Insurance Laws 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 form financial losses caused by insolvent insurers
What is a controlled business?
Insurance on the producers own life or property, or the lives or property of the producers 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
So 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
