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P&C Exam Review > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

PURPOSE OF LICENSING

A

To protect the public and help them get the most for their insurance expenditure

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2
Q

Explain Pre-licensing prerequisites

A
  1. Complete 24 credit hours
  2. Pass exam
  3. Apply for license
  4. Revive License from Commissioner
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3
Q

Applicant Qualifications

A
  1. 18 years old
  2. Read/Write English
  3. Has not committed any prohibited acts
  4. Paid all the fees
  5. Professional Competence and general fitness
  6. Pass exam
  7. Must maintain business or legal address in PA
  8. Fingerprinted
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4
Q

Licensing Fees

A

Resident- $55

Non-Resident- $110

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5
Q

Lines of authority

A 
Life 
Accident/Health
Property 
Casualty 
Variable Life 
Personal Lines
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6
Q

Life Insurance

A

Coverage on human life including benefits of endowments, annuities, disability income and accidental death or dismemberment

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7
Q

Accident/Health or sickness insurance

A

Coverage for sickness, bodily injury or accidental death including disability income

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8
Q

Property Insurance

A

Coverage for direct or consequential loss or damage to property of any kind

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9
Q

Casualty Insurance

A

Coverage against legal liability, including due to death, injury, disability or damage to real or personal property

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10
Q

Variable Life/Annuity Insurance

A

Coverage that involve investment in securities

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11
Q

Personal lines of insurance

A

P&C coverage sold to individuals and families primarily for non-commercial purposes

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12
Q

4 types of licenses

A
  1. Resident-Must obtain either business or legal address in PA
  2. Non-Resident- producer that neither lives or considers business in PA
  3. Temporary License- issued due to death, disability, active military service NOT TO EXCEED 180 days
  4. 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
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13
Q

How to maintain a License

A
  1. License is good for up to 2 years
  2. Renewal fees
    A: Resident-$55
    B: Non-Resident-$110
    C: Lapsed License-$165
  3. Must complete 24 hours of continuing education each licensing period(every 2 years)
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14
Q

Timeframes for reporting Criminal Convictions & Address change

A

With in 30 days

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15
Q

License lapse and reinstatement

A
  1. Reinstatement request must be within one year of renewal date
  2. Requested within first 60 days, License is reinstates retroactively
  3. Requested after the first 60 days will be reinstatement but will show a gap of non licensed time
  4. If not requested within 1 year Licensee must re apply
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16
Q

Rebating

A

Giving back a portion of premium to the insured

17
Q

Misrepresentation(false statements)

A
  1. Twisting- incomplete comparisons between polices

2. Illegal Inducement- offering illegal inducements that cause the insured to enter into an agreement(bribing)

18
Q

Consent agreement

A

Written agreement in which an accused person does not admit nor deny the charges but consents to payment of the civil penalty

19
Q

3 acts requiring a license

A
  1. Negotiate- confer directly
  2. Sell- exchange for money
  3. Solicit- attempt for a particular kind of insurance from a particular insurance entity
20
Q

Duties of Commissioner

A
  1. Appointed by governor for a 4 year term
  2. Issue/Revoke/Suspend/Non-Renew Licenses
  3. Regulate solvency
  4. Investigate Complaints
  5. Regulate rates, rating plans, forms
  6. Collect fees
  7. Regulate trade/claim practices
  8. Report illegalities to Attorney General
21
Q

Certificate of authority

A

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

22
Q

3 rules of rate making

A
  1. Adequate- Fair and charged enough to cover losses and expenses
  2. Not Excessive- Not unreasonably High
  3. Not unfairly Discriminatory- Make it fair and legal
23
Q

Filing rate forms in PA

A

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

24
Q

Producers Fiduciary Responsibility

A

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

25
Q

Who is allowed to be paid commission

A

Paid only to licensed persons

Exceptions

  1. May be paid to unloved person if said person referred a perspective client
  2. Renewal commission may be paid to someone who once was licensed during policy period
26
Q

Company appointment procedures

A

Producer may have written contract under which they can sell, solicit, and negotiate insurance policies issued by the appointing insurance company

P&C Exam Review (5 decks)

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