Insurance Law Rules and Regulations Flashcards
The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?
Fiduciary
What are the most common penalties for violations of insurance statutes?
A cease and desist order, a fine, and license suspension or revocation.
What type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Twisting
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?
Misrepresentation
If the commissioner finds a license engaging in an unfair method of competition or an unfair practice, what order will be issued?
Cease and desist order
When is controlled business legal?
When commissions from the controlled business do not exceed the aggregate commissions on all other business.
When can the commissioner or director examine insurers?
Whenever deemed necessary, but at least once every few years (5 years NC).
Who is responsible for the costs associated with the examination of insurers?
The insurer being examined.
What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?
Misrepresentation
What is the purpose of insurance guaranty associations?
Protect the policy owners, insured’s and beneficiaries from financial losses caused by insolvent insurers.
What is a controlled business?
Insurance on the producer’s own life or property, or the lives or property of the producer’s family or business associates.
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
What type of licensee represents the insurance company?
Agent
To whom may a certificate of authority be issued?
To an insurer authorized to transact business in this state.
Who may share in the commission from the sale of a life insurance policy?
Only producers properly licensed for the type of insurance transaction.
For what reason can a temporary license be issued?
For continuation of business in case the licensed producer dies or becomes disabled.
What are agents/producers required to do in order to renew their license?
CE hours and renewal fee.
Who can usually be granted a temporary license?
Spouse or designee.
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 any commissions for their services.
Who must be a member of insurance guaranty associations?
Authorized insurer within the state.
What type of license represents the insured?
Broker.
Who is considered a nonresident agent?
Any agent who resides and is licensed in another state but who is authorized to transact insurance in the state.
If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?
Defamation.
What is the purpose of a cease and desist order?
To prevent a producer or insurer from further violating laws for transacting insurance.
If an insurer holds a certificate of authority, it is known as what type of insurer?
Authorized or admitted.
Who must be notified of a producer’s change of address?
Department of insurance/The commissioner.
Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?
No. It’s illegal.
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.
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.
