Section 7 - Arizona Insurance Regulations (10%)
Non Resident Producers
A person licensed in a state that ISNT AZ, but seeks to do business here. Exempt from AZ exam
Producers are known as:
Agents
a person MAY NOT make any unfair discrimination between:
individuals of the same class and equal expectation of life in the rates charged for any life insurance or annuity contract, or in the dividends or other benefits payable, or in any other terms of the policy
No person may offer as an ________________ any rebate of commissions or advantage in dividends not specified in their policy:
inducement to the sale
Temporary License
issued when: 1)surviving spouse or personal rep of a deceased insurance producer 2) spouse or personal rep of a mentally ill or physically disabled producer 3) designee of a licensed producers who enters active service in armed forces
Conditional License:
issued without having to wait for the results of a criminal history search (fingerprint check.)
Consumer reports:
may only be furnished for specific purposes, such as: -insurance underwriting purposes -credit transactions and employment
all telemarketing records must be kept for how long?
minimum of 24 months
Is it unfair discrimination to charge a young male more for auto insurance than a young female?
no
Is it unfair discrimination to charge an older person more for life insurance than a younger person?
no
How long can a temporary license be held?
no more than 180 days
Defamation means:
no oral or written statement that is false or maliciously critical of the financial condition of an insurer
The Director shall examine each of the domestic insurers:
not less than once every 3 years
Active military service does not include:
periodic and routine service as a military reservist
What is controlled business?
when an insured person uses their license to sell insurance to themselves, relatives, or fellow employees
Insurer Insolvency is:
when the director determines an insurer is insolvent/ the continuation of their business is hazardous to the public. They will be placed under the supervision of the Department of Insurance.
Statutory damages can reach as high as:
$2 million
Producer Regulations: Misrepresentation includes:
**1) misrepresenting terms or benefits of a policy, or the dividends to be received 2) making false statements regarding previously paid dividends **3) false statements about the financial condition of any insurer or the legal reserve system 4) using any name or title that misrepresents the true nature of the policy 5) misrepresenting for the purpose of replacing life insurance (twisting)
If a director finds that ANY licensee has failed to perform a duty, discharge an obligation, or has violated any insurance law, rule, regulation, or order, how much is the penalty?
-UNINTENTIONAL: director may issue penalty of up to $250 for EACH violation. Cannot exceed 2,500. - INTENTIONAL: civil penalty of up to 2,500 for EACH violation. Cannot exceed 15,000.
If an insurer receives a notice of claim, how long do they have to acknowledge it?
-Within 10 working days -Within 15 working days after receipt of proof of loss
No person may unfairly discriminate between individuals who are:
-blind or have physical disabilities -unfair sex discrimination based on gender or marital status
Director may issue resident insurance producer licenses to eligible individuals who:
1) Are residents to AZ 2) Are at least 18 3) passed the exam and paid the fees 4) have filed the proper application and submitted a fingerprint card 5) Shall not use the license to sell insurance to themselves, relatives, or employees
Company Regulations:
1) Certificate Of Authority 2) Annual Financial Statements 3) Rates 4) Insurer Insolvency 5) Policy Forms 6) Unfair Claims Settlement Practices 7) Examination of Records 8) Payment of Commissions
What are the types of licenses?
1) Producer (agent) license 2) adjuster license 3)Surplus Lines broker 4) Managing General Agent (MGA) 5) Non-resident producers 6) Temporary license 7) Conditional license
What must telemarketers truthfully disclose?
1) identity of the seller 2) the purpose of the call is to sell goods or services 3) the nature of the goods or services 4) no purchase or payment is necessary to be able to win a prize if offered 5) A customer's social security is not required in order to add their name to the National Do Not Call Registry
In the case of renewal, what shall the notice state?
1) if personal information is to be collected from someone other than the proposed individual 2) what type of info is going to be collected 3) the circumstances in which disclosure of personal info may be made without authorization of the insured 4)the fact that information obtained from a report prepared by an insurance-support organization may be retained by them and disclosed to other persons
A licensee who is ordered into active military service may request that the license be placed on inactive status by sending the department a written statement including:
1) licensee's name 2) licensee's license number or social 3) date of active military service 4) request for inactive statues
Producer Regulations: Unfair Trade Practices and Frauds include:
1) misrepresentation 2)False Deceptive Advertising 3) Defamation 4) boycott, coercion, or intimidation 5) False financial statements 6) unfair discrimination
What inducements are also prohibited?
1) offerings of employment 2) giving shares of stock or securities ****3) any prizes or merchandise given in excess of $10
A director may refuse to issue an insurance producer license if:
1) the applicant has been convicted of felony 2) there's a record of dishonesty or misappropriation of customer funds 3) material misrepresentation or fraud in license application 4) a record of suspension or revocation in any other jurisdiction 5) applicant is incompetent or lack moral turpitude (criminal behavior that is inherently bad)
3 Can-spam acts:
1) unsolicited emails must be clearly identified 2) senders must provide easily accessible, legitimate means for recipients to "opt-out" 3) Unsolicited emails must contain legitimate return email addresses, as well as the sender's post address
A Director can permanently revoke or renew any license if:
1) willful violation of insurance code, incompetence, false license application 2) Misrepresentation, fraud, misappropriation, or conversion of money 3) Conviction of a felony or suspension/revocation in another state
How long can the Direction suspend a license for?
12 months
Producers (agents) shall keep usual records are their place of business for inspection of director for:
3 years following the date of completion of a change of address
Examination of Records must be kept for:
3 years from the date of the transaction
How long before an insurer can use their policy without having it disapproved by the director?
30 days
An insurer must pay interest on first party claims if they are not paid within:
30 days after receipt of an acceptable proof of loss
How many days does a licensee have to notify the director of a change of address?
30 days.
How long are newly issued licenses active?
4 years. expire on the last day of the licensee's birth month
How many attempts are there to pass an examination within 1 year?
4, successful candidates must apply for license within 120 days of passing state exam
How many years of continuing education must an Arizona Licensee complete to renew and expiring license?
40 hours
If placed under the supervision of the department of insurance, how long does an insurer have to comply with the director's requirements?
60 days
Unfair Claims Settlement Practices:
A person cannot: 1) misrepresent facts or policy provisions 2)fail to adopt reasonable standards for prompt investigations 3) fail to act promptly on claims communications 4) refuse to pay claims without conducting a reasonable investigation 5) fail to confirm or deny coverage within a reasonable time 6) compel insureds to file lawsuits by offering less than a reasonable person would expect 7) attempt to settle on the basis of an altered application 8) Fail to explain the specific reasons for denial of a claim in writing
In case of renewal, when should the notice be provided?
At least annually
What are insurer's called once their Certificate of Authority is received?
Authorized/Admitted.
How must an insurer obtain their Certificate of authority?
Must file their rates and policy forms for approval. They must also post initial required legal reserves to pay future claims.
Are dividends paid out of accumulated surplus, or the readjustment of premiums on group insurance plans based on loss experience considered rebates?
No
Can a policy be used by the insurer if it hasn't been filed and approved by the director?
No
Is the insurer or agent required to show the consumer a copy of their report?
No
Is it legal for an insurer to transact business in AZ without a Certificate of Authority?
No, unless you are a Surplus Lines or Reinsurance company
you cannot make any unfair discrimination in the sale of:
Property and Casualty insurance
Rate requirements:
Rates may not be too high, too low, or unfairly discriminatory. Insurers may change their rates at ANY time as long as it is submitted to the director within 30 days of its effective date
Penalties:
UNINTENTIONAL: up to $250. Aggregate limit of $2500 INTENTIONAL: up to $2,500. Aggregate limit of $15,000
How long should a producer take to report a criminal prosecution to the director?
Within 30 days
When new insurance is being sought:
a notice must be provided at the time of policy delivery AT THE LATEST
Boycott, Coercion, Intimidation
a person cant enter an agreement that may result in monopoly
Surplus Lines broker:
acquires insurance on behalf of clients with Surplus Lines insurers, such as Lloyds of London. Applicant must already hold Property and Casualty Producer license first.
Adjuster License:
adjusts, investigates, or negotiates settlement of claims on behalf of insurer. does NOT include: licensed attorneys, salaried employees of insurers, or Managing General Agents, or licensed insurance producers. MUST pass AZ Adjusters exam
What is an annual financial statement?
all foreign, domestic, and alien insurers must file with the director to prove they have adequate "legal reserves" to meet the future obligations of to their policyholders
Payment of commissions:
an insurer may only pay commissions to licensed producers in connection with the insurance transactions in AZ. Licensee may only share commissions received with those also licensed as producers for the same lines of insurance
Transacting insurance is defined as:
any activity related to the negotiation, sale, or purchase of insurance that comes under the jurisdiction of the AZ Insurance Code. -handling claims, inspecting risks, collecting premiums
Director's General Duties and Powers are:
appointed by the governor for 6 years.
A Director shall not reissue any revoked license fo:
at LEAST 1 year
Producer (Agent) License:
authorized by an insurer to solicit applications or negotiate insurance on it's behalf. Producers represents the INSURER, not the insured
When may telephone solicitations occur?
between 8am and 9pm
Can-spam act:
does NOT make spam unlawful. It attempts to regulate it.
Persons convicted of fraud and false statements can face:
fined and/or imprisoned for up to 10 years, and are prohibited from obtaining a producer license without prior approval of the director
Federal Regulation: Fair Credit Reporting Act (FCRA)
protects customers by requiring certain types of notification, and by establishing provisions for the removal of outdated and incorrect information
What does Insurance information and privacy protection do?
protects the rights of insurance applicants, policyholders and other persons who are the subjects of collected or received info
Managing General Agent (MGA)
recruits and trains local insurance sales saff for either a Life and Health (L&H) or Property and Casualty (P&C) insurer. Surety bond is a requirement
Certificate of Authority is:
the authority granted by the director to an insurer to transact business in AZ
Post-notification of an adverse outcome requires that:
the consumer be notified and provided with the name and address of the reporting agency
Pre-notification requires that:
the insurer notify the customer IN WRITING that a consumer investigative report may be ordered
The consumer has the right to obtain the substance of the report from:
the reporting agency and to be informed of anyone who recieved reports within the prior 6 months
someone misrepresents information for the purpose of replacing life insurance is called:
twisting
Violators to the can-spam act face statutory fines of:
up to $250 per violation
