Chapter 4: State Insurance Statutes, Rules, and Regulations Flashcards
What type of licensee represents the insurance company?
The agent
What is the purpose of insurance guaranty associations?
To protect policyowners, insureds and beneficiaries from financial losses caused by insolvent insurers
In the agent/insurer relationship, who is considered the principal?
Insurer
What is controlled business?
Insurance on the producer’s own life or property, or the lives or property of the producer’s family or business associates
What type of misrepresentation persuades an insured, to their detriment, to cancel, lapse, or switch policies from one to another?
Twisting
Who may share in the commission from the sale of a life insurance policy?
Only producers properly licensed for the type of insurance transaction
Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?
No, advertising of the existence of the guaranty association for the purposes of solicitation and sale of insurance policies by insurers is an illegal business practice.
What are producers required to do in order to renew their license?
Complete continuing education hours and pay a renewal fee
What type of licensee represents the insured?
Broker
To whom may a certificate of authority be issued?
To an insurer authorized to transact business in this state
Who is an insurance agent?
A person authorized to sell, solicit and negotiate insurance contracts
Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?
Discrimination
If an insurer meets the state’s financial requirements and is approved to transact business in the state, it is considered what type of insurer?
Authorized or admitted
If an insurer holds a Certificate of Authority, it is known as what type of insurer?
Authorized or admitted
For what reason can a temporary license be issued?
For continuation of business in case the licensed producer dies or becomes disabled
Who must be a member of insurance guaranty associations?
All insurers authorized to write insurance within a state
If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?
Defamation
An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?
Rebating
Who is considered a nonresident agent?
An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state
Who must be notified of a producer’s change of address?
The Department of Insurance (Commissioner/Director/Superintendent)
When can the Commissioner or Director examine insurers?
Whenever deemed necessary, but at least once every few years (please check your state regulations for specific time requirement)
If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?
Cease and desist order
In general, who can be excluded from producer licensing and examination requirements?
Insurance company officers, directors, or any other employees who do not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive or clerical).
What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?
Misrepresentation
