Property and Casualty Chapter 10 Insurance regulation
What type of license represents the insurance company?
The agent.
reciprocity
a mutual interchange of rights and privileges
domicile
a state in which an insurer is organized and has its main place of business
inducement
an offer that attempts to influence the other party
properly licensed for a specific line of authority
Prior to transacting insurance in the state, insurance professionals must be?
Who owns stock companies?
Stockholders
Who must be notified of a producer's change of address?
The department of insurance (commissioner/director/superintendent)
What is controlled business legal?
When commissions from a controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state)
What would be misrepresentation on an insurance application be considered fraud?
When it is intentional and material
Which can the commissioner or director examine insurers?
Whenever deemed necessary, but at least once every five years (please check your state regulations for specific time requirements)
if an insurer holds a certificate of authority, it is known as what type of insurer?
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?
authorized or admitted
a state-issued document empowering an insurance company to become an admitted insurer is called what?
certificate of authority
what document is required for an insurance company to transact insurance?
certificate of authority
Statement of its financial condition (solvency)
in conformity with the U.S generally accepted accounting principals (GAAP) requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
cease and desist
to stop or discontinue
Charla wants to serve as a producer for Commissions Galore Insurance Company. In addition to obtaining her producer's license, what else must happen before she can officially transact insurance for CGIC? A. she must be appointed specifically by CGIC B. She must get certificate of authority C. she must submit a list of 5 references to CGIC D. She must be appointed by the commissioner
A
a France-based insurer would like to do business in Louisiana. What document must it first receive? A. certificate of authority B. Transcontinental commerce clearance C. alien insurer license D. International certificate of incorporation
A (all insurers, regardless of the state in which they are chartered, must obtain a certificate of authority from Louisiana Insurance department before they can transact insurance in the state.)
Motor Carrier Act of 1980
Act that sets out the minimum financial responsibility requirements for for-hire interstate carriers and all carriers of hazardous property.
If the commissioner/ Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?
Cease and desist order
An insured is dissatisfied with their insurance policy and wants to negotiate certain provisions of the contract. What entity would her producer represent? A. the commissioner of insurance B. the government C. the insured D. the insurer
D
what is controlled business?
Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates
To whom may a certificate of authority be issued?
To an insurer authorized to transact business in this state
What is the purpose of a cease and desist order?
To prevent a producer or insurer from further violating laws for transacting insurance
What are the most common penalties for violating of insurance statues?
a cease and desist order, a fine, and license suspension or revocation.
Business entity
a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity
statute
a formal written enactment of a legislature; insurance statutes can be found in the state insurance code.
Who is an insurance agent?
a person authorized to sell, solicit and negotiate insurance contracts
who is considered a non-registered agent?
an agent who resides and is licensed in another state, but who is authorized to transact insurance in the state
What are producers required to do in order to renew their license?
complete continuing education hours and pay a renewal fee.
moral turpitude
conduct that is contrary to community standards justice, honesty or good morals
if a producer makes maliciously critical statements about another insurer, what is this illegal practice called?
defamation
Two individuals who are in the same risk and age class are charged with different rates for their insurance policies due to an insignificant factor. What is this called?
discrimination
Insurers are classified according to their domicile. What are the three types of insurers?
domestic, foreign, alien
Fair Credit reporting Act
established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential accurate, relevant, and property used. the law also protects consumers against the circulations of inaccurate or obsolete personal or financial information
The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?
fiduciary
What type of insurer is formed under the laws of another state?
foreign
producers
individuals or business entities that are licensed to sell, solicit, or negotiate insurance. from a legal standpoint, ___________ represent respective insurance companies, not their customers.
In general, who can be excluded from producer licensing and examination requirements?
insurance companies officers, directors, or any other employee who do not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive, or clerical).
authorized insurer
insurer who has received a certificate of authority from the department of insurance to transact insurance in the state
home office
insurers' headquarters, principal place of business
What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?
misrepresentation
commission
payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium
an agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?
rebating
commissioner
the head of the state department of insurance.
A temporary license may be issued without examination to all of the following except? A. the surviving spouse of a deceased producer B. the spouse of a retired producer C. The legal guardian of a disabled producer D. the designee of a producer entering active service in the US Navy
B
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Twisting
Who is responsible for the costs associated with the examination of insurers?
the insurer who is being examined
foreign and alien insurers
licensed in Louisiana 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 of domicile or port-of-entry state, provided that proper protocol is followed.
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. What is the company guilty of?
misrepresentation
who may share in the commission from the sale of an insurance policy?
only producers properly licensed for the type of insurance transaction
Commissioner of insurance
supervise insurance business; licensing; approve polices and forms; enforce insurance laws and penalties for violations; conduct examinations, investigations, hearings.
Federal Motor Carrier Administration (FMCSA)
the government, both state and federal, has implemented several regulations that pertain to trucking risks for truckers who travel across state lines and within the boundaries of a single state. the federal body that regulates interstate truckers. Federal regulation also applies to truckers, interstate or interstate, that haul hazardous materials.
