Ch 13 California Laws and Rules

Question 1

Buyer’s Guide

Answer 1

Buyer’s Guide is a consumer publication that describes the type of coverage being offered and
provides general information to help the applicant compare different policies and reach an informed
decision about whether the proposed coverage is appropriate.

Question 2

Commissioner of Insurance

Answer 2

The Commissioner oversees the insurance industry in California. This is an elected position that is held for a term of 4 years with a two-term limit.

Question 3

Notice

Answer 3

An order or notice of the Commissioner must be in writing and signed by the Commissioner or an authorized representative.

Question 4

Examination of Records

Answer 4

The Commissioner must examine the financial affairs of each insurer operating in California prior to issuing a certificate of authority. At the very least, a company shall be then examined once every 5 years.

Question 5

Hearings

Answer 5

The Commissioner may call and hold hearings for any purpose deemed necessary. The hearing must be held within 30 days after the notice is served. Within 30 days after the hearing, the Commissioner shall issue an order specifying the amount of the penalties to be paid.

Question 6

Cease and Desist Order

Answer 6

The Commissioner may issue a cease-and-desist order to any person found to have committed an unfair or deceptive act or has violated a state insurance law.

Question 7

Insurance Agent

Answer 7

An insurance agent is a person authorized, by and on behalf of an insurer to transact all classes of insurance other than life, disability, or health insurance, on behalf of an admitted insurance company.

Question 8

Insurance Broker

Answer 8

An insurance broker is a person who, for compensation and on behalf of another person, transacts insurance other than life, disability, or health with, but not on behalf of, an insurer. There is no such license issued in California.

Question 9

Insolvency

Answer 9

Insurer Insolvency is the impairment of an insurer’s capital, financial stability, and financial strength to the point where policyholders and the public may be harmed.

Question 10

Impairment

Answer 10

Impairment means that the necessary paid-in capital of the insurer has been compromised.

Question 11

Conservation

Answer 11

If an insurance company is in an impaired financial condition, the Commissioner may file an application for an order to take control of its affairs for the purpose of improving its condition. This action is known as conservation.

Question 12

Agent

Answer 12

An insurance agent is a person authorized, by and on behalf of an insurer to transact all classes of insurance other than life, disability, or health insurance, on behalf of an admitted insurance
company.

Question 13

Continuing Education

Answer 13

All agents must complete 24 hours of continuing education each two-year
license renewal period. Four of those hours must be in Ethics.

Question 14

Agent Records

Answer 14

Life insurance agents must keep transaction records for 5 years. Claimant: A person who asserts a right of recovery under an insurance policy is called the claimant.

Question 15

Materiality

Answer 15

Materiality is relevant information that would probably influence a party’s assessment of
a proposed contract.