Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Insurance > Chapter 10 The Insurance marketplace > Flashcards

Chapter 10 The Insurance marketplace Flashcards

1
Q

What are the 4 distribution systems used to sell insurance?

A
  1. Independent Agency
  2. Exclusive Agency
  3. Direct Writing
  4. Direct Mail
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is an Independent Agent?

A

This person owns the renewal rights to policies that come up for renewal and has the right to place a renewing policy with any company to which he is appointed to (with consent of insured)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is an exclusive agent?

A

This person can be labeled as “captive” or “career” agent. They do not own renewal rights because the insuring company retains them. This type of agent must write business with the appointing company or give that company the right to refusal.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is Direct Writing?

A

This type of company uses its own employees to transact insurance directly with consumers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is Direct Mail?

A

These companies mail solicitation directly to the consumer. These come from the insurer instead of the applicant.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is direct response marketing/ Online direct sales

A

These companies(also know as writing companies) use employees to solicit and sell insurance. These agents usually receive a salary, or a salary plus commission. They have complete control and ownership of their policies and renewals.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is Home Servicing Market(also known as Industrail Life)

A

This was developed in the early 1900s to give minimum coverage to blue collar and factory workers. Coverage is usually low(1k-20k) and is intended to cover funeral expenses. Also available for families with no suicide or loan provisions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Why is Industrial Life/Home Servicing more expensive that other life policies?

A
  1. Underwriting more lenient
  2. Those that carry this are often higher-than-average risks.
  3. The agent collects premiums either monthly or weekly, which makes the insurance company’s administrative costs higher.
  4. Called “home servicing” because the premiums are often times collected in person.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is a producer?

A

This is either an agent, broker, or solicitor who generates insurance policies. This person must accept a high level of legal, ethical, and moral responsibility when dealing with both the clients and companies they represent.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

AGENTS REPRESENT

A

Companies to clients. These people enter into a contract to represent the insurer. Their actions are actions of the company. Their knowledge is that of the company, as well as receipt of money by this person is receipt of money by the company.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

BROKERS REPRESENT

A

Clients to companies. This person does not represent the company.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is Fiduciary Capacity?

A

This is a position of financial trust. An example of this is to promptly submit all premiums to the insurer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Both Insurance Agents and Brokers acting as fiduciary have the following responsibilities when it comes to the treatment of funds?

A
  1. They must remit all funds received to the appropriate insurer.
  2. When funds are received by a licensed agent/broker in transacting business, (A) he/she shall remit and/or return premiums, less any commissions, to the insurer to person entitled to the funds (B) Maintain fiduciary funds for Cali business in a trustee bank account(separate from other accounts) or depository, and not commingle and other funds in an amount at least equal to premiums and return premiums, net commission received and remaining unpaid amounts to persons that are entitled to such funds.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is an Insurance Agent (Property Cash Agent)?

A

This is the person authorized by and for an insurer to transact all classes of insurance OTHER THAN LIFE, DISABILITY, AND HEALTH INSURANCE. This includes all type of Property and Casualty insurance, which may be sold by a property and casualty license-a person authorized to act as an insurance agent, broker or solicitor.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is a Solicitor?

A

This is a natural person who assists an agent or broker in transacting all classes of insurance other than life. The may take applications, collect premiums, and solicit on behalf of the agent or broker, but cannot bind.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is a Personal Lines Agent?

A

This person is licensed to only sell insurance that meets the needs of the individual or family- not commercial insurance. They can sell the following:
-Auto
-Personal Watercraft
-Residential property
Inland Marine insurance for personal property
-Umbrella or excess liability Insurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is a life Agent?

A

This person is a person authorized by and for and/or disability insurer to transact life insurance , fixed annuities, and/or accident and health insurance. This person may also be authorized to transact 24 hour care.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

The reason a life and accident, health or sickness agents cannot receive a fee and the stipulations

A

Life and Accident, health or sickness agents cannot receive a fee unless it is based on a written agreement signed by the party being charged and cannot charge a fee for soliciting or servicing insurance contracts written by the licensee or contracts for which the license receives compensation from the insurer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is a life only agent?

A

This is a person authorized by and for a life insurer to transact life insurance and fixed annuities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is DUAL AUTHORITY held by both a licensed life agent or accident Health/sickness agent?

A

This means that both these type of licensed agents may be authorized and/or appointed to transact Accident, Health and Sickness Insurance by filing a “notice of appointment” for that purpose.

21
Q

What is a limited life agent?

A

These agents are authorized by and for a life insurer to transact life insurance and fixed annuities not to exceed 20k in face amount. Commonly referred to as pre-need or burial insurance.

22
Q

What is a life settlement Broker

A

When the owner of a life insurance policy sells it to a third party, these people arrange the sale. They normally work for commissions and fees, that are always based on a written agreement signed by the party being charged.

23
Q

What is a managing general agent?

A

These people are licensed property and casualty broker/agents or life agents who:

  1. Have a written management contract on file with the commissioner, with one or more admitted insurers
  2. Manage the transaction of a class or slashes of insurance written by those insurers in a specific territory under the contract
  3. Has the power to appoint/supervise/ and terminate the appointment of local agents
  4. Has the power to accept and decline risks
  5. Collects premium money from producing broker/agents
  6. Remits the money to those insurers according to the account current system

** They may only accept/decline risks only on property and casualty policies. Life insurance companies only allow their underwriting department to accept or decline risks.

24
Q

What are direct writing companies?

A

These companies use employees to solicit and sell insurance. Their agents are normally on salary. These companies have complete control and ownership of their policies and renewals.

25
Q

What is an administrator?

A

This is someone who collects any charge or premium (or who adjusts or settles claims on) California residents in connection with life, health or annuities coverage.

26
Q

An administrator cannot collect:

A
  1. An employer on behalf of its employees
  2. Union on behalf of members
  3. An insurance company
  4. Life or health agent or broker exclusively selling insurance
  5. Creditor on behalf of debtors
  6. Trust, its trustees, agents and employees
  7. Trust excempt from taxes
  8. Bank, credit union , or other financial institution
  9. Company which advances and collects premium or charges from credit card holders, provided it does not adjust settle claims
  10. Person who adjusts or settles claims as an attorney and does not collect premiums in connection with life or health or annuity coverages
  11. An adjuster
  12. A nonprofit agricultural association
27
Q

What is a third party administrator?

A

This is a firm that provides administrative services for employers and asssociations having group insurance policies. They act as a liaison between the insurer and the employer in matters such as certifying eligibility, preparing reports required by state, and processing claims. This is a common use for employers who self-insure

28
Q

What is an ADJUSTER?

A

This is a person who disposes of property insurance policy claims.

29
Q

What are the three types of ADJUSTERS IN THE INSURANCE INDUSTRY?

A
  1. Insurance company Adjusters- work for insurance companies do not need to be licensed
  2. Independent Adjusters- need license and pass adjusters test. Rep the insurer
  3. Public Adjusters- Same as above, Must post a 5k bond. They may represent the insured in a dispute with his/her own insurance company .
30
Q

Broker-Agent as Agent

A

Any person licensed to act as a broker to agent is deemed to be acting as an agent in all insurers for whom a notice of appointment of that licensee as its agent has been filed with the commissioner and is in force.

31
Q

What is an Independent Agency?

A

This type of agency enters into agency agreements and represents more than one company at a time. They own the records of policies sold and pats the cost of doing business out of commissions

32
Q

What is an EXCLUSIVE AGENCY?

A

Also known as “captive” or “career” agency. Represents a single insurer and submits business only to that company. They DO NOT own the records of the policies sold.

33
Q

What is a general Agency?

A

This type of agency has a group of agents working for him or her at a specific location. They are responsible for the agency operation within a geographic area and acts as.a liaison between selling agents and the home or regional office of the company they represent.

34
Q

What are the three Types of Authority?

A
  1. Express- granted to agent under written contract
  2. Implied- Not specifically stated, but included based on other statements in the contract
  3. Apparent- Appears to exist in the public, even if it does not in reality
35
Q

What is the Principal?

A

Is the individual or corporation where performance is guaranteed in the insurance policy

36
Q

What is a Binder?

A

This is temporary coverage agreement executed by the agent or insurance company(usually the company) and delivered by agent. Puts the insurance in force, until premium is paid and is good until the insurer issues a policy or declines coverage. (IN LIFE INSURANCE, THIS IS A COVERING NOTE AND THE AGENT NORMALLY PREPARES THIS)

37
Q

What is a Conditional Receipt?

A

If a premium is paid, policy coverage will be in force from the date of the application or medical exam, if required, so long as the insurer would have approved coverage. This is not valid(in life and health) until it is delivered to the insured and premium is paid.

38
Q

What is the suspense diary?

A

This is the agent’s record keeping system for tracking client transactions and communication. This must be available for viewing by the commissioner on request

39
Q

Non-admitted Insurers may transact insurance in California with:

A
  1. A citizen of Cali with respect to that citizen’s own property
  2. A surplus lines broker
  3. Special Lines surplus lines broker ( Applies to Property and Casualty Insurance)
40
Q

Records: Agents and Brokers must retain informational records for?

A

18 months

41
Q

Records: Detailed bank and Financial Records must be kept for?

A

5 years

42
Q

Records: Life insurance agents must keep records for?

A

5 years

43
Q

Records: Premium Finance records must be kept for?

A

3 years

44
Q

Records: Insurance Companies must keep records for?

A

2 years

45
Q

Records: Those transacting life/health and disability insurance must:

A

Records should be maintained for 5 years following the delivery of the insurance policy to the insured party. If no policy, then the period begins from the date of application. For agent, must keep records minimum 5 years. If Commissioner states that the agent has no kept required records, he/she may require the agent or broker to complete those records within 60 days

46
Q

Filing a notice of Appointment

A

Every insurance producer(all) must have a notice of appointment filed with the Department of Insurance. Any authority to transact insurance becomes effective as of the date the notice is signed.

47
Q

When can a licensed accident and health agent present a proposal for insurance to a prospective insured?

A

They can submit a proposal for insurance to an insurer without an appointment so long as the insurer submits a Notice of Appointment to the COmmisioner within 14 days of receipt of application

48
Q

How can a copartnership continue to operate?

A

They can operate for 30 days after registering a change in membership paying the required fee and furnishing a bond so long as one person continues to act as the agency or broker.

Insurance (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions