Chapter 11- Laws and Rules

Question 1

An insurance company incorporated or organized under the laws of any jurisdiction outside of the United States.

Answer 1

Alien Insurer

Question 2

An insurance producer doing business under any name other than the producer’s legal name shall notify the Commissioner before using the assumed name.

Answer 2

Assumed Names

Question 3

An insurance company that has been issued a Certificate of Authority by the commissioner authorizing the company to transact insurance business in this state.

Answer 3

Authorized (Admitted) Insurer

Question 4

The Commissioner may issue an order to any person found to have committed an unfair or deceptive act or has violated a state insurance law.

Answer 4

Cease and Desist

Question 5

A license granted by the Commissioner to an insurance company authorizing them to transact insurance in this state.

Answer 5

Certificate of Authority

Question 6

A producer who has combined premiums collected with personal funds has engaged in ___

Answer 6

Commingling

Question 7

The amount paid by an insurer to a producer for transacting insurance.

Answer 7

Commission

Question 8

is biannual education required for a producer to maintain their insurance license.

Answer 8

Continuing Education

Question 9

can be defined as policies written on people that the licensed agent has direct influence over: including family, employers/employees, and/or any company to which the agent has stock control.

Answer 9

Controlled Business

Question 10

This is an unfair practice where a producer or insurer makes false and maliciously critical statements regarding the financial condition of a competing insurer.

Answer 10

Defamation

Question 11

solicitation means any offer by an insurance company to persons in this state (either directly or through a third party) to effect life or health insurance coverage which enables the individual to apply for the insurance on the basis of the offer.

Answer 11

Direct Response

Question 12

An insurance company incorporated or organized under the laws of this State.

Answer 12

Domestic Insurer

Question 13

Producers possess this responsibility since they handle the monies of the public.
- A producer must account for all premiums collected, or they have failed to uphold this duty.
- Anyone who possesses this duty must act with a high degree of trust.

Answer 13

Fiduciary Responsibility

Question 14

An insurance company incorporated or organized under the laws of the United States or any jurisdiction within the United States.

Answer 14

Foreign Insurer

Question 15

are a corporation, society, or order that have a representative form of government and are organized through a lodge system.
- solicit insurance only among its members and exist for the benefit of its members and their beneficiaries.

Answer 15

Fraternal Benefit Society

Question 16

is the intentional misrepresentation or intentional concealment of a material fact used to induce another party to make or refrain from making a contract, or to deceive or cheat a party.
- is grounds for voiding an insurance contract.

Answer 16

Fraud

Question 17

federal law makes it illegal to lie, falsify, or conceal information (orally or in writing) from a federal official.

Answer 17

Fraud and False Statements

Question 18

protects policy owners against the insolvency of an insurer by providing a mechanism for the payment of covered claims under certain insurance policies and surety bonds.

Answer 18

The Insurance Guaranty Association or Fund

Question 19

An individual who in any manner sells, solicits, or negotiates insurance on behalf of insurance companies for compensation is an

Answer 19

insurance Agent

Question 20

in Texas is a representative of the insured.

Answer 20

Insurance Broker

Question 21

the chief officer of the state insurance department

Answer 21

Insurance Commissioner

Question 22

any person who, for a fee or commission, offers insurance advice.
- This can also include someone who has completed a recognized insurance course and is designated as a certified financial planner, chartered life underwriter (CLU), chartered financial consultant, or general insurance agent.

Answer 22

Insurance Counselor

Question 23

any person who sells, solicits, or negotiates insurance contracts for compensation on behalf of an insurer.
- may also be referred to as an agent or field underwriter.

Answer 23

insurance Producer

Question 24

An unfair trade practice involving the commingling or misappropriation of premiums by a producer.

Answer 24

Larceny

Question 25

an insurance company owned and controlled by its policyholders.
- issue participating policies that may pay dividends to policyholders.

Answer 25

Mutual Insurance Company

Question 26

contains specific information on the provisions, benefits, and coverage of the policy applied for.

Answer 26

Policy Summary - The policy summary

Question 27

One of the parties in an agency relationship.
- The other is the agent who acts on behalf of the principal.
- This relationship describes the insurance business where a producer (i.e., agent) represents the insurer (i.e., the principal).

Answer 27

Principal

Question 28

Paying, offering or giving anything of value not specified in the policy to any person as an inducement to apply for or renew an insurance policy

Answer 28

Rebating

Question 29

The combined funds required by law that are set aside by an insurer to assure the payment of future claims.

Answer 29

Reserve

Question 30

An insurance company is owned and controlled by its stockholders who share in its divisible surplus.
- issue non-participating life insurance.

Answer 30

Stock Insurance Company

Question 31

The amount by which the assets of an insurer exceed its liabilities.

Answer 31

Surplus

Question 32

A license issued to an applicant who is being considered for appointment as an agent by another license holder, an insurer, or a health maintenance organization.

Answer 32

Temporary License

Question 33

Making a misrepresentation for the purpose of inducing or tending to induce the lapse, forfeiture, exchange, conversion, or surrender of an insurance policy with the intention of writing the insurance with another insurer.

Answer 33

Twisting

Question 34

An insurance company that has been denied or not yet applied for a Certificate of Authority may not sell or solicit insurance in this state.

Answer 34

Unauthorized (Non-admitted)

Question 35

All States have regulations prohibiting these activities.
- such activities are illegal and subject the individual engaging in these activities to monetary fines and/or imprisonment.

These unfair acts include but are not limited to:
- rebating
- twisting
- misrepresentation
- defamation
- coercion and boycott
- larceny
- perjury

Answer 35

Unfair Trade Practices (unfair marketing practices)