Insurance Regulation Flashcards
What is an insurance transaction?
sell, solicit, or negotiate
What is an insurance producer?
a person licensed and authorized by Maryland Insurance Administration to sell, solicit or negotiate insurance
Who are licenses issued by?
The Commissioner
To qualify for a Title Producer’s License, the applicant must be:
must be of good character and trustworthy
at least 18 years old
complete 20 hours of an approved licensing course
pass the required examination
pay the required application fee of $59
An insurance producer may be
an individual or business
Employees that manage escrow must be
licensed as title producers
Employees that perform clerical and similar office duties, that do no solicit, procure or negotiate title insurance contracts for compensation are not considered
title insurance producers
A nonresident producer is
an individual or entity that is not a resident of Maryland but does business in Maryland
For a business entity to obtain a Maryland license as an insurance producer
the business entity must designate a licensed insurance producer to serve as the primary point of contact with the Insurance Administration
Sole Propriertorship
simplest and most common structure people choose to start a business.
It is an unincorporated business owned and run by one individual with no distinction between the business and the owner
Owners are entitled to all profits and are responsible for all business’ debts, losses, and liabilities
General Partnership
A single business where two or more people share ownership. Each partner contributes to all aspects of the business including money, property, labor, or skill. Each partner shares in profits and losses of the business
Limited Liability Company
Provides limited liability of a corporation, tax efficiencies, and operational flexibility of a partnership.
The owners of an LLC are referred to as members. Depending on the state the members can consist of a one owner or two or more individuals, corporations or other LLCS
Limited Partnership
Allows partners to have limited liability as well as limited input with management decisions. Limits depends on each partner’s investment percentage
Stock Corporation
Must have at least three officers (President, Secretary, and Treasurer) at least on Director and is owned by shareholders which may be individuals or other business entities.
Not an S-Corp
S-Corp
Refers to an election made with the IRS concerning how a business entity is taxed by the federal government
Close Corporation
Referred to as a closely held corporation
Permitted to have on individual acting as all required officers and may also elect to have no board of directors
Subject to restrictions on the number and identity of shareholders
Not C-Corps
A title insurance companies must be organized as
stock company or mutual insurance company
Mutual Insurance Company
owned by policyholders. Provides coverage for its members and policyholders. Members are given right to participate in management selection
In order to act as an insurer or title insurer in Maryland, a person must obtain
A certificate of Authority issued by the Commissioner
Trust Money
deposit, payment or other money that a person entrusts to a title insurer or its agent to hold for the benefit of the buyer in a real estate transaction or for a beneficial owner in connection with escrow, settlement, closing or title indemnification
Trust Money Controller
a person within a title agency who has day to day direct control over trust money
Commissioner may deny, suspend, revoke, or refuse to renew/ reinstate a license to an applicant business entity if the person
violated any provision of insurance article
been convicted of felony, crime of moral turpitude, or any criminal offense
had any professional license suspended or revoked for a fraudulent or dishonest practice
Temporary License
may be issued to an individual due to death or disability of a producer for 15 months to surviving spouse, court appointed representative, next of kin, or competent employee
A title insurance producer acting as an independent contractor may
request a waiver of the bonding requirements at time of application
Title agents are required to maintain
$150,00 Surety Bond, $150,000 Fidelity Bond, Errors and Omissions
Once all prerequisites of licensing are met,
A license will be issued to the title insurance producer. The license may be issued in electronic or paper format. The license is valid for two years and will remain in effect unless it is revoked, suspended or expired
An insurance producer must notify the Commission of any address or name changes within
30 days. It is also considered public information
A fictitious name is
commonly referred to as a DBA (doing business as)
Continuing eduction is required to
a title producer’s license
Continuing education requirements
Sixteen hours of continuing education must be complete
three hours of the sixteen hours must be in the area of ethics
If a title producer allows their license to lapse by failing to renew they may request a
reinstatement within one year of the renew date by paying the reinstatement fee
Commissioner may do what with a license
Deny, suspend, revoke, refuse to renew or reinstate a license of a producer
Reasons that a commissioner would deny, suspend, revoke, refuse to renew or reinstate a license of a producer
willfully violate insurance laws
intentionally misrepresenting or concealing material information during application process
intentionally misrepresenting or concealing information on the license application
intentionally misrepresenting the provisions of an insurance policy
committing a fraudulent act
being charged with a felony
being convicted of a crime involving moral turpitude
being convicted of a felony
forging names to insurance documents
accepting business from an unlicensed person
failure to comply with a court order
failure to pay taxes
What are the penalty violation
maximum civil penalty for unauthorized insurer violation is $125k
maximum monetary penalty for licensed insurance producer for violation is $5k
If an insurance producer has been accused of violation of insurance laws
the producer will have an opportunity for a hearing
if producer is found guilty the Commissioner can issue a cease and desist order, suspend or revoke the producer’s license, or impose fines
