chap.10 Flashcards
Q: What are producers required to do in order to renew their license?
A: Complete continuing education hours and pay a renewal fee
Q: When can the Commissioner or Director examine insurers?
A: Whenever deemed necessary, but at least once every few years (please check your state regulations for specific time requirement)
Although most domestic insurers must be examined at least once every 5 years, how often may the Director examine an insurer?
Whenever necessary
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?
Rebating
Q: If an insurer holds a Certificate of Authority, it is known as what type of insurer?
A: Authorized or admitted
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
Q: Who is responsible for the costs associated with the examination of insurers?
A: The insurer who is being examined
Q: What type of licensee represents the insured?
Broker
Which of the following statements does NOT accurately describe an insurance broker?
A broker does not represent individual clients.
Q: Who may share in the commission from the sale of a life insurance policy?
A: Only producers properly licensed for the type of insurance transaction
Q: What type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
A: Twisting
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
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
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
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
Q: What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?
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?
Misrepresentation
Q: Who can usually be granted a temporary license?
A: Producer’s spouse or designee in case the licensed producer dies or becomes disabled
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?
Discrimination
Q: For what reason can a temporary license be issued?
A: For continuation of business in case the licensed producer dies or becomes disabled
Q: If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?
A: Defamation
Q: Who is an insurance agent?
A: A person authorized to sell, solicit and negotiate insurance contracts
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 include administrative, executive or clerical).
Q: Who must be notified of a producer’s change of address?
A: The Department of Insurance (Commissioner/Director/Superintendent)
Q: To whom may a certificate of authority be issued?
A: To an insurer authorized to transact business in this state
Q: What type of licensee represents the insurance company?
A: The agent
Which of the following would be considered an illegal inducement to purchase insurance in Arizona?
A $50 voucher toward a policyholder’s next transaction with an agent
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?
Making comparisons between different policies
An agent’s license expired on December 1, 2015. His renewal application was not received until July 31, 2016. Which of the following is true regarding the license’s renewal?
The Director may accept the application, provided that the agent pays the appropriate renewal fees plus a $100 late fee.
Producers in Arizona may do all of the following EXCEPT
Bind coverage for their clients.
In order to get a nonresident license is this state a producer must
Apply and pay a fee to a nonresident state that reciprocates.
Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance?
Oral statements cannot be considered fraud.
If a telemarketer wants to make an unsolicited sales call to a potential customer, what is the earliest time the telemarketer can call the prospect’s residence?
8am
Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must
Respond to the consumer’s complaint.
Which of the following regulatory authorities participated in creating the National Do Not Call Registry?
FTC
An insurance policy or countersignature endorsement must be signed by any of the following EXCEPT
Director of Insurance.
If an insurance company sends e-mail solicitations to potential customers, and if a customer chooses to opt out of the list, then how much time will the company have to remove the person from solicitation lists?
10 days
An insurance company sends frequent email advertisements and coupons to its customers. One customer does not want to receive these emails anymore and requests to be excluded from the mailing list. The emails to the customer must stop within
10 business days.
If a producer waits more than 1 year to renew a license after it has expired, what is the producer required to do to be licensed again?
Retake a licensing exam
A producer’s insurance license was due for renewal but she failed to pay the required license renewal fee. Seven months later, the producer decided to pay her renewal fee. How much can she expect to pay in addition to the renewal fee?
100
Who decides if a licensed property or casualty insurance producer can be licensed as a resident surplus lines broker?
The Director
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
Coercion.
Every producer must maintain a place of business in Arizona
Accessible to the public.
Which of the following is a qualification for an adjuster’s license?
Must be at least 18 years old
What is the maximum civil penalty for violating Insurance Information and Privacy Protection laws?
$10,000
If a premium payment is mailed, how can an insurer establish the date of payment?
The postmark on the envelope
Which of the following policies must comply with the signature regulation for insurance policies?
An insured’s initial policy with an insurer
How long are title insurance licenses in effect?
4 years
Intentionally misrepresenting or concealing a material fact to induce an insurance company to make a contract is known as
Fraud
The necessary proof of loss claim is submitted to an insurer. Assuming the claim is complete, how long does the insurer have to pay the claim without additional interest?
30 days
The Gramm-Leach-Bliley Act was passed to
Protect private customer information filed with a financial institution.
Which of the following shows the types of insurance an insurer is permitted to transact?
Certificate of Authority
If a producer changes his or her residential address, the Director must be notified of the change within how many days?
30 days
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?
The Fair Credit Reporting Act
How many credit hours of ethics training are licensed resident producers required to complete every licensing period?
6 hours
The Federal Fair Credit Reporting Act
Regulates consumer reports.
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
All of the following are requirements for producer license renewal EXCEPT
Renewal examination
A person requests that an insurance company quit sending him e-mail solicitations. According to the law, the company has 10 days to stop e-mailing the complainant. However, the company sends him four more e-mails after that time limit has expired. Which of the following is true?
The company will be fined at least $250 for each e-mail.
If the Director believes that a producer may be in violation of an insurance law or regulation, what may be issued that would legally force the producer to stop committing the violation?
Cease and desist order
What is the purpose of a certificate of authority?
To show the lines of insurance an insurer is authorized to transact
