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Exam FX > Ch. 10 - Insurance Regulation Flash Cards > Flashcards

Ch. 10 - Insurance Regulation Flash Cards

1
Q

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?

A

Misrepresentation

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2
Q

When would a misrepresentation on an insurance application be considered fraud?

A

When it is intentional and material

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3
Q

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

A

Only producers licensed for the type of insurance transaction

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4
Q

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?

A

Rebating

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5
Q

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

A

Misrepresentation

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6
Q

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

A

Twisting

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7
Q

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

A

Defamation

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8
Q

What type of insurer is formed under the laws of another state?

A

Foreign

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9
Q

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?

A

Discrimination

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10
Q

To whom may a certificate of authority be issued?

A

To an insurer authorized to transact business in this state

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11
Q

What is the purpose of a cease and desist order?

A

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

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12
Q

Who owns stock companies?

A

Stockholders

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13
Q

A state-issued document empowering an insurance company to become an admitted insurer is called what?

A

Certificate of Authority

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14
Q

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

A

Cease and desist order

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15
Q

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

A

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

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16
Q

What type of licensee represents the insurance company?

A

The agent

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17
Q

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

A

Complete continuing education hours and pay a renewal fee.

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18
Q

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?

A

Authorized or admitted

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19
Q

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

A

Domestic, foreign, and alien

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20
Q

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

A

The Department of Insurance (Commissioner, Director, or Superintendent)

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21
Q

When is controlled business legal?

A

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)

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22
Q

The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?

A

Fiduciary

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23
Q

When can the Commissioner or Director examine insurers?

A

Whenever deemed necessary, but at least once every 3 to 5 years.

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24
Q

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

A

Certificate of Authority

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25
Q

Who is considered a nonresident agent?

A

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

26
Q

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

A

The insurer who is being examined

27
Q

What is controlled business?

A

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

28
Q

Who is an insurance agent?

A

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

29
Q

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

A

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 included administrative, executive, or clerical).

30
Q

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

A

Authorized or admitted

31
Q

The authority given by an insurer to an agent to transact insurance or adjust claims on the insurer’s behalf.

A

Appointment

32
Q

To stop or discontinue

A

Cease and desist

33
Q

Payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium.

A

Commission

34
Q

Not subject to an obligation.

A

Exempt

35
Q

An offer that attempts to influence the other party.

A

Inducement

36
Q

Unable to meet financial obligations

A

Insolvent:

37
Q

Conduct that is contrary to community standards of justice, honesty, or good morals.

A

Moral turpitude

38
Q

A mutual interchange of rights and privileges.

A

Reciprocity

39
Q

Restoration to the original condition or repayment.

A

Restitution

40
Q

A formal written law enacted by legislature; insurance statutes can be found in the state Insurance Code.

A

Statute

41
Q

Enacted or regulated by a statute.

A

Statutory

42
Q

The head of the State Department of Insurance

A

Superintendent

43
Q

Insurance that is not available from admitted insurers.

A

Surplus lines insurance

44
Q

Examine domestic insurers time frame:

A

3 years

45
Q

Hold hearing after issuing a cease and desist order:

A

15 days

46
Q

Age to apply for license:

A

18 years old

47
Q

Required prelicensing education for each line of authority

A

20 hours

48
Q

Period of a temp license:

A

180 days

49
Q

Time period for license reinstatement after a lapse

A

12 months

50
Q

Time period to file a notice of agent’s appointment with the Superintendent

A

30 days

51
Q

Time period to notify Superintendent of appointment termination

A

30 days

52
Q

Time period to send copy of notification to agent

A

15 days

53
Q

Time period for agent to file written comments concerning notification of appointment termination

A

30 days

54
Q

CE required every 2 years

A

24 hours

55
Q

CE credits required in ethics:

A

3 hours

56
Q

Time to report change of address:

A

30 days

57
Q

Time to report admin actions or criminal prosecution:

A

30 days

58
Q

Agents cannot seek a new license after surrendering previous existing license for how long?

A

5 years

59
Q

Civil penalty per violation in Insurance code

A

$25,000

60
Q

Fine for acting without a license -

A

$25-$500

61
Q

Fine for failing to file proper fees, taxes, or assessments

A

$100-$500

62
Q

Civil penalty for violating the Superintendent’s cease and desist order

A

$10,000

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