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Disability Income Insurance > Insurance Laws and Rules > Flashcards

Insurance Laws and Rules Flashcards

1
Q

Define the Insurance Code

A

They are laws or statues enacted by the Oregon Legislature relating to the insurance business

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2
Q

Can the director make a law

A

No, only the Oregon Legislature can

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3
Q

What is the difference between a law and a rule

A

A law is created by the legislature and a rule is created by the department

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4
Q

Who authorizes insurers and producers

A

The Director

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5
Q

What are 3 examples of producers that may do business without a license

A
  • Surplus lines
  • Reinsurance
  • Adjuster or attorney
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6
Q

Who is liable for a claim or loss when an unauthorized insurer does not pay a claim or cover a loss

A

The agent who assisted with the policy, knowing that they were not authorized

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7
Q

How often will the director audit the finances of the insurer

A

At least every 5 years

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8
Q

When the director is performing their audit, what are the 4 things that they are looking for

A
  • The nature of the insurer’s operations
  • Their financial condition
  • Their ability to fulfill obligations (pay claims)
  • Make sure that they’re in compliance
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9
Q

How does the director examine a foreign and alien insurer

A

The director can accept the findings of the insurer’s home state director as long as they are accredited by the NAIC and that the NAIC conducted or supervised the examination

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10
Q

How do you exam an alien insurer

A

You generally base it off of their transactions and affairs in the US

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11
Q

Who pays for the audit and any costs associated with the audit (ie transportation)

A

The insurance company being examined pays for the cost

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12
Q

When can the director do any audit

A

Whenever they want

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13
Q

Who can the director do an audit on

A

Anyone who does or advertises that they do business in Oregon

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14
Q

Can the director examine people directly

A

yes, they may examine anyone under oath who may have material information

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15
Q

After the chief examiner has completed their audit, within how many days must they get the report to the director

A

Within 60 days

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16
Q

After the director receives the audit from the examiner, what will they do

A
  • Allow the insurance company to review and comment on the report
  • Meet with the insurance company to resolve any questions or obtain further information
  • Have the examiner include the additional information in the report
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17
Q

Who is authorized to give orders

A

The director

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18
Q

Define a final order

A

It is an order issued by the Director in writing and it must be signed by the director (or someone under their authority), filed in the department, State the effective date, the intent or purpose and the grounds for which the order is on (what insurance code may have been broken)

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19
Q

When is a mailed notice considered given

A

When it is deposited in a mailbox

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20
Q

What is the cease and desist order for

A

When a person is engaging or is about to engage in a violation of the code

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21
Q

What does the cease and desist order state

A

That the person can still do business, but they have to stop the violation

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22
Q

When a person receives a cease and desist order, within how many days can they request a hearing from the date of the mailing

A

Within 20 days

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23
Q

What if a person who received a cease and desist order does not request a hearing

A

Then the order becomes final

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24
Q

If a person requests a cease and desist order hearing, within how many days should the hearing take place

A

Within 30 days after the receipt of the request

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25
Q

If a hearing is requested for a cease and desist when must the person be given notice as to the time and place

A

At least 7 days prior

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26
Q

What are the 3 options that the director can take against a licensee

A

They can

  • Refuse to issue or renew a license
  • Place a licensee on probation
  • Suspend a license (temporarily can’t do business)
  • Revoke a license or not allow the licensee to do a certain type of business
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27
Q

Define clean sheeting

A

Hiding an applicant’s medical conditions from the insurance company

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28
Q

For each violation, what is the maximum fine for a company

A

$10,000

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29
Q

For each violation, what is the maximum fine amount for the individual agent

A

$1,000

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30
Q

If there is a second penalty, how much can that fine be

A

It may be up to the amount by which the violator profited from

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31
Q

Where do the fines go

A

General Fund of the State Treasury

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32
Q

What does a civil penalty stand for

A

A fine

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33
Q

If a person receives a civil penalty, how many days do they have to request a hearing

A

20 Days

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34
Q

How many days does a person have to pay a final order (for a fine)

A

10 days

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35
Q

What if the person does not pay their fine in 10 days

A

Then the county clerk will record their name and the penalty, and put a lien on any property that they own

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36
Q

What is the criminal penalty for an individual for filing with the Director any information that is known to be materially false or misleading

A

It can lead to an imprisonment in jail for up to 1 year or a fine of up to $1,000

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37
Q

What is the criminal penalty for a corporation for filing with the Director any information that is known to be materially false or misleading

A

It can lead to a fine of up to $10,000

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38
Q

Define guaranty associations

A

They help to detect and prevent insurer insolvencies and help pay claims when insurers cannot

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39
Q

What does the Oregon Life and Health Insurance Guaranty Association do

A

It pays claims from individual or group life or health insurance policies and annuities for impaired and insolvent insurers

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40
Q

Who has to be apart of Oregon’s Guaranty Association

A

All authorized life and health insurers

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41
Q

Define an impaired insurer

A

An insurer that is unable to fulfill their obligations or is insolvent

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42
Q

Define an insolvent insurer

A

Insurer that is under a liquidation, conservation or rehab order

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43
Q

How much will the Association pay (regardless of the number of the number of policies/contracts) per life for life insurance death benefits, disability insurance and LTC

A

$300,000

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44
Q

How much will the Association pay (regardless of the number of the number of policies/contracts) per life for cash surrender value

A

$100,000

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45
Q

How much will the Association pay (regardless of the number of the number of policies/contracts) per life for health insurance

A

$500,000

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46
Q

How much will the Association pay (regardless of the number of the number of policies/contracts) per life for present value annuity benefits

A

$250,000

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47
Q

For guaranty associations, what is the total amount payable for any one individual for all policies

A

$300,000 (except for health)

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48
Q

For guaranty associations, what is the total amount payable for any one policyowner

A

$5,000,000

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49
Q

Once an insurer is deemed insolvent, within how many days after that point will a guaranty pay for claims

A

They will cover claims arising within 30 days after an insurer is deemed insolvent

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50
Q

How much will the guaranty pay for a worker’s compensation claim

A

They will cover the full amount

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51
Q

How much is each insurer charged to pay for the guaranty

A

Up to 2% of premiums (they can deduct 20% of this from their taxes)

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52
Q

What must a resident consultant have

A
  • Policy with at lest $500,000 in coverage

- 5 years of experience

53
Q

When is an adjuster license not required

A

When that adjuster is only adjusting claims for an insurer and is employed by that insurer

54
Q

If a person is not a resident of Oregon, but they want to sell insurance in Oregon, then what do they need

A

They can get their nonresident insurance producer license as long as they are licensed in their home state

55
Q

Define an attorney in fact

A

The director of the nonresident licensing state (you live in washington, but you want to sell insurance in oregon)

56
Q

Within how many days should a nonresident producer who moves states, notify the director of a change in address

A

Within 30 days

57
Q

What is the point of a temporary producer license

A

Give it to a surviving spouse or court appointed personal representative when a licensed producer dies or becomes mentally or physically disabled, that way they can either sell the business or give them time to have someone else run it

58
Q

How long is a temporary license good for

A

180 days

59
Q

How long does a producer have to keep records

A

Three years following the expiration of the policy

60
Q

When must a producer notify a director (3)

A
  • Before doing business under a different name
  • Before changing, deleting or adding another business (a consultant or adjuster can do it after 30 days)
  • Within 30 days of changing address, location, residence, etc.
61
Q

When does a license expire

A

Every 2 years on the last day of the licensee’s birth month

62
Q

Within how many months can you reinstate your license

A

Within 12 months

63
Q

What do you have to do to reinstate your license (without taking the exam)

A
  • Pay twice or 200% of the unpaid renewal fees

- Satisfy any CEs

64
Q

How many CE does someone need to complete to renew

A

24 hours

65
Q

What CE must you always take

A
  • 3 hours in Oregon statutes and admin rules

- 3 hours in professional ethics for insurance prodcuers

66
Q

Within how many days does a CE provider have to produce a certificate of completion

A

Within 15 days

67
Q

How many years does a CE provider have to keep records of attendance and exam results

A

3 years

68
Q

Can the premiums that a producer receive commingle with other funds

A

No they have to be placed in trust accounts that are separate from all other business and personal funds (accounts have to be in Oregon)

69
Q

When does a producer have to deposit funds received

A

Within 7 days

70
Q

When does the producer have to pay any premium funds owed to an insured

A

Within 30 days

71
Q

Is a producer regarded as an agent of the insured

A

No, they are the agent of the insurer

72
Q

In order to be an agent of an insurer, the producer must either be:

A
  • An appointed agent

- Affiliated with the producer (if a producer is terminated, the insurer must notify the state within 30 days)

73
Q

Within how many days must the insurer give notice that the producer’s appointment is going to be terminated

A

At least 90 days prior to the effective date of the termination (you also have to give a reason)

74
Q

Within how many days can a producer terminate their appoint

A

Within 30 days after the effective date (have to give notice to the Director and the insurer)

75
Q

A person would be guilty of unfair claim settlement practices if they failed to do what

A
  • Represent facts or policy provisions truthfully

- Acknowledge and act promptly on communications relating to claims

76
Q

Within how many days should you respond to the director in regards to a claim inquiry

A

Within 21 days

77
Q

Within how many days should you investigate a claim

A

Within 45 days

78
Q

Within how many days from receiving a claim should you notify the claimant that you need more time

A

30 days

79
Q

Within how many days from receiving a claim should you give a reason as to why more time is needed

A

Within 45 days (and then every 45 days after)

80
Q

How much capital should most insurers have

A

$2,500,00

81
Q

How much capital should workers’ comp insurers have

A

$5,000,000

82
Q

When applying for an original certificate of authority, how much funds should a domestic insurer have

A

An additional $500,000

83
Q

What is a charge made by a producer, with respect to an insurance transaction to a party other than the insurer, which is not a part of the insurer’s rate filing

A

Service fee

84
Q

If the director believes that an insurer is being unfairly discriminating, then what happens

A

The director will give them 10 days to correct the situation

85
Q

What should the insurer provide the customer with when doing an insurance transaction

A

They should provide them with a notice of personal information practices

86
Q

When does the insurer have to provide the privacy policies and practices notice

A

At least every year

87
Q

What two sources should you use to make sure your privacy notice is in compliance

A
  • Gramm Leach Bliley Act

- Privacy of consumer financial and health information regulation

88
Q

Define a rebate

A

Kickback to a purchaser of insurance by the producer or insurer

89
Q

Is a rebate legal

A

No, it is illegal

90
Q

Are commissions received by the producer on excessive personal or controlled insurance legal

A

No, these are illegal and considered rebates

91
Q

For life and health, when are premiums on personal or controlled insurance in excessive

A

If in one calendar year, they are more than two times the amount of the premiums on noncontrolled life or health insurance (noncontrolled premiums $50,000, then controlled can’t be more than $100,000)

92
Q

For all types other types of insurance (not life or health) what are the limits on premiums for controlled and noncontrolled

A

They have to be the same amount (noncontrolled premiums are at $50,000, then controlled premiums can’t be more than $50,000)

93
Q

What is personal/controlled insurance

A

If it is insurance that covers the producer or his spouse (or any of his relatives), covers a group of employees under a group policy issued to the producer’s employer, etc. (basically anything personal)

94
Q

The restrictions on personal/controlled insurance do not apply to who

A
  • Property to cover property with installment
  • Person is an individual producer
  • Has an individual business
  • Has been a broker for at least 25 years and is 65 years old
95
Q

Define twisting

A

Make a misrepresentation to a person with ownership rights in life insurance, in order to have their policy lapse, forfeit, surrender, etc. (illegal)

96
Q

You can only receive commissions if you are what

A

Licensed

97
Q

If a person is licensed as both a producer and a consultant, then what may they accept

A

Commissions and/or a fee

98
Q

What does every insurer have to do

A

File their premiums with the director, who will then approve them

99
Q

Define a service fee

A

It is a charge from an insurance transaction made by a producer to someone other than the insurer, which is not part of the insurer’s rate filing

100
Q

When would a producer charge a service fee

A

If they provide service beyond what is usual and customary in commercial lines insurance

101
Q

When can a producer not charge someone a combination of commissions and service fees (3)

A
  • Insurance covers an individual’s person, property or liability
  • Life or health insurance for groups of fewer than 51 lives
  • Commercial or public entity paying $100,000 in premiums
102
Q

When can you not charge a service fee

A

When it is for an individual’s person, property or liability

103
Q

When must the insurer provide their notice of personal information practices

A

Date of the application (when you give them the policy)

104
Q

When must a licensee provide clear and conspicuous notice of personal information practices

A

When he provides insurance products or services to be used primarily for personal, family or household purposes

105
Q

What lines of coverage can a producer charge service fees on

A

Commercial lines

106
Q

An insurer cannot retain risk on any one subject line of insurance in excess of what percentage of its surplus to policyholders unless it reinsurers the excess

A

10%

107
Q

Define the retention limit

A

The maximum amount of insurance an insurer can have at risk on one subject of insurance

108
Q

In order to insure risk, what does the risk have to be

A

The risk has to have limited catastrophic potential and cannot be speculative

109
Q

In the event of a claim and the insurer has reinsurance who pays

A

The ceding insurer will pay (original insurer) and then the assuming insurer will reimburse the insurer

110
Q

What are two types of reinsurance

A
  • Treaty (the insurer automatically accepts all exposures)

- Facultative (The reinsurance requires an individual reinsurance agreement for each risk reinsured)

111
Q

Define mutual companies

A

They do not have capital stock and they are owned by the policyholders (called members). Any profit goes back to the policyholders

112
Q

Define reciprocal insurer

A

Unincorporated group of persons that insure each other by exchanging indemnity agreements through an attorney in fact

113
Q

Define a fraternal benefit society

A

Not for profit without capital stock

114
Q

Define Lloyd’s Association

A

Voluntary association of individuals or groups that agree to insure a particular risk. Each member is responsible for an agreed portion of the insurance.

115
Q

What are the 5 rating agencies

A 
AM Best
Fitch 
Moody
S&P
Weiss Research
116
Q

Define direct writing

A

Insurance companies use employees to deal directly with applicants and policyholders

117
Q

Define direct response

A

Advertise or use telemarketing

118
Q

Define vending machines

A

Used to market travel policies

119
Q

Define franchise (wholesale) policies

A

Individual policies sold through employers or associations

120
Q

How does the general producer system work

A

They are independent contractors that can appoint other producers to operate there, they are responsible for paying expenses, receiving selling commissions and overrides, perform admin functions

121
Q

What are two forms that producers can be

A
  • Independent - Receive commissions only, can work for several insurers and own their own policy expirations
  • Exclusive (captive) - us at Moda
122
Q

What does the law of agency do

A

It lists the rights and duties of principals, agents and third parties in business transactions

123
Q

How does a law of agency work

A

The insurer is the principal, who is represented by the an agent, who is a producer (when dealing with third parties)

124
Q

What are a producer’s three authorities

A
  • Express (stated by the agency)
  • Implied (not stated, but assumed)
  • Apparent (authority the public believes the producer has)
125
Q

To be enforceable, what must a contract have

A

The four elements (CLOC)

126
Q

What is the punishment if someone breaks a law that relates to fraud and false statements

A
  • Prison up to 15 years

- Fine up to $50,000/violation or the amount of compensation that they received (whichever is greater)

127
Q

Define a prohibited person

A

An individual who has been convicted of a felony involving dishonesty, a breach of trust or a violation of the Act

128
Q

If a prohibited person engages in insurance business, what is their punishment

A

Prison for up to 5 years

Disability Income Insurance (9 decks)

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