Chapter 1 Flashcards
What is a broker?
Brokers represent the policyholder in any dispute.
What is an agent?
Agents are presumed to be a representative of an insurance company.
An agent may perform any of the following tasks:
Solicit insurance
Take or transmit an application for insurance
Receive or deliver a policy (issue)
Examine or inspect a risk
Collect or transmit any premium for insurance
Adjust a claim on behalf of an insurance company.
What are the 6 primary types of licenses offered by the state?
Property & Casualty Agent (PCA) Insurance Service Representative (ISA) Managing General Agent (MGA) Risk Manager Adjuster Surplus Lines
Property Casualty Agent (PCA)
Is authorized to write, sign, execute and deliver policies.
Only a PCA can bind a company on a risk or sign a policy.
All policies must be signed by a resident PCA.
PCA must be appointed by an insurance company.
PCA’s can appoint other licensed individuals (ISRs) to bind polices for them.
What are the 3 types of PCAs?
Individual - solicits business directly from the public and must be sponsored by an insurance company.
Partnership - must license the company and 1 partner. All employees actively selling insurance must be licensed.
Corporation - organized under Texas law and located in Texas. Only one officer or director must be licensed as a PCA. Must also demonstrate financial responsibility by holding an Errors & Omissions policy of $250,000 or a bond of $25,000.
What are the 2 situations that one may take actions requiring a PCA license without actually having one?
Survivors: Temporary license
Emergency PCA licensed
What is a survivors temporary license?
Upon death of a PCA, the surviving spouse or children may continue to receive commissions but cannot write new business.
What is an emergency PCA?
In the event of a death or disability of a PCA, allows an individual to conduct business of the agency. Is limited to 90 days. (may be renewed for 1 additional 90 day period)
What is an ISR?
An ISR is a licensed representative of a PCA who only performs assigned duties within the office of a PCA.
Is not allowed to solicit outside, no cold calling.
May only represent one PCA at a time.
May bind coverage with PCA’s expressed prior approval.
Is paid a salary with ability to earn commissions and bonus.
What is a Non-Resident Agent?
Can write business in Texas if it is counter-signed by a resident PCA.
May not solicit business in Texas or act as a PCA.
Must be licensed in home state.
Managing General Agent
A MGA is a person or corporation with supervisory responsibility for an agency.
May receive and pass on daily reports, receive and be responsible for agency balances and appoint PCA’s.
May not deal with insuring public and may not sign or execute policies.
Must have an Errors & Omissions Policy of $250,000 or bond if $25,000.
Surplus Lines Agent
Must be appointed by a surplus company and hold a surplus license.
To apply for a surplus license you must have either a PCA, MGA or both.
Is considered non-admitted.
What is a Risk Manager?
Consultants
Evaluates risks for another person or company and advises on how to reduce their loses and exposure to risk.
Can collect a fee for services as long as fee disclosed prior to services.
Is not an agent.
Limited Lines License
Banks and rental car companies must be licensed to sell insurance products that they sale.
What are adjusters?
Is initially licensed for 1 year.
Must compete a 40 hour preparation course and pass state exam.
Controlled Business Law
A PCA must generate at least 25% of their business from the general public (random).
75% can be from their own selection.
Continuing Education Requirments
30 hours every 2 years
Minimum 15 per year
Must maintain CE records for 4 years
Reporting Address Change
Address changes must be reported immediately.
Fair Credit Reporting Act
If a consumer is denied credit, insurance or employment as result of information in a credit report, the consumer must be informed and given name of reporting agency used.
Consumers may refute any information they feel is incorrect.
Surrender of License
The surrendering of a license will NOT negate any offense prior to the effective date of the license surrender.