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IA&B PC Insurance > Chapter 1: Insurance Regulation > Flashcards

Chapter 1: Insurance Regulation Flashcards

1
Q

Purpose of licensing

A

to assure the public is treated fairly and equitably. Protect the public and help them get the most for their insurance expenditure

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2
Q

Licensing Prerequisites

A

pass exam, apply for license and pay fee, fingerprints
24 hrs PLE, waivers for CPCU,CLU,CIC

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3
Q

Qualification of an applicant

A

individual who has passed or is exempt from taking the insurance producer licensing exam
18yrs old, read/write English, no prohibited acts, pass exam, residence or business address in PA, finger prints

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4
Q

Producer (resident)

A

agent representing company- appointment
broker representing consumer- written agreement (surplus lines)

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5
Q

What is the licensing fee for an individual resident and an individual non-resident?

A

Resident- $55
Non-Resident- $110

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6
Q

Lines of authority- what is it & how they apply to a producer

A

Insurance coverages; Types of insurance which the producer can sell, solicit or negotiate.

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7
Q

Lines of Authority
- Life

A

coverage on human lives, benefits of endowments, annuities, disability income and accidental death/dismemberment

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8
Q

Lines of Authority
- Accident and Health or Sickness

A

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

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9
Q

Lines of Authority
- Property

A

coverage for direct or consequential loss/damage to property of every kind

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10
Q

Lines of Authority
- Casualty

A

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

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11
Q

Lines of Authority
- Variable Life and Annuity

A

Coverage provided under variable life and variable annuity contracts that involve investment in securities

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12
Q

Lines of Authority
- Personal Lines

A

Property & Casualty insurance coverage sold to individuals and families primarily for non-commercial purposes

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13
Q

Other lines of authority

A

Credit Insurance & Motor Vehicle Rental

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14
Q

who qualifies for a temp license

A
  1. Surviving spouse or representative of deceased/disabled individual producer
  2. Designee of licensee who enters active service in military
  3. Persons involved which commissioner determines the public interest would be served
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15
Q

How do you maintain an insurance license (renewal fees/education)

A
  • each 2 yr license period
    Resident fee- $55
    Non Resident- $110
    Lapsed fee- $165
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16
Q

Timeframes for reporting criminal convictions, address changes or contact information

A

Misconduct- 30 days after final disposition
Criminal- within 30 days of being charges with conduct, including legal documents
Address Changes- within 30 days of change

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17
Q

license lapse and reinstatement

A

Failing to renew the license on timely basis, request reinstatement within 1 yr of the renewal date.
- First 60 days following lapse will be reinstated retroactively back to effective date.
- More than 60 days (w/n 1 yr) after lapse, will be reinstated not retroactively, resulting in gap of licensing
- After 1 yr, you have to reapply

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18
Q

activities that carry disciplinary actions from the Insurance Dept.

A

Acting as producer w/o license
Doing business with unlicensed persons
Representing/advertising as a producer for an nonadmitted insurer
Soliciting applications or insurance for non-existent entities
Rebating (giving back a portion of premium)
Misrepresentation (false statements)
Larceny (theft)
Redlining

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19
Q

enforcement options for insurance dept.

A

Notice, hearing, evidence, penalties (loss of license, financial up to $5,000 fine, cease and desist)

20
Q

penalties for

A

Did not know- $1,000 to $10,000
Did Know- $5,000 to $50,000
Violation of Cease & Desist- up to $10,000
*max is for 6 month period

21
Q

Consent agreement

A

penalty paid but no admission of wrongdoing

22
Q

3 acts that require someone to have a producer’s license

A

Negotiate- offer to a purchaser
Sell- exchange money for insurance contract
Solicit- attempt to sell/ask/urge person for insurance

23
Q

general duties and responsibilities of the Insurance Commissioner

A

investigate and examine the affairs of persons engaged in unfair competition or deceptive act/prohibited practices
collect fees
report illegalities to the Attorney General

24
Q

Certificate of Authority- what does it do

A

Permitted to conduct business in another state other than which formed

25
Q

3 “rules” in rate making

A

Adequate- enough money/earnings to pay losses/expenses
Not Excessive- Rates unreasonably high; rate is high for insurance type and company’s losses/expenses are low compared to cost of insurance
Not Unfairly Discriminatory

26
Q

the process companies must follow in filing rates and forms in PA

A

Every manual, class rate, rating schedule or rating plan and modification. State proposed effective date and extent of coverage

27
Q

Producer’s fiduciary responsibility

A

act honestly & faithfully with premiums
separate account for premiums
no co-mingling

28
Q

who is allowed to be paid commissions and fees

A

unlicensed person for referring a prospective client to a producer or renewal commission to person who was licensed when witting license but sense expired

29
Q

company appointment procedure’s

A

Notify the department of a producer’s appointment or companies made. Producer remains appointed until insurer terminates or license is revoked, suspended, terminated.

30
Q

Unfair insurance practice and potential penalties

A

Failing to act promptly on communication dealing with a claim
Penalties- Fines, revoking license, increased CE hrs

31
Q

producer’s requirements for maintaining consumer privacy

A

annual privacy notification given
given the option to opt out of sharing info with others
protect security of financial info

32
Q

Federal Regulations that affect Insurance

A

Federal Fair Credit Reporting Act- financial info as part of underwriting process
Fraud and False Statements
Insurance Fraud Regulation
Privacy of Consumer Financial Info
Feral Terrorism Risk Insurance Program (TRIA)
Motor Carrier Act

33
Q

Non-Resident Insurance Producer

A

neither lives nor has office in PA; licensed producer, principal residence in home state, principal place of business in home state

34
Q

4 instances when Commissioner may grant temp license

A

surviving spouse or rep if death
spouse or rep is disabled
designee if producer enters active service in armed forces
other situation
*no new business
*max of 180 days

35
Q

Temporary License

A

issued to individual due to death, disability, or active military service of a licensed producer; issued for 180 days or until business is sold/transferred, producer recovers/returns, new personnel are trained/licensed to operate business

36
Q

Managers & Exclusive General Agents

A

Firms (licensed producers) who work for independent contractors on behalf of a domestic insurer
- specified territory
- function on behalf of insurance companies

37
Q

Manager General Agent (MGA)

A

negotiates and binds on behalf of insurer

38
Q

Exclusive General Agent

A

sole authority as producer for territory/specific portion of Insurers Business
*has binding authority
*Produces & Underwrites more than 25% of surplus

39
Q

Rebating

A

a practice whereby something of value is given to sell the policy that is not provided for in the policy itself

40
Q

Misrepresentations

A

an illegal act or activity that causes someone to enter into a contract

41
Q

Twisting

A

making incomplete comparisons between policies

42
Q

Illegal Inducement

A

tricking another person into signing an agreement by offering something (tickets in exchange for policy)

43
Q

Consent Agreement

A

requires an insurer to seek an insured’s approval prior to settling a claim for a specific amount.

44
Q

Solvency

A

the ability for an insurance company to meet its long term obligations.
pay what you owe/claims

45
Q

Boycott, Coercion, Intimidation

A

Boycott- pressure another group to do something by withholding
Coercion- forcing someone to buy insurance
Intimidation- unreasonable restraint of or monopoly in insurance

46
Q

Misappropriation of Funds

A

Improperly withhold, steal, or convert money or property received in the course of doing business

IA&B PC Insurance (21 decks)

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