7.1 Insurance Regulations Flash

Question 1

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

Answer 1

Misrepresentation

Question 2

Who must be notified of a producers change of address?

Answer 2

The Department of Insurance (Commissioner/Director/Superintendent)

Question 3

Who is considered a nonresident agent?

Answer 3

an agent who resides and is licensed in another state, but who is authorized to transact insurance in this state

Question 4

for what reason can a temp license be issued

Answer 4

for the continuation of business in case the licensed producer dies or becomes disabled

Question 5

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

Answer 5

the insurer who is being examined

Question 6

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

Answer 6

defamation

Question 7

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 7

Discrimination

Question 8

Who is an insurance agent?

Answer 8

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

Question 9

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 9

authorized or admitted

Question 10

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

Answer 10

twisting

Question 11

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 11

misrepresentation

Question 12

when can the Commissioner or Director examine insurers

Answer 12

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

Question 13

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 13

Rebating

Question 14

what are the producers required to do in order to renew their license?

Answer 14

complete continuing education hours and pay a renewal fee.

Question 15

If the Commissioner/Superintendent find a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?

Answer 15

cease and desist order

Question 16

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

Answer 16

authorized or admitted

Question 17

to whom may a certificate of authority be issued?

Answer 17

to an insurer authorized to transact business in this state.

Question 18

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

Answer 18

Only producers properly licensed for the type of insurance transaction

Question 19

who can usually be granted a temporary license

Answer 19

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

Question 20

What type of licensee represents the insurance company?

Answer 20

the agent

Question 21

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

Answer 21

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)

Question 22

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

Answer 22

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

Question 23

what type of licensee represents the insured?

Answer 23

Broker

Question 24

what is the purpose of a cease and desist order?

Answer 24

to prevent a producer or insurer from furthering violating laws for transacting insurance.