Chapter 1 Flashcards
PURPOSE OF LICENSING
To protect the public and help them get the most for their insurance expenditure
Explain Pre-licensing prerequisites
- Complete 24 credit hours
- Pass exam
- Apply for license
- Revive License from Commissioner
Applicant Qualifications
- 18 years old
- Read/Write English
- Has not committed any prohibited acts
- Paid all the fees
- Professional Competence and general fitness
- Pass exam
- Must maintain business or legal address in PA
- Fingerprinted
Licensing Fees
Resident- $55
Non-Resident- $110
Lines of authority
Life Accident/Health Property Casualty Variable Life Personal Lines
Life Insurance
Coverage on human life including benefits of endowments, annuities, disability income and accidental death or dismemberment
Accident/Health or sickness insurance
Coverage for sickness, bodily injury or accidental death including disability income
Property Insurance
Coverage for direct or consequential loss or damage to property of any kind
Casualty Insurance
Coverage against legal liability, including due to death, injury, disability or damage to real or personal property
Variable Life/Annuity Insurance
Coverage that involve investment in securities
Personal lines of insurance
P&C coverage sold to individuals and families primarily for non-commercial purposes
4 types of licenses
- Resident-Must obtain either business or legal address in PA
- Non-Resident- producer that neither lives or considers business in PA
- Temporary License- issued due to death, disability, active military service NOT TO EXCEED 180 days
- Managers/ Exclusive general agents
Managers- negotiate and bonds ceding reinsurance contracts on behalf of domestic insurer
EGA- granted sole authority to act directly or indirectly as an insurance producer for a domestic insurer
How to maintain a License
- License is good for up to 2 years
- Renewal fees
A: Resident-$55
B: Non-Resident-$110
C: Lapsed License-$165 - Must complete 24 hours of continuing education each licensing period(every 2 years)
Timeframes for reporting Criminal Convictions & Address change
With in 30 days
License lapse and reinstatement
- Reinstatement request must be within one year of renewal date
- Requested within first 60 days, License is reinstates retroactively
- Requested after the first 60 days will be reinstatement but will show a gap of non licensed time
- If not requested within 1 year Licensee must re apply
Rebating
Giving back a portion of premium to the insured
Misrepresentation(false statements)
- Twisting- incomplete comparisons between polices
2. Illegal Inducement- offering illegal inducements that cause the insured to enter into an agreement(bribing)
Consent agreement
Written agreement in which an accused person does not admit nor deny the charges but consents to payment of the civil penalty
3 acts requiring a license
- Negotiate- confer directly
- Sell- exchange for money
- Solicit- attempt for a particular kind of insurance from a particular insurance entity
Duties of Commissioner
- Appointed by governor for a 4 year term
- Issue/Revoke/Suspend/Non-Renew Licenses
- Regulate solvency
- Investigate Complaints
- Regulate rates, rating plans, forms
- Collect fees
- Regulate trade/claim practices
- Report illegalities to Attorney General
Certificate of authority
Any insurance company, association or exchange, doing insurance business within the commonwealth, that shall exceed the powers granted under a certificate of authority, shall forfeit and pay to the commonwealth a sum not more than $500 per policy issued in violation
3 rules of rate making
- Adequate- Fair and charged enough to cover losses and expenses
- Not Excessive- Not unreasonably High
- Not unfairly Discriminatory- Make it fair and legal
Filing rate forms in PA
Every manual, class rate, rating schedule or rating plan and any modification it uses. The filing must state the proposed effective date and shall indicate the extent of coverage contemplated
Producers Fiduciary Responsibility
Must keep all insurance premium funds separate from the producers own funds or other agency funds, unless they have express consent of the insurance entity on whose behalf the funds were collected
Who is allowed to be paid commission
Paid only to licensed persons
Exceptions
- May be paid to unloved person if said person referred a perspective client
- Renewal commission may be paid to someone who once was licensed during policy period
Company appointment procedures
Producer may have written contract under which they can sell, solicit, and negotiate insurance policies issued by the appointing insurance company
