Illinois Sate Law: Insurance Director Overview Flashcards
Covers the general powers that the Director has, written orders, penalties, examinations and regulations.
Who appoints the Director for a state?
The governor
What general (7) powers does the Director have?
1) Make rules and regulations (within reason)
2) Conduct investigations on person; determine violated insurance law.
3) Subpoena insurance company records. Conduct examinations, investigates, and hearings (as necessary) to administer insurance law.
4) Subpoena and examine witnesses under oath during examinations, investigations and hearings.
5) Establish guidelines or institute any action or legal proceeding to enforce insurance laws or the direction’s actions.
6) Issue licenses for insurance providers, certificates of authority(for insurance companies), permitting them to transact business in IL.
7) Issue and serve a cease and desist order on any person/company, whose action are: illegal, threaten its solvency, or that endanger its policyholders, creditors- or the public.
What does subpoena mean?
A subpoena is a legal document that compels a person to appear in court as a witness or to produce documents.
-official order issued by a court, requiring someone to provide information or evidence related to a specific case. Failing to comply with a subpoena can result in legal consequences.
True or False:
The Director can act as a JUDGE in a lawsuit involving claims.
False. They cannot.
True or False:
The Director can adjust claims.
False. They cannot.
True or False:
The Director can advise any insured of any legal action to be taken against an insurer, impose a jail sentence, or make any state laws.
False. They cannot.
What does the Illinois’s Attorney General do?
protects Illinois consumers and businesses from fraud, deception, and unfair business practices
Fill in the black:
the Director may request the Attorney General to initiate ________ _________ to enforce an _____________ _________ or _________ ________.
legal action; administrative order ;proceeding decision.
What is a cease and desist order?
a formal written notice that demands someone stop an activity that is considered to be infringing on the sender’s rights.
-It can be sent by an individual or company, but it is not legally binding. However, it can be a first step towards further legal action.
When a cease and desist order is served, how many days must issued notice that a hearing is to be held within (from the notification date)?
between 20-30days; MAX 30 days.
True or False:
If after a hearing any statement in the notice are found to be true; the director may make orders to correct, eliminate or remedy the illegal or improper conduct, conditions or grounds.
True.
Fill in the blank:
Any person who violates a cease and desist order, circuit court order, or other written order must pay a fine of $________ per day or up to a total of $__________.
100;5000
True or false:
For a cease and desist order violation, can the license or certification of authority of a producer or insurer be revoked?
True.
What is an insurance producer?
Definition: This is a general term that encompasses both insurance agents and brokers. It refers to anyone who sells or negotiates insurance policies on behalf of an insurance company or insurance buyers.
What is an insurance producer’s role?
Role: The main job of an insurance producer is to help clients find suitable insurance coverage and facilitate the purchase process. They can represent either the insurer or the insured, depending on their specific role and licensing.
What is an insurance agent? What are the two types?
Definition: An insurance agent is a specific type of insurance producer who represents one or more insurance companies. They are licensed to sell insurance products on behalf of these companies.
Types:
Captive Agent: Works for a single insurance company and sells only that company’s policies.
Independent Agent: Represents multiple insurance companies and can offer a range of products from different insurers.
What is an insurance Agent’s role?
Role: Insurance agents typically provide advice to clients, help them choose appropriate coverage, and assist with the application and policy issuance processes. Their primary allegiance is to the insurance companies they represent.
What is an insurance broker?
Definition: An insurance broker is a type of insurance producer who represents the insurance buyer, not the insurance company.
What is an insurance broker’s role?
Role: Brokers work on behalf of clients to find the best insurance policies that fit their needs and budget. They have access to a range of insurers and can offer more diverse options compared to agents who represent specific companies. Brokers provide advice, negotiate terms, and help clients with claims and policy management. Their compensation is often based on commissions paid by the insurers, but they also may charge fees to their clients
Fill in the blank:
The director may conduct an examination of any company, at their own discretion, but minimum conduct one for every insurer authorized or licensed in Illinois at least once every ___ years.
5.
EXAMINATIONS
To determine the nonfinancial business practices, performance and operations of any company the Director may examine the following 5 things:
1) Any company transacting business in this state.
2) Any person forming, promoting, soliciting shares of, or making capital contributions to a company.
3) Any person under contract to manage or control a company as a general agent, managing agent, or attorney-in-fact
4) Any licensed or registered producer, firm, or administrator, or an applicant for such registration or license.
5) Any person engaged in the business of adjusting losses or financing premiums.
What is an attorney-in-fact?
is a person who is legally authorized to act on behalf of another person in a business or legal matter. The person who appoints the attorney-in-fact is called the “principal”. The attorney-in-fact is sometimes called the “agent”.
What is a managing agent?
is an insurance agent or broker who is contracted by an insurance company to perform various business functions on their behalf. MGAs are different from traditional insurance agents because they have the authority to underwrite insurance policies, which means they can assess a customer’s risk and offer them insurance. MGAs can also perform other tasks that would normally be done by the insurer in-house, such as:
Issuing policies
Appointing producers
Arranging for reinsurance
Adjusting or paying claims
Negotiating contracts with insurance carriers
Researching new products and trends
Creating advertising campaigns
Planning promotional events
What is a general agent?
also known as a brokerage general agency (BGA), is a broker’s broker who acts as an intermediary between insurance carriers and agents. They can provide insurance agencies and brokers with a wide range of products and services that may not be otherwise available. General agents can specialize in a particular segment of the insurance industry or sell policies from many different insurance companies.
