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PnC California - Study Material > Insurance Regulation > Flashcards

Insurance Regulation Flashcards

1
Q

What regulation gave jurisdiction of the insurance industry back to the States?

A

McCarron-Ferguson Act (Public Law 15)

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2
Q

Established to minimize intrusiveness; to make it known to public that they can expect personal information to handle in confidence.

A

California’s Privacy Act

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3
Q

It protects consumers by requiring notification, establishing provisions for removal of outdated or incorrect information.

A

Fair Credit Reporting Act

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4
Q

These interviews are illegal unless the insurer suspects fraud or criminal activity…

A

Pre-text interviews

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5
Q

Risks that are unique are usually classified as…

A

Surplus lines or excess lines

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6
Q

(Blank) includes provisions to protect consumers’ personal financial information held by financial institutions (require annual notices).

A

Gramm-Leach-Bliley Act

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7
Q

(Blank) imposes penalties for fraud and false statements made in connection with insurance transactions.

Civil fines up to…

A

Federal Law Title XVII

Fines up to $50,000 per violation or amount; up to 10 years imprisonment

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8
Q

Purpose of the Code

A

1) Prevent insurer insolvency
2) Make sure rates are not inadequate, excessive or unfairly discriminatory.
3) Prevent fraud
4) Set up procedure for operation of insurance business in this state
5) Purpose is NOT TO INTERPRET POLICY PROVISIONS

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9
Q

Under HIPAA the number of days pertaining to creditable coverage is…

A

63 days

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10
Q

The process to determine prices.

A

Rate-making

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11
Q

Types of Rating Laws

A
  • Prior approval
  • File and use
  • Use and File
  • Open competition (open rating)
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12
Q

Annually an accredited financial statement must be given to both the…

A

Department of Insurance (DOI) and the National Association of Insurance Commissioners (NAIC)

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13
Q

What is insolvency?

A

Any impairment in paid in capital. An insurer’s inability to meet its financial obligations when due.

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14
Q

If an individual fails to send the documents when the Commissioner issues a Notice of Seizure the penalty is…

A

Guilty of a misdemeanor and punishable by a fine up to $1,000 and/or 1 year imprisonment.

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15
Q

California has two guarantee associations. What are they?

A

California Insurance Guarantee Association (CIGA)

California Life & Health Insurance Guarantee Association (CLHIGA)

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16
Q

(Blank) is leading a client to expect dividends; stating an insurer is a member of the Guarantee Association in sales or advertisement.

A

Unfair Methods of Competition

17
Q

(Blank) is settling for less than what a reasonable person would expect by referring to printed or advertising material; misleading the claimant.

A

Unfair Claims Practices

18
Q

Penalties for violating unfair practices.

A

$5,000 if not willful per violation

$10,000 if willful per violation

3 mistakes in a single policy = $15,000

19
Q

The Commissioner considers an insurer’s (blank) when determining if the rates are adequate or excessive, not whether or not the insurer is competitive.

A

Investment income

20
Q

When an agent holds both a life and property & casualty license they are considered to be (blank) licensed.

A

Concurrent - holding more than 1 license.

21
Q

If an agent’s license is inactive they cannot transact any insurance business for which a license is required to transact they would need to file an…

A

Appointment

22
Q

An applicant for a license can be denied if the applicant has been..

A

Convicted of a felony

23
Q

What always requires approval before usage?

A

Agency name

24
Q

A person who diverts or misappropriates fiduciary funds is guilty of…

A

Theft

25
Q

An insurer who unintentionally makes an error in underwriting, issuing and renewing a single policy would incur how many violations under Unfair Practices?

A

3 violations = $15,000

26
Q

What is it called when an insurer uses higher rates based solely on religion, race, or ethnic group?

A

Unfair discrimination

27
Q

According to the Code, which class of insurance cannot issue a binder?

A

Life, health & disability

28
Q

Describe Binders.

A

Temporary contracts between the insured and insurer that requires a premium charge.

Good up to 90 days; insurer can extend binder an additional 60 days.

Max Binder $1,000,000

29
Q

The word “shall” indicates…

A

An action is mandatory (must)

30
Q

The word “may” (can) indicates…

A

An action is permissive

PnC California - Study Material (11 decks)

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