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Insurance Liability > General NJ Insurance Law > Flashcards

General NJ Insurance Law Flashcards

1
Q

What is the DOI?

A

Division of Insurance

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2
Q

What is the purpose Division of Insurance?

A

DOI is tasked with the responsibility of enforcing insurance laws passed by Legislature

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3
Q

What Branch does the Division of Insurance belong to?

A

Executive Branch

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4
Q

What is the Commissioner of the Insurance Department?

A

Commissioner is the one who issues rules and regulations that Producers must follow.

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5
Q

Who can Conduct hearings and impose administrative penalties such as fines or revocations?

A

The Commissioner of the Insurance Department

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6
Q

What is Paul v.s. Virginia?

A

In 1868, Samuel Paul a NY insurance agent in Virginia sought out to sell insurance. This was to argue against discrimination of out of state insurance agencies sales. Supreme Court denied the case.

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7
Q

What is United States v.s. South-Eastern Underwriters Association?

A

In 1944, It was the case that overturned ‘Paul v.s Virginia’s ruling. Sherman Act does apply to interstate commerce of insurance and will become regulated under Congress (Federal Government) under commerce law.

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8
Q

What is the McCarran-Feguson Act?

A

Public Law 15. In 1945, its a federal law that came to be after ‘U.S v.s. SEUA’ stating that business regarding to insurance are exempt from most federal regulations, including anti-trust laws.

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9
Q

What does the McCarran-Feguson Act not cover.

A

Does not cover Federal Anti-laws that are in regard to Boycotting, coercion, and intimidation.

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10
Q

What is the Commissioner of Banking and Insurance?

A

Appointed by the Governor with advice and consent of Senate, the commissioner is an individual who is in charge of the insurance department and tasked with administrating and regulating rules, policies and licenses.

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11
Q

What authority does the Commissioner of Banking and Insurance have?

A

They are tasked with administrating the Department to keep it running efficiently and effectively, they put laws into place regarding to the Department, companies, and agencies and licensees and regulate those laws, put in process of legal proceeding, and makes a reports annually to the governor and Legislative Department

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12
Q

What power does the Commissioner have?

A

Commissioners have the power to conduct investigations, issue subpoenas, order penalties & reimbursements, and can require immediate action before completion of hearing.

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13
Q

a written order that demands one to attend court; a summons to court.

A

subpoenas

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14
Q

What are the penalty for violations committed in court issued by the Commissioner.

A

Penalties for first offense is $5000. subsequent offenses are $10,000 each

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15
Q

What powers can a Commissioners Subpoena have?

A

Examine all individuals under oath, force attendance of witnesses, the production all forms of documentations, records, and other media of evidence. and request any court to produce evidences and testimonies.

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16
Q

What reason would the Commissioner would hold a hearings?

A

Commissioner can hold hearings to investigate unfair methods of competition, practices, or deceptive acts.

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17
Q

What is difference in a hearing by the commissioner than a normal hearing?

A

Hearing will be held before 10 days after notice was issued. Subject of hearing will be given opportunity to be heard or present evidence to make sure an order of cease & desist . Anyone can appear at the hearing and formal rules of evidence and pleading will no be enacted at the hearing.

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18
Q

What are the penalties for violating the Unfair Practice Acts?

A

An order for a cease and desist will be placed on the behavior that violated the act. There will also be a fee of $1,000 for every violation that the individual was not aware of and a fine of $5,000 for each violations that the individual was aware of.

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19
Q

What is the Judicial involvement with the Commissioner?

A

The Supreme Court reviews the Commissioners orders.

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20
Q

Can an individual only be liable for what the court hearing is in regard to?

A

Even if the Commissioner finds an individual guilty, they will still be liable for other violations and damages outside the realm of the original case by the court of law.

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21
Q

The Unfair Practice Acts is only applicable with the specified violations, right?

A

The Commissioner can deemed an individual as a suspect to deceptive acts. If the behavior of the individual is not specified in the Act, Commissioner can still proceed as if the Act were violated, according to public interest.

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22
Q

What is an Intervenor?

A

An intervenor is when someone, specifically a third-party, intervenes the proceedings in the Superior Court to enjoin and restrain the practice or act the subject of the case committed. Can only be done within the 30 day window of the Commissioner deciding to not charge a violation of insurances law.

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23
Q

a court or governmental agency that issues a legally enforced order to stop certain activities.

A

Cease and Desist

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24
Q

instruct or urge (someone) to do something.

A

enjoin

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25
Q

What are the penalties to resist a cease and desist order?

A

The penalties are the forfeit of ones case, and to pay the state $5,000 for each violation conducted. Payment can be done through civil actions.

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26
Q

How does the Fifth Amendment apply in the hearings by the commissioner?

A

It applies by giving immunity from liability, Witnesses may produce testimonies and evidence without the fear of being prosecuted. One can give excuse to not appear and not testify, however it can be overruled and must comply. Immunity from prosecution does not protect from punishments of perjury, suspension and revocation of your license.

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27
Q

What actions must one do to renew ones license after suspension and revocation?

A

One must send over an application for a renewal. Commissioner holds the power to deny and not renew ones application.

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28
Q

What power does the Commissioner have in regards to licenses?

A

They have the power to place an individual on probation, suspension, revoke, and the refuse to issue or renew a license. This is in regards to both individuals and business entity (agencies).

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29
Q

What are the penalties if a business’s officers or managers of any quantity, ignores or are unaware of violations?

A

This is the failure to supervise. There is a lack of awareness and lack of action regarding the violation(s). If such a thing is occurring, the commissioner can suspend, revoke or refuse the Producer license of both the individuals and agency.

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30
Q

True or False. An individual can only receive penalties and punishment after a hearing.

A

False. Commissioner has the authority to enforce provisions and impose penalties when the individual is under investigations for violation of the Unfair Practice Acts. Lapsed , a surrendered license, or resignation does not grant any kind of immunity.

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31
Q

For insurance businesses, what are the rules in regard too?

A

Rules are in regard to:
- Selling, Soliciting, Negotiating, or binding policies
- Communication with policy owners
- Office Management policies
- Processing claims
- Transmitting funds between policy owners, agencies, producers, and banks.

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32
Q

An insurance company formed and acts within the same state.

A

Domestic Insurer

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33
Q

An insurance company that is formed in one state and does business in another.

A

Foreign insurer

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34
Q

An insurance company formed in another country and does business in any region within ones country.

A

Alien Insurer

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35
Q

an owner of shares in a company

A

a Shareholder/ a stockholder

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36
Q

the owning to a fraction of company’s property, capital, and being entitled a proportion of the profits along side other joint owners.

A

Shares

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37
Q

An insurance company incorporated the same state of business that has its capital divided into shares owned by stockholders

A

Domestic stock insurance company

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38
Q

An insurance company incorporated in the same state as business without permanent capitol stock. its governing body is elected by the policyowners, except while temp. capitol stocks is outstanding.

A

Domestic mutual insurance company

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39
Q

Insurance that an insurance company buys from another insurance company to insulate from major risks, such as claims.

A

Reinsurance

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40
Q

The insurance company that buys insurance for it’s self is called?

A

ceding insurance company

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41
Q

The insurance company that sells insurance

A
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42
Q

Insurance company that sells reinsurance to another insurance company is called?

A

assuming insurance company

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43
Q

When the assuming insurance company buys its own reinsurance to share its own risk.

A

retrocession

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44
Q

when a reinsurance company buys reinsurance from another reinsurance company but inadvertently buys back its own risk.

A

Spiraling

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45
Q

Certificate of authority

A

A certificate issued by the commissioner that authorizes an insurance company to manage insurance within the respective state.

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46
Q

What does one need to sell insurance?

A

Certificate of Authorization and a license for the insurance company and the individual in question.

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47
Q

What is a Producer

A

Person or business entity (that needs a state-issued license) that sells, solicit, or negotiate insurance.

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48
Q

a Producer authorized by an insurance company to solicit, sell, or negotiate insurance contracts on their behalf. As well as collect premiums and countersign insurance policies.

A

an Agent

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49
Q

What is a Broker?

A

They represent either a company or a prospective policy owner. They are capable of placing insurance with companies they do not represent as a producer. They are working for a fee, they assist in regards to negotiating policies for others.

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50
Q

a Person who acts or holds himself out to the public or any licensees offering advice, counsel, or services. For a fee or commission.

A

Consultant

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51
Q

To exchange a contract or policy by any means of for money.

A

Sell

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52
Q

Solicit

A

Attempt to sell insurance or urge person to apply for a type of insurance from a type of insurance company;ask for or try to obtain (something) from someone.

53
Q

The act of directly discussing and advising a purchaser for a particular insurance policy or insurance company

A

Negotiate

54
Q

there are multiple types of licenses. only specified licenses specify the type of insurance one can sell. What are the types of license one can get.

A
  • Life insurance
  • Accident and Health or Sickness Insurance
  • Property Insurance
  • Casualty Insurance
  • Variable Life and Variable Annuity products insurance
  • Limited Line Credit insurance
  • Personal Lines insurance
55
Q

True or False. One only needs a Variable life and Variable Annuity license to sell these types of insurance.

A

False. Producer needs Securities license on top of the existing producer license to sell Variable life and Variable Annuity insurance.

56
Q

What is a requirement for taking a State licensing exam?

A

A minimum of 20 hours per each course that the exam subject is in regard to.

57
Q

Which subjects require the minimum 20 hours?

A

-Life and Variable Life
- Accident and Health (Sickness and Accident)
- Property
- Casualty
- Personal Lines
- Title

58
Q

Which subjects are not required the for seeking authority?

A
  • Travel insurance
  • Car rental insurance
  • Ticket insurance
  • Group Mortgage cancellation insurance
  • Legal insurance
  • Self-storage personal Property insurance
59
Q

What does one do if they have a license from one state and moved to another state?

A

The appropriate actions one take is to apply within 90 days prior to the cancellation. The home state must certify that one is an agent with good standing.

60
Q

What would allow one to waiver a licensing examination?

A
  • Held similar licensing in another state that is active or exp. within a years time.
  • Completed relevant veterans training
  • Completed relevant higher education
  • is an attorney at law licensed in the same state.
  • Held a position of authority as a veteran armed service that took a similar course.
  • For specialized field of licenses, they need to hold a professional designation within that field.
61
Q

What are some facts they want to know when one is getting there license?

A
  • are you older than 18 years old.
  • have not committed acts that are ground for denial, suspension, or revocation.
  • have completed prelicensing course of study for the lines of authority.
  • payed the fees
  • passed the examination for the line of authority that one applied.
62
Q

For a resident applicant, one is required to present:

A
  • A certificate of completing the approved course of prelicensing education.
  • A certificate of passing the state exam licensing
  • a completed criminal history request and fingerprint forms
  • Statement on ones personality
  • Payment
63
Q

What is the appointment contract by authorized insurance company

A
  • Authorize one to act as a producer for the authorized appointing insurance company.
  • Outline the duties, responsibility, and limitations of authority between one and the appointing company.
64
Q

Can insurance companies cancel a work contract?

A

Work contracts can only be canceled if the company, within 15 days of deciding to terminate, files a written notice of cancellation.

65
Q

How does one maintain there licenses?

A

Fee’s must be paid, continued education requirements, 24 credit every two years ( 3 of those are approved ethic instructions).

66
Q

What happens when one fails to reinstate their license.

A

there is a lapse of 12 months permitted, one can reinstate the license by paying the renewal fee before the due date without the need of passing an exam. If one misses the due date then the penalty is to pay double the renewal fee.

67
Q

What can be done if one fails to comply to license renewal procedures?

A

One would need to request a waiver. Reason to grant the request would be due to military services or medical disability, or another extenuating circumstance.

68
Q

What action does one take when they moved to a new home (same state or new state)?

A

They need to inform the Commissioner that there is a change in address within the 30 days of them moving.

69
Q

How long until the licenses expires?

A

The license last for two years. They expire on the last day of ones birth month.

70
Q

what is different about Business entity producer licenses renewing process?

A

They expire every two years at May 31st.

71
Q

What does one need to provide to reinstate their license after its been lapsed?

A

Proof of completion of continuing education, certification that states one did not preformed any insurance work during the lapsed period.

72
Q

For Insurance companies to get their business entity licenses, they need to send an application to Commissioner to get it approved.

A

Commissioner will check if the business entity has paid the required fees, has designated licensed insurance producer that runs the operations and appropriate rules in accordance to the states regulations. As well as viewing there are no criminal history and that the fingerprints are checked.

73
Q

A first-time applicant in regard to business entity license must submit a proper completed application containing:

A
  • Legal name
  • Mailing address & location
  • Names, license reference numbers
  • License authorities of each licensed officer
  • Names, addresses and license reference numbers of any person owning 10% or more of business entity.
  • Responses and any necessary documentation regarding to applicants character, fitness, and financial responsibility.
  • completed fingerprint forms, and electronic fingerprinting of owners of 10% the business entity
  • Required fees
74
Q

Nonresident applicants can receive the nonresident insurance producer license if:

A
  • currently licensed as a resident insurer with good status in home state.
  • paid required fees and submitted proper requests
  • the application that was sent in the home state
  • Lives in home state that has mutual exchange
75
Q

For those who want the authority Surplus Lines, what do they need.

A

They must be a producer with a Property and Casualty license

76
Q

How does Temporary work Authority work?

A

When one with a residence status changes their residency, the Commissioner can grant Temporary work Authority for 60 days. For nonresident moving to new state, must notify home state within 30 days of move and request resident status within 90 days of move.

77
Q

Any one can get their contract terminated by the appointing company as they see fit.

A

Wrong, the notice of termination has to state their reason for the termination of the contract. Reason for the notice has to be justifiable to a termination, such as misconduct.

78
Q

What occurs when an incident occurs to the Producer?

A

When an incident occurs, the Commissioner may issue a temporary license for a period of 180 days. In the incident, if the Producer becomes disabled, the 180 days is a time period for them to recover. If the Producer dies due to the incident, the 180 days is spent for training and licensing new personal.

79
Q

What happens when an application, renewal form, or attached documents do not have the qualifications prescribed in the Act?

A
  • they will advise that the license requested is denied
  • specify the reason for denial
  • advise one of a hearing and have the right to request one
80
Q

What occurs when one tries to cancel or surrender their Producer license of a business entity?

A

The Department can refuse the cancellation since it affects other licensed officers involved and their consent would be needed. The surrendered license can be reinstated with an application if its in the period before cancellation. Cancellation also does not grant any immunity to penalties or disciplinary actions that were charged.

81
Q

In detail what would cause the commissioner to issue a probation, suspend, revoke, or refuse renewal of ones license.

A
  • Providing incorrect, misleading, or untrue information.
  • violation of any insurance laws and regulations
  • Obtaining a license through fraud
  • Improperly withhold or misappropriating monies or properties received while doing insurance business
  • Convicted of a felony or a fourth degree crime.
  • Have admitted or found committed fraud or broke the Unfair Practice Act
  • Using Dishonest and coercive practices, showing fraudulent, untrustworthy, incompetent behavior and financial irresponsibility.
  • Having a license revoked, suspended or denied in other states
  • Forging another name to applications and document related to insurance transactions
  • Cheating exams
  • knowingly do business with a unlicensed insurance producer.
  • failure to comply and impose child support obligations.
  • Failing to pay income tax
  • withholding material information in applications for licenses
  • Knowingly assist someone violating insurance law.
  • Failure to notify the Commissioner within 30 days of any crime, suspension from another state, failure to give necessary documentation, initiations of formal proceeding.
82
Q

Regarding to a producer who has been convicted of criminal felony or other crimes, is there a way to be granted their license.

A

Regarding to such a Producer, they will need to receive a written consent from the Commissioner to be allowed to continue with the business of insurance. The commissioner can deny or accept ones application and give reasons as to why. The producer has a right to a hearing if they chose too.

83
Q

What occurs when a Producers license is suspended or revoked.

A

Their license must be returned immediately for cancellation. Once cancelled, they will have to sever any existing agency relationship with insurance companies or any other employment relationships related to the agency

84
Q

What happens when a Producers suspension ends?

A

The producer have to reapply with an affidavit stating that all the conditions for ones suspension.

85
Q

affidavit

A

a written statement confirmed by oath or affirmation, for use as evidence in court

86
Q

What can happen after revocation of a producers license?

A

A reinstatement would only be allowed 5 years after its been revoked. The ex-Producer can reinstate by submitting a affidavit that describes the activities since the revoke, that the conditions for of the suspension are fulfilled, and the improvement of their reputation, trustworthiness, and competency. They will also need a report from the chief probation officer.

87
Q

The administration penalty can impose penalties, but the Department must provide a notice stating the reason of penalty and description of violation, and statement that they have a right to a hearing. What can the licensee do regarding this?

A

If they fail to respond to the notice from the Department, they will be considered as guilty since it will be seen as admission of all allegations. No more procedures or hearings will done, it will be the final order. If the producer/licensee in question gives consent to the penalties, Department may still suspend and revoke license.

88
Q

What should one do when they receive a notice of Administrative penalties and would like to contest the charges.

A

Hearing will have to occur once a written request is submitted within 20 days from the service of the notice. Then after, within the 60 days of receiving said notice, the Manager of Enforcement will inform the Producer of the disposition ( arrangement ) of the court. The court can be arranged as:
- Terminated with or without prejudice (to permanently or temporary dismiss a case)
- Resolve via consent order, to give lesser or different penalties
- find a contested matter, meaning the case will be given to the Office of Administrative Law for a hearing.

89
Q

What does it mean to be terminated with prejudice?

A

A court case that is is dismissed permanently. It is over and done with, and can’t be brought back to court.

90
Q

What does it mean to be terminated without prejudice?

A

A case that is dismissed temporarily. This temporary dismissal means that the plaintiff is allowed to re-file charges, alter the claim, or bring the case to another court.

91
Q

a person who brings a case against another in a court of law.

A

Plaintiff

92
Q

What would be considered an Unfair Method of Practice and Deceptive Acts?

A
  • Misrepresentation and false advertising of policy contracts
  • False information and advertising generally
  • Defamation
  • Boycott, Coercion, and intimidation
  • False financial statements
  • Stock operations and advisory board contracts that promise returns & profits as an inducement to insurance. (Bribery)
  • Unfair Discrimination
  • Rebates
  • Unfair claim settlement practice
  • Failure to maintain compliant handling procedures
93
Q

What would be the penalties if an insurance Company violated the Unfair Method Competition and Deceptive Acts and Practices?

A

They will receive a penalty fine of $5,000 for each violation the company committed, if the acts were known or there is reasonably suspicion that the violations were well known, the penalty will be $25,000.

94
Q

What in regard to Policy Owners Inquiry could be considered Unfair and deceptive?

A

Turning in a Policy owners Request for information, especially information regarding to loss or home ownership, as a claim for the purpose of adverse claims experiment is a prime example of such unfair and deceptive actions

95
Q

What Power does the Commissioner have in regards to unfair deceptive acts that isn’t penalties?

A

They have the power to to examine and investigate in the affairs of every individual engaged in the business of insurance in order to determine if their is any involvement with unfair methods or deceptive acts.

96
Q

What names must be noted to distinguish the business entity?

A

The business name is the legal name for that entity, they can also be distinguished with an assumed name, a name that the company can also go by. The assume name can only be used once the Commissioner is notified.

97
Q

When it comes down to businesses names, there is a set standard. They are:

A
  • business names must not in any capacity, be deceptive or misleading
  • business name must not be identical or confusingly similar with name of another business from a current licensed producer.
  • If business name contains, the word ‘insurance’ or its equivalent, it must be joined with the phrase ‘agency’ or ‘brokerage’ to distinguish the entity from an insurance company.
  • No business name can may imply identification or affiliation with Federal, State, or other government entity. Neither misleadingly imply identification of non-profit organization.
  • No business name can include any franchise designation except in accordance with procedure approved by the Commissioner.
  • No business name can have a the same name, similar, or affiliated to a Producer who’s license is revoked, suspended, or surrendered.
98
Q

Businesses when they change their addresses, they must:

A
  • Provide the Department with complete and current business mailing address, when the address changed, include the crucial detail that changed. This also applies to licensees, they must provide their info.
  • Provide notification of any change regarding to addresses, phone number, and email address within 30 days of the change and maintain the proof of notification for at least of 5 years. This applies to the licensees and info on their residence as well.
99
Q

What must an insurance company do when establishing a branch office?

A

They must register within 30 days before any business can be conducted and at least one licensed Producer must be present for said office.

100
Q

What is a branch office?

A

It is an outlet of the company that does not constitute as a separate legal entity (its not its own company or business), while being physically separated from the organization’s main office (different location).

101
Q

Regarding to establishing a branch office, which types of insurance agency are exempt from needing a licensed producer on hand?

A
  • Ticket insurance
  • Group Mortgage cancellation insurance
  • Legal Insurance
  • Credit Insurance
  • Car Rental insurance
  • Travel Insurance
  • Self-Storage Personal Property insurance
102
Q

What are branch offices required to do?

A

Branch offices are required to be open to the public during reasonable hours and days and provide public access to said office. In case the Branch office is closing, the Department must be notified of it within 30 days of closing.

103
Q

What is a rebate?

A

a partial refund to someone who has paid too much money for tax, rent, or a utility.

104
Q

What is an inducement?

A

a thing that persuades or influences someone to do something. (Bribe)

105
Q

Regarding to marketing within the insurance space, one can not give an individual an inducement to purchase an insurance that is not stated within the policy, This also includes:

A
  • Rebates of Premiums not covered in the policy
  • Anything of value in return for the agreement of not purchasing insurance from another insurance producer/company
  • Anything of value as a compensation for being unable to provide comparable or better insurance program at less cost.
106
Q

In regard to inducement, many companies have products or goods, usually intended for marketing; however the prices and types of good are limited for what reason?

A

Products and goods sold can not be used for inducement, to prevent it, goods can not be over $25 dollars. All goods sold separately must be invoiced and recorded. Commissioner makes the final call on the value of said goods.

107
Q

the practice of persuading someone to do something by using force or threats.

A

Coercion

108
Q

Coercion is clearly on act the Department frowns upon. What act of coercion is not approved within the marketing side of things?

A

No financial institute may make requirements to the borrowers for lending money or extension for credit. They can’t institute conditions such as getting a specific type of policy from a specific insurance company/Producer.

109
Q

Regarding with acts of Coercion, Producers and companies are prohibited from:

A
  • engaging in conduct that would result in:
    - leading a person to believe their credit-worthiness is conditional to the purchase of insurance from a specified
    Producer/Insurance Company.
    - An unlicensed financial institute selling insurance on behalf of the insurance Producer.
  • Requiring policy owners to purchase collateral policy in order to secure a renewal policy
  • Engaging in any act of conduct that results in coercing applicants/policy owners to purchase as a reason to secure goods or service.
  • Restricting sales of an insurance policy to an individual who enters into a premium financing agreements with specific finance service company
110
Q

When in regard to to producer and applicants, the Producer cannot solicit the applicant unless the producer provides certain information:

A
  • State name as it appears on the Producer license.
  • State the name of the insurance Company or insurance that one represents.
  • state also the nature of relationship between the insurance company or insurance that one represents.
111
Q

Discrimination of any kind is unacceptable. It falls under the unfair practice act. Any refusal due to the following is discrimination.

A

Refusal of:
-color
- race
- creed
- religion
- sex
- material status
- physical impairment
- any arbitrary, capricious, or unfairly discriminatory reason

112
Q

Twisting

A

The act of misleading representation, incomplete or fraudulent comparison of any insurance policy to induce someone to retain, lapse, forfeit, convert, or surrender their policy in favor of another policy.

113
Q

What are some of the Producers Responsibilities.

A
  • They must uphold the responsibilities of not disclosing personal info
  • must reply to the Commissioner/ Department requests within 15 calendar days.
  • Claims and loss must be reported to the insurance company no later than 5 business days.
  • As a Producer, act in Fiduciary Capacity in the conduct of the insurance business
114
Q

Fiduciary

A

is a person who is bound to act for another persons benefit. Involving trust, especially with regard to the relationship between a trustee and a beneficiary.
Any situation in which one person justifiably places confidence and trust in someone else and seeks that person’s help or advice in some matter.

115
Q

Fiduciary Capacity

A

The act of benefiting from another trusting one to manage a business transaction, money and property.

116
Q

What are the responsibilities of a Producer in regard to Commissions and Fees?

A
  • One can not pay a commission to an unlicensed individual or org. for services signed as an insurance producer.
  • If ones licensed is revoked or suspend, they can only be paid from renewals and deferred commissions that were done during the period when the producer still had their licensed.
  • Policy owner may not receive payment from any portion of the commission received from the sale.
  • When in regards to fees, Producers are not allowed to charge policy owners for services unless its out of pocket expense regarding documents, and automobile application.
  • If a fee is charged, there must be a written agreement from policy owner that clearly defines the service and amount.
  • no discriminatory fee.
117
Q

When it comes to Service Fees, fees for providing a service not included in policies or policy fees, have set conditions to ensure fairness.

A
  • no service fee for policies that exceed $20
  • inspection fee is only applicable to Surplus Line Policy not exceeding 2% of the premium or $10
  • max service fee of $15 may be charged an by producer or broker in regards to consultation.
  • Only one service fee per policy per year can be charged.
  • Insurance Producer may charge a service fee for new automobile
  • no service fees in regard to Life or Health
118
Q

Regarding to Funds, there is a standard one needs to maintain in managing it.

A
  • All premium funds should be held in fiduciary capacity. They cannot be misappropriated, improperly converted for ones use, or illegally withheld by the producer.
  • Keep premium funds separated from others fund.
  • Remit (send over) all premium funds to insurance company within 5 business days of receipt.
  • Return to the Policyowners or credit to their account any premium funds received from insurance company.
  • Disburse all title insurance settlements fund after settlement
119
Q

What action needs to be done if the premium is advanced and the policy owner cancels or stops making payment?

A

Request reimbursement from the policyowner or insurance company.

120
Q

When does one need to deposit funds into a Trust Account?

A
  • To hold a premium for more than 5 business days before remitting the premium to an insurance company
  • Deposit any collected premium into any financial institute account or other investment or use the premium
  • Non-premium money one receive after business insurance transaction can be deposited.
121
Q

What is a good reason to withdraw from a trust account lawfully?

A
  • Non-premium money received
  • Net or gross premium remittance due other insurance Producer
  • Claim payments or reinsurance premiums for transfer to another trust account.
  • Premiums due policyowners
  • Commission due to Producer
  • Interest that the Producer is authorized to retain
  • Voluntary Deposits
  • Funds for investment
122
Q

What is the proper method in dealing with receipts?

A
  • Receipt books must be maintained within a proper business address listed within the Department of Insurance.
  • Every receipt will be accounted by the Producer
  • Completed receipt books must be retained a minimum of 5 years from data completion.
123
Q

What are Requirements in Recordkeeping?

A
  • All books and records must numbered properly and maintain so they can be produced at any time for examination.
  • Appropriate and required entries must be made at least every 30 days.
  • Maintenance of all money received, deposited, disbursed, or withdrawn in connection with insurance transaction
  • record any premium payment or disbursement discrepancies.
  • Maintenance of a monthly reconciliation of the trust account.
124
Q

What reason would book and records be maintained electronically?

A
  • All required elements are contained in the electronically kept records can be reproduced in hard copy
  • Upon request of the Department, can be reproduced in hard copy
  • Electronic Backups are produced daily and at least monthly the records are maintained electronics are reproduced and stored off-site.
125
Q

What are Time related violations?

A
  • Failure to respond to an inquiry of the Department within 15 days of request.
  • Failure to act within time period established by a court order
  • Each day after violation will be a separate violation and will receive maximum penalty.
126
Q

For each Violations, the department imposes fines. For repeated offenders they receive the maximum fines allowed.

A
  • Failure to maintain current info on business or home address within 30 days; fine is $250. Sixty days receives max penalty
  • Failure to notify Department of the opening or closing branch office within 30 days; $500
  • Payment of licensing or processing fee with a check later returned due to insufficient funds; $500
  • Failure to obtain approval for the us of a business name from the Department prior to conducting business under that name; $250
  • Failure to notify the Department within 30 days of addition or deletion of owners more than 5%, directors, or partners; $250
  • Failure to maintain at least one office with an address on file with department and employment contract copies; $100 per contract.
  • Failure to return a license to the named insurance producer; $500
127
Q

What are some fraudulent acts must be reported?

A
  • Providing misinformation or concealing info that affects
    • a claim amount for benefits
    • Entitlement benefits
    • Eligibility for insurance
  • Knowingly assisted any person to violate any State law or regulations
  • Knowingly allowing the use of the facilities of the hospital by anyone in a scheme to violate any provision of the Act.
  • Receiving monetary gain for participating in the process of any claim
128
Q

Penalties for fraud violations.

A
  • Commissioner an request Attorney General to bring a criminal action.
  • Commissioner can proceed with suspension or revocation of your license
  • Civil or administrative action will be taken against you with result in up to:
    • $5000 for first violation
    • $10000 for second violation
    • $15000 for each subsequent violation
    • an order of restitution

Insurance Liability (2 decks)

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