05 Regulations

Question 1

Who must be notified of producer’s change of address?

Answer 1

The Department of insurance (commissioner/Director/Superintendent)

Question 2

Who can usually be granted a temporary license?

Answer 2

Producer’s spouse or designee in case the licensed producer dies or becomes disabled.

Question 3

In the agent/insurer relationship, who is considered the principal?

Answer 3

Insurer.

Question 4

If the commissioner/superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?

Answer 4

Cease and desist order.

Question 5

When is controlled business legal?

Answer 5

When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits May vary from state to state)

Question 6

For what reason can a temporary license be issued?

Answer 6

For contribution of business in case the licensed producer dies or becomes disabled.

Question 7

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?

Answer 7

Misrepresentation.

Question 8

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the police really is?

Answer 8

Misrepresentation.

Question 9

What is the purpose of ceased and desist order?

Answer 9

To prevent a producer or insurer from further violating laws for transecting insurance.

Question 10

To whom may a certificate of authority issued?

Answer 10

To an insurer authorized to transact business in this state.

Question 11

Insurers are classified according to their domicile. What are the three types of insurers?

Answer 11

Domestic, foreign, and alien.

Question 12

Who must be a member of insurance guaranty Associations?

Answer 12

All insurers authorized to write insurance with a state.

Question 13

Who owns stock companies?

Answer 13

Stockholders.

Question 14

Who is considered a non-resident agent?

Answer 14

An agent who resides and is licensed in another state, but who is authorized to transact insurance in the state.

Question 15

Who is an insurance agent?

Answer 15

A person authorized to sell, solicit, and negotiate insurance contracts.

Question 16

What document is required for an insurance company to transact insurance?

Answer 16

Certificate of authority.

Question 17

Who is responsible for the costs associated with the examination of insurers?

Answer 17

The insurer who is being examined.

Question 18

What are the most common penalties for violations of insurance statutes?

Answer 18

A cease and desist order, a fine, and license suspension or revocation.

Question 19

Who is responsible for the contents of insurance advertisements?

Answer 19

The insurance company.

Question 20

Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Answer 20

Discrimination.

Question 21

What type of licensee represents the insured?

Answer 21

Broker.

Question 22

If an insurer holds a Certificate of Authority, it is known as what type of insurer?

Answer 22

Authorized or admitted.

Question 23

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?

Answer 23

Rabating.

Question 24

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?

Answer 24

Authorized or admitted.

Question 25

What are producers required to do in order to renew their license?

Answer 25

Complete continuing education hours and pay a renewable fee.

Question 26

What is controlled business?

Answer 26

Insurance on the producer’s own life or property, or the lives or property of the producer’s family or business associates.

Question 27

What type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

Answer 27

Twisting.

Question 28

Who may share in the commission from the sale of a life insurance policy?

Answer 28

Only producers properly licensed for the type of insurance transaction.

Question 29

What is the purpose of insurance guaranty Associations?

Answer 29

To protect policy owners, insured and beneficiaries from financial losses caused by insolvent insurers.

Question 30

Can insurer advertise the existence of the guaranty association during solicitation and sale of insurance policies?

Answer 30

No, advertising of the existence of the guaranty Association for the purposes of solicitation and sale of insurance policies by insurers is an illegal business practice.

Question 31

If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?

Answer 31

Defamation.

Question 32

What type of license he represents the insurance company?

Answer 32

The agent.

Question 33

When can the commissioner or director examine insurers?

Answer 33

Whenever deemed necessary, but at least once every few years (please check your state regulations for a specific time requirement)

Question 34

In general, who can be excluded from producer licensing and examination requirements?

Answer 34

Insurance company officers, directors, or any other employees who do not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive, or clerical)