Property and Casualty Chapter 5
Illegal under any circumstances
An insurer publishes intimidating brochures that portray that insurer's competition as financially and professionally unstable. Which of the following best describes this act?
Rebating
Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy that is not specified in the policy is an unlawful practice known as
It is never legal to limit coverage based on marital status.
In which of the following situations is it legal to limit coverage based on marital status?
10 days
What is a required advance notice for a hearing held by the Commissioner of Insurance?
$10,000
What is maximum fine for violating the Commissioner's cease and desist order?
Passing the licensing examination
Which of the following conditions is NOT necessary for becoming a nonresident producer in this state?
Sharing commissions
All of the following are considered unfair trade practices in the business of insurance EXCEPT
False Advertising
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
False advertising
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
To service existing business
For what reasons can a temporary license be issued?
10 working days
Once a claim is processed, and all claim investigations are completed, within how many days must the insurer mail or deliver a claim check?
Promote the public welfare.
The purpose of insurance regulation is to
180 days
What is the maximum period for a temporary license in this state?
Negotiating claims
Which of the following is NOT an unfair trade practice?
It is issued to group insurance participants
Which of the following is NOT true regarding a Certificate of Authority?
They do not need to be a resident in this state
Which of the following is NOT true regarding insurance consultants?
Consultant
Which of the following is paid solely to advise clients?
Twisting
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Coercion
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 an insurance policy from the bank in the amount of the loan. This is an example of
Explaining to client the advantages of permanent insurance over tern and suggesting changing policies
All of the following actions can be described as twisting EXCEPT
Rebates are allowed if it is the best interest of the client.
All of the following are true regarding rebates EXCEPT
An unfair trade practice
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered
12 months
If an insurance producer allows his license to lapse, within how many months of the due date of the continuation fee may the producer reinstate the license without having to pass a written examination?
A reinstatement fee is double the renewal fee
If an insurance producer's or consultant's license has lapsed,
Authorized
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be
150 days
A disabled producer's spouse was issued a temporary license 30 days ago. How much longer can the spouse legally serve under this license?
Misdemeanor
A failure to report insurance fraud to the Commissioner is considered a/an
Collect premiums for in-force policies and explain coverages written by the producer.
A prodcer's daughter, who is unlicensed, works part time in her father's insurance agency. She may perform all of the following activities EXCEPT
Reciprocity
A producer in another state wants to become a producer in Arkansas. The other state gives the same privileges to Arkansas producers wanting to be licensed in that state as it does its own producers. Arkansas therefore
10 days
A producer moves to another state and terminates her residency in Arkansas. The Arkansas producer's license must be returned to the Commissioner within how many days?
With its capital divided into share and owned by its stockholders
A stock insurer is defined as an insurer
The spouse of a retired producer
A temporary license may be issues without examination to all of the following, EXCEPT
Insurance Company
According to agency law, the producer always represents the
Suggesting negotiations in settling the claim
All of the following are unfair claims settlement practices EXCEPT
A new Commissioner or Director is put into office
All of the following events will terminate a producer's certificate of appointment EXCEPT
A producer/broker who handles insurer funds in a trust capacity
Concerning insurance, the definition of a fiduciary is
Coercion
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
Guaranty association
The mechanism used to pay covered claims and prevent financial losses to claimants and policyowners when an insurance company becomes insolvent is a
Certificate of Authority
To legally transact insurance in this state, an insurer must obtain which of the following?
Making derogatory oral statements about another insurer's financial condition
Which of the following best describes the unfair trade practice of defamation?
Making comparisons between different policies
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?
Telling a client that his first premium will be waived if he purchases the insurance policy today
Which of the following is an example of a producer being involved in an unfair trade practice of rebating?
A producer promptly forwarding premiums to the insurance company
Which of the following is an example of a producer's fiduciary responsibilities?
Admitted
Which of the following is another term for an authorized insurer?
Certificate of Authority
Which of the following must an insurer obtain in order to transact insurance within a given state?
Defamation
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?
Mutual Insurer
Which of the following types of insurance companies is an incorporated insurer without capital stock or shares?
Discriminating in benefits and coverages based on the insured's habits and lifestyle
Which of the following will NOT be considered unfair discrimination by insrers?
A salaried employee who advertises and solicits insurance
Which of the following would be required to be licensed as an insurance producer?
Dividends from a mutual insurer
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT
Obtaining an insurance license
All of the following would be considered an insurance transaction EXCEPT
An agent misrepresents policy benefits to convince a policyowner to replace policies
All of the following would be considered rebating EXCEPT
5 years
Although the Commissioner must examine the affairs, transactions, records and assets of each authorized insurer as often as deemed advisable, each authorized insurer must be examined at least once every
Rebating
An agent offers his client free tickers to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of
Legal
An applicant who lives in a state in which a producer is not licensed travels to the state in which the producer is licensed to apply for a policy. This is considered to be
False advertising
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?
Foreign
An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?
Illegal
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?
Authorized insurer
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an
Appointed by the Governor
How is the Commissioner selected for the office?
2 years
How long is the licensing period in Arkansas?
The Commissioner
If a producer, broker, or solicitor has a change of business address, who should be notified?
36 months
If, after a hearing, the Commissioner finds that a producer had committed any insurance unfair trade practice, the Commissioner may revoke or refuse to renew the producer's licensee on probationary status, or suspend a licensee for up to
Apply and pay a fee to a nonresident state that reciprocates
In order to get a nonresident license in this state, producers must
The state
The regulation of the insurance industry primarily rests with
24
To maintain an insurance producer license, how many continuing education hours must a producer take for each licensing period?
An insurer with a home office in another state
What is a foreign insurer?
To protect the public
What is the main justification for the existence of the State Insurance Department?
$5,000
What is the maximum fine for a single violation of the Insurance Code if a person knew or should have known that an act would result in a violation?
To provide benefits to insureds whose insurers have become insolvent
What is the purpose of the Guaranty Association?
30 days
When a producer changes address of his/her residence, the Insurance Department must be notified within
Defamation
When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of
False financial statement
When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, its financial health is terrible, and the company will soon have to file for bankruptcy. Which of the following terms best describes the advertisement?
Foreign
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?
Fiduciary capacity
When handling premium funds, insurance producers are acting in a
Alien Insurer
When transacting business in this state an insurer formed under the laws of another country is known as a
Discrimination
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered
Issuing sales material with exaggerated statements about policy benefits
Which of the following best describes misrepresentation?
