS AND CRAP
Insurance Regulation Practice Questions: An agent in another state wants to become an agent in New York. The other state gives the same privileges to New York agents wanting to be licensed in that state as it does its own ages. New York therefore extends the privileges of its agents to the prospective agent of the other state. What is this called?
Reciprocity
Insurance Regulation Practice Questions: What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
$2,500
Insurance Regulation Snapshot 10: What is the maximum allowed value of articles of merchandise offered to prospective insured by an agent not to be considered rebates?
$25
Insurance Regulation Definitions: Insurance Agents
-Represents the INSURER, NOT the insured -agents or representatives of title insurance companies don't count as agents
Insurance Regulation Snapshot 6: if a producer's license has been revoked, how long must the producer wait before reapplying for a new license?
1 year
Insurance Regulation Snapshot 11: What is controlled business?
10% of business to family and friends
Insurance Regulation Practice Questions: Mike Armstrong is an agent and wants to operate under the name The Insurance Palace. What kind of license would this require?
Agency (Anything other than an individual license is an Agency Insurance License)
Insurance Regulation Practice Questions: If an insurance company wishes to order an inspection report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report could contain all of the following information EXCEPT the applicant's
Ancestry
Insurance Regulation Practice Questions: The Superintendent is
Appointed by the Governor
Insurance Regulation Definitions: Fiduciary Responsibility
Brokers are in position of financial trust - funds CANNOT BE COMMINGLED with personal funds -premiums collected must be deposited in a seprate account
Insurance Regulation Snapshot 14: What is the difference between a Consumer Report and an Investigative Consumer Report?
Consumer Report = Include written and/or oral information regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources. Investigative Consumer Report = Also provide info on the consumer's character, reputation, and habits, but in this case the data is obtained through investigation and interviews with associates, friends, and neighbors. These reports can't be made unless the consumer is advised in writing about it 3 days prior to its actual happening.
Insurance Regulation Practice Questions: An insurance producer just sold an insurance policy to his sister. What kind of business is this?
Controlled
Insurance Regulation Practice Questions: The XYZ Insurance Company Markets standard accident and health policy as a Medicate supplement policy. This company is guilty of
Misrepresentation
Insurance Regulation Practice Questions: In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?
The customer's associates, friends, and neighbors provide the report's data.
Insurance Regulation Practice Questions: Can the Superintendent investigate fraudulent claims if they occurred outside of the resident's state, according to the Insurance Fraud Prevention Act?
Yes. The Superintendent has the power to make an investigation within this state or outside of the state.
Insurance Regulation Practice Questions: If an insurance company wishes to order an inspection report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report could contain all of the following information EXCEPT the applicant's
ancestry
Insurance Regulation Definitions: Superintendent
- Appointed by governor and stays in office until the end of his term -Recommends, withdraws, or amends regulations -Also can examine and investigate any licensed person to check for violations - if a person doesn't submit requested information to the superintendent within 15 DAYS, the Superintendent can charge a penalty of $500 per day for each day up to $10,000 -can examine anybody's books and records and examines every DOMESTIC INSURER at least once every 5 YEARS
Insurance Regulation Definitions: Producer Compensation Transparency
- Disclosure to consumer of how their money is being spent
Insurance Regulation Definitions: Appointing an Agent
- File submitted to Superintendent, 15 days notice hired, 30 days fired
Insurance Regulation Definitions: Reporting Actions/Disciplinary Actions
- If you get in trouble in another state, you have 30 days to report it -If the Superintendent thinks that the licensee is involved in unfair competition, or has made an unfair claim or practice, then the SUperintendent will issue a CEASE AND DESIST ORDER. A person who violates this order is liable for penalties of up to $5000 PER VIOLATION -Hearing is held at least 10 days after notice is served in which your lisence can either be suspended, revoked, or nonrenewed -If your license has been revoked, they cannot obtain a new license for a period of 1 YEAR. -If a non-resident's license is axed, their license is suspended until the end of the licensing period in their new state. -If the licensee violates insurance laws, the superintendent can charge up to $500 per offence for a max of $2500 aggregate for all offences. The offender has 20 days after reciept to pay the penalty
Insurance Regulation Definitions: Temporary License
- Must only be used to service EXISTING BUSINESS --SUperintendent may issue a temporary licens for a term NOT EXCEEDING 90 DAYS (maximum extension = 15 MONTHS) -Temp license is given in case of disability or death to finish existing business and not continue adding new accounts
Insurance Regulation Definitions: Insurance Frauds Prevention Act/Insurance Frauds Bureau
- Set up and run by New York State Insurance Department to allow the Superintendent and Department to STOP FRAUD -It established the Insurance Frauds Bureau to investigate fraud both IN AND OUT OF THE STATE -Violating the Bureau = $5000 per violation -If the Bureau smells fowl play it has 30 DAYS to report the action -Insured can never get the actual reports back, just the info in them
Insurance Regulation Snapshot 8: What document is required for a company to conduct insurance business in New York?
-Certificate of Authority = Insurance Company - Certificate of Appointment = Agent
Insurance Regulation Definitions: Change of Address
-Department of Insurance must be notified within 30 days of any change of address, residence, business or email
Insurance Regulation Definitions: Fair Credit Reporting Act
-Designed to monitor the credit AGENCIES & doesn't operate on a consumer level - Monitors Equifax & Transperion -Designed to monitor the credit AGENCIES (Equifax and Transperion) -Not on the consumer level - established procedures for agencies to follow in order to ensure that records are confidential, accurate, relevant etc & also protects consumers against the circulation of inaccurate or obsolete information -People who Willfully violate this act can face a penalty of $2500 Consumer Report = Include written and/or oral information regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources. Investigative Consumer Report = Also provide info on the consumer's character, reputation, and habits, but in this case the data is obtained through investigation and interviews with associates, friends, and neighbors. These reports can't be made unless the consumer is advised in writing about it 3 days prior to its actual happening.
Insurance Regulation Snapshot 13: What is the purpose of the Fair Credit Reporting Act?
-Designed to monitor the credit AGENCIES (Equifax and Transperion) -Not on the consumer level - established procedures for agencies to follow in order to ensure that records are confidential, accurate, relevant etc & also protects consumers against the circulation of inaccurate or obsolete information
Insurance Regulation Definitions: Stuff you can't do
-False Advertising/misrepresenting -Defamation (slandering somebody, even if it's true you can't talk about it) -Discrimination: rates, premiums, or policy benefits cannot differ for people withinn the same class or life expectancy, cannot exist on the basis of race, gender, ancestry, etc - Rebating: knick knacks you give out can't exceed $25 -Controlled Business: no more than 10% of your business can be from friends and fam AFTER A YEAR -Sharing Commissions with non-insurance people because that is a bribe and both parties are guilty -- you can split with other insurance people however -give commissions to people not licensed in new york
Insurance Regulation Definitions: Renewal and Continuing Ed
-License expires every 2 YEARS, renewal period based on birth year but regardless of when you take it it will expire on birthday so might not last full 2 years -Continuing ed = 15 hours of instruction every 2 years
Insurance Regulation Definitions: Improper Claims Practices
-Misrepresenting information about policy coverage to insured -Failing to adopt and implement reasonable standards for prompt investigation and processing claims -Failing to affirm or deny coverage
Insurance Regulation Snapshot 9: What information must each license contain?
-Name of licensee -Home office address -The state or country under whose laws it was organized -The kinds of insurance business it will provide -Term of lisence
Insurance Regulation Definitions: Consultants
-Offer advice to public about the benefits, advantages, and disadvantages of insurance policies for a fee -Don't earn commission but earn $$ on a fee basis
Insurance Regulation Definitions: "Reciprocity"/Nonresident Details
-Reciprocity = a reciprocal thing in which non-resident people aren't forced to retake lisence tests for other states - states do each other a solid and people only need to fill out new applications -If a person licensed in another state moves to NY and wants to become a resident agent, they must apply for a license within 90 DAYS of the cancellation of the applicant's previous license.
Insurance Regulation Definitions: Insurance Brokers
-Represents the INSURED -Obtains insurance for insured in exchange for a commission
Insurance Regulation Snapshot 1: What is the prelicensing requirement to qualify for an agent's or broker's license in NY?
1) Be a resident of the state of NY 2) Be at least 18 3) Can't be convicted of any felonies - IT'S OKAY TO BE CHARGED WITH MISDEMEANORS THOUGH
Insurance Regulation Snapshot 12: How much controlled business is legal?
10% of business to family and friends
Insurance Regulation Snapshot 4: What is the continuing education requirement in New York?
15 hours of continuing education every 2 years
Insurance Regulation Practice Questions: The Superintendent will not issue or permit a license to remain in force upon finding that the license has been or probably will be used to write controlled business. Which of the following would qualify as controlled business practice?
15% of the agent's annual commission is from business sold to the agent's family
Insurance Regulation Definitions: Adjusters (3 Types)
3 Types: 1) Company adjusters = reps company & *don't need a license 2) Independent Adjusters act on behalf of an insurer in the work of investigating and adjusting claims 3)Public Adjusters = someone who for a commission acts on behalf of the insured in negotiating a settlement of a claim
Insurance Regulation Practice Questions: If a certificate of appointment is terminated, a statement must be filed with the Superintendent within
30 Days
Insurance Regulation Definitions: A Proof of Loss
A Proof of Loss is a form used by the policyholder to support the amount they are claiming under their policy, which must then be signed and sworn to, and submitted with supporting documentation. -Basically has details of claim, insurance company won't release it if suspect, once released for the insured to sign they have 60 days
Insurance Regulation Practice Questions: Mike Armstrong is an agent and wants to operate under the name The Insurance Palace. What kind of license would this require?
Agency
Insurance Regulation Snapshot 3: Under what circumstances can a temporary license be issued?
Death, disability
Insurance Regulation Practice Questions: When Producer A was reviewing Bruce's insurance that is written by another company, she made several oral statements that were maliciously critical of that other insurer. Producer A could be found guilty of
Defamation
Insurance Regulation Practice Questions: 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
Insurance Regulation Practice Questions: Tim and Tom are twins. When they applied for life insurance from Company A, the insurance company found that while neither of them smoked and both had a very 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
Insurance Regulation Practice Questions: Two Individuals are in the same risk and age class, yet they are charged different rates for their insurance policies due to an insignificant factor. What is this called?
Discrimination
Insurance Regulation Snapshot 2: What are the licensing requirements for nonresident agents in the state?
Don't have to take an exam, just need application & fingerprints
Insurance Regulation Snapshot 7: What are the duties of the superintendent?
Enforces insurance laws, doesn't create them -APPOINTED BY GOV
Insurance Regulation Snapshot 15:What is fraud in insurance? Give some examples.
Falsifying a claim, misrepresenting yourself
Insurance Regulation Practice Questions: The requirement that agents must account for all insurance funds collected, and without the expressed consent of the insurance companies are not permitted to comingle those funds with their own funds is known as
Fiduciary Responsibility
Insurance Regulation Practice Questions: In New York, the Superintendent is appointed by and stays in office for a term as long as the
Governor is in office
Insurance Regulation Practice Questions: Which of the following qualifications for selling insurance in the State of New York is NOT correct?
Having a letter of recommendation attesting to trustworthiness and good repute
Insurance Regulation Practice Questions: In order for a previous nonresident licensee to become a licesee in New York, which requirements must be met?
He/she must apply within 90 days of becoming a resident, but does not have to fulfill prelicensing or exam requirements.
Insurance Regulation Practice Questions: An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?
Ilegal under any circumstances
Insurance Regulation Practice Questions: An agent has recently changed his email address. What must the agent do to comply with the regulation for change of address?
Inform the department within 30 days
Insurance Regulation Snapshot 16: Can a person who has been found guilty of fraud work in insurance?
No
Insurance Regulation Snapshot 5: Can a person transact insurance under an assumed name?
No - everyone needs to notify superintentent upon changing legal names and even then you need to get approved
Insurance Regulation Practice Questions: According to the Insurance Fraud Prevention Act, will the person who suspects a fraudulent transaction be penalized for reporting it to the Superintendent?
No, as long as the act is reported in good faith
Insurance Regulation Practice Questions: For the protection of public interest, the Superintendent may examine any of the following EXCEPT
Producers' personal bank accounts
Insurance Regulation Practice Questions: Paul is an agent in Vermont and wants to become an agent in New York. The Department will waive certain examination requirements, provided that Vermont would waive the same requirements if a New York agent sought licensure in Vermont What term is used to describe this phenomenon?
Reciprocity
Insurance Regulation Definitions: Solvency
Solvent = an insurer has the assets to meet its financial obligations. It is considered INSOLVENT if it doesn't have enough money to pay its claims.
Insurance Regulation Definitions: Insurance Producer
Someone who is licensed under the laws of the state to sell, solicit, or negotiate insurance
Insurance Regulation Practice Questions: The law that protects consumers against the circulation of inaccurate or obsolete information is known as
The Fair Credit Reporting Act
Insurance Regulation Practice Questions: In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?
The customer's associates, friends, and neighbors provide the report's data
