Insurance industry overview

Question 1

Types of Insurers

Answer 1

Stock Companies: incorporated companies owned by their stockholders. they are nonparticipating because policyholders do not receive dividens

Mutual Companies: commercial insurers that are owned by their policyholders. They are participating because dividens are paid to policyholders

noncommercial organizations to service providers: are service organizations that provide perpaid health plans for medical, surgical, and hospital expenses.

Question 2

Admitted Insurers

Answer 2

Authorized/licensed insurers who have received a certificate of authority

Question 3

domestic Insurer

Answer 3

insurer that conducts business in the state it was incorporated

Question 4

Foreign Insurer

Answer 4

Insurer that conducts business in a state or district in which it wasn’t incorporated

Question 5

Alien Insurer

Answer 5

An insurer that conducts business in a country in which it wasn’t incorporated

Question 6

Independent Rating Services

Answer 6

Credit rating agencies that rate or grade the financial strength and stability of insurers based on claims, reserves, and company profits
A.M Best, Moody’s Investors Service, Standard and Poor’s, Fitch Ratings, LACE financial, and Japan Credit Rating Agency.

Question 7

Producers

Answer 7

People who sell, solicit and negotiate insurance

Question 8

Insurance Agent

Answer 8

insurance producers who represent and work on behalf of the insurer

Question 9

Broker

Answer 9

Insurance producers who represent the insured or purchaser of insurance

Question 10

Solicitors

Answer 10

Licensed salespeople who work for an agent or broker

Question 11

Agent Authority

Answer 11

authority and power are granted through the agency contract which is established through the insurer

Question 12

Express Authority

Answer 12

explicit authority granted to the agent by the principal as written in the agency contract

Question 13

Implied Authority

Answer 13

not specifically expressed by the principal to the agent in the agency contract

Question 14

Apparent Authority

Answer 14

Insurer gives the customer reasonable belief that an agent ahs the power and authority to bind the principle even in cases where they do not have authority

Question 15

Privacy Act of 1974

Answer 15

Establishes a code of fair information practices dictationg how information is handled by federal agencies. It mandates federal agencies to provide the public with a notice of their systems of records.

Question 16

Fair credit reporting act

Answer 16

Regulates teh way consumer credit reporting agencies collect and use an applicant’s personal credit information in order to preserve the confidentiality, accurancy, relevance, and appropriate utilization of the information

Question 17

NAIC

Answer 17

National Association of Insurance Commissiioners: Promotes the standardization of insurance laws between states without the use of federal regulations

Question 18

Fraud and False Statements

Answer 18

Punishment for any individual who knowingly and wit the intent to deceive, makes any false material statements regarding any financial reports or documents. Civil fine up to 50000 per act or imprisonment for upto 10yrs

Question 19

Guaranty Associations

Answer 19

Protect insureds if insurers cannot pay claims

Question 20

Misrepresentation

Answer 20

any written or oral statement that does ont accurately describe a policy’s benefits, conditions, or coverage

Question 21

Defamation

Answer 21

any false, maliciously critical, or derogatory communication that injures another’s reputation, fame, or character

Question 22

Rebating

Answer 22

an illegal practice for an agent or broker that involves the return of a portion of the premium or the agent’s commission on the premium to the insured or other inducemetns to place business with a specific insurer.

Question 23

Twisting

Answer 23

The unethical act of persuading a policyowner to drop a policy solely for the purpose of selling another policy without regard to possible disadvantages to the policyowner

Question 24

Churning

Answer 24

The practice of using misrepresentation to induce a policyholder to replace a policy issued by the insurer the producer represents, rather than the policy of a competitor

Question 25

False Financial Statement

Answer 25

Deliberatly making false financial statements regarding the solvency of an insurer with the intent to deceive others

Question 26

Boycott

Answer 26

A form of intimidation in which an individual or group refuses to do business with a company or individual, either to drive them out of buisness or force them to act in a certain way

Question 27

Unfair discrimination

Answer 27

policyowners cannot be charged different premiums unless the difference are based on classifications relating to the nature and degree of the covered risk

Question 28

Coercion

Answer 28

manipulating someone through the prospect of something desirable

Question 29

Intimidation

Answer 29

Manipulating someone through the threat of a negative result

Question 30

unfair claims settlement practices 1

Answer 30

knowingly misrepresenting to claimants pertinent facts relating to coverages

Question 31

unfair claims settlement practices 2

Answer 31

failing to acknowledge with reasonable promptness communications regarding claims

Question 32

unfair claims settlement practices 3

Answer 32

failing to affirm or deny coverage of claims within a resonable time after proof of claims

Question 33

unfair claims settlement practices 4

Answer 33

failing to adopt resonable standards for prompt investigation and settlement of claims

Question 34

unfair claims settlement practices 5

Answer 34

not attempting in good faith to effect prompt, fair, and equitable settlement fo claims

Question 35

unfair claims settlement practices 6

Answer 35

Offering to settle claims for an amount less that the amount otherwise resonably due or payable

Question 36

unfair claims settlement practices 7

Answer 36

Delaying the investigation or payment of a claim by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of a formal proof of loss forms, both of which contain same info

Question 37

unfair claims settlement practices 8

Answer 37

Threating a client in order to discourage his effort to recover a loss or reduce the claim by, for instance, mentioning a policy of appaling arbitration awards that are in favor of insureds