1.2 Company Regulation Flashcards
Unfair claims settlement practices
The insures license is called a ?
Certificate of authority- therefore an authorized company =admitted carrier
What practice model did SC adopt as the South Carolina Unfair Claims Settlment Practices Act?
The 1997, National Association of Insurance Commissioners NAIC Unfair Claims settlment Practices Model
The South Carolina Unfair Claim Settlement Practices Act among insurers includes what?
- Misrepresenting facts or policy provisions
Example: If a policy covers storm damage but an insurer falsely claims that a particular type of storm damage isn’t covered, that would be misrepresentation. - Failing to promptly acknowledge communications about claims
Example: If you file a claim and the insurance company ignores emails, calls, or letters for weeks or months without reason, that’s a violation of fair claims practices. - Failing to use standards to promptly investigate and settle claims
Example: If an insurance company doesn’t send an adjuster to inspect a damaged car or home within a reasonable time, it could be seen as delaying the process unfairly. - Failing to make a good-faith effort to fairly settle claims when liability is clear
Example: If someone has a valid claim for damages after an accident, but the insurance company drags out the process or lowballs the payment, they’re not acting in good faith. - Forcing lawsuits by offering substantially less than what is owed
Example: If a car accident results in $50,000 in damages, but the insurer only offers $5,000, hoping the claimant will take it instead of suing, that’s an unfair practice. - Offering settlements lower than the amount owed unless the claimant hires an attorney
Example: If an insurer offers only 50% of what is due unless the claimant hires a lawyer, that’s an unethical pressure tactic. - Raising or threatening to raise policy defenses or cancel policies to avoid paying claims
Example: If someone files a claim for fire damage, and the insurer suddenly threatens to cancel their policy unless they accept a lower payout, that’s bad faith. - Any practice that unreasonably delays or avoids paying a claim
Example: If an insurer repeatedly asks for unnecessary documents or keeps reassigning the claim to different representatives, causing delays, that’s unfair.
An insurer is what?
An insurer is a company or organization that provides insurance coverage by agreeing to compensate policyholders for specified financial losses or damages in exchange for a premium. Insurers assess risks, determine policy terms, and pay claims when covered events occur. They can be private companies, government entities, or mutual organizations. Examples include Allstate, State Farm, Geico, and Aetna in the U.S.
Examination of Books and Records
1.The Director has the authority to examine the books and records of an insurer domiciled in South Carolina as often as necessary, but at least once every five years.
2. Insurers being examined must cooperate with the Director during the examination. Failure to do so can lead to suspension or revocation of a producer’s license or an insurer’s certificate of authority.
3. The costs of the examination are paid by the insurance company.
4. Foreign and alien companies (those domiciled in another state or country) are examined by their regulatory authority, and examination results may be shared with other state directors upon request.
Domiciled means what?
Where headquartered
Appointment
A licensed producer can only represent an authorized insurer in South Carolina if they are approved and designated as an agent to act on behalf of the insurer. This process is known as an appointment.
Insurers can appoint multiple producers to conduct business on their behalf. However, the insurer must certify that the applicant is trustworthy and qualified before appointing them.
The insurer is required to renew the appointment every two years (biennially) by September 30th of even-numbered years. If the appointment is not renewed by this date, it will be canceled.
The fee for a Resident Producer’s appointment is $40.00.
Termination for Business reasons
(Appointment being Terminated)
If an insurer decides to terminate a producer’s appointment for business-related reasons, they must notify the Department within 30 days of the termination.
Within 15 days of notifying the Director, the insurer must also send a notice of termination to the producer at their last known address.
Termination for criminal reasons
(Appointment being terminated)
If a producer is terminated due to a criminal act (such as dishonesty, breach of trust, fiduciary duty violation, or an illegal act), the insurer must notify the Director within 30 days of the termination.
The insurer must send the termination notification to the producer by certified mail with return receipt requested, postage prepaid, or overnight delivery to the producer’s last known address.
The Director may request additional documentation regarding the termination.
Within 30 days of receiving the notification, the producer has the right to file written comments with the Director or their designee. The producer must also send a copy of their comments to the insurer, and the comments will be included in the Director’s records.
The Director may also share this information, including the confidential and privilege information with other state, federal and international regulatory agencies with a national Association of insurance commercials other state, federal and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality (share information with others about you)
