Insurance Regulation 5%

Question 1

There is an annual fee to maintain an adjuster license paid to the

Answer 1

director of insurance.

Question 2

An adjuster must notify the commissioner of a change of name, address, or email address

Answer 2

within 30 days of the change.

Question 3

Disciplinary Actions - Cease and Desist Order

Answer 3

● Commissioner issues a cease and desist order after finding that a licensee has violated an insurance law

● Licensee must cease his unlawful actions at once

Question 4

Penalty for violating cease and desist order:

Answer 4

● fine up to $10,000 - $50,000 and/or suspension or revocation of license

Question 5

Suspension, Revocation, and Refusal to Issue or Renew

Answer 5

●Commissioner can suspend, revoke, or refuse to issue or renew a person’s license if a hearing determines that the licensee is guilty of violating insurance law

● If an adjuster poses a threat to the public, the commissioner can suspend his license immediately, without a hearing

Question 6

Penalties and Fines - Misrepresenting terms of a policy

Answer 6

● upto$1,000 fine per violation or
imprisonment

Question 7

Penalties and Fines - Violating an insurance law

Answer 7

● up to $500 fine per violation or $5,000 total

Question 8

Penalties and Fines - Knowingly violating an insurance law:

Answer 8

● up to $2,500 fine per violation or $25,000
total for multiple violations committed in a 6-month period

Question 9

Commissioner can hold a hearing if he believes a person has violated

Answer 9

● an insurance law or regulation
● An applicant denied a license can request a hearing within 30 days of being denied

Question 10

Process for applying for an adjuster license:

Answer 10

1. Applicant submits an application to the commissioner
2. Commissioner has the applicant take an examination and conducts any
   investigations necessary for determining the applicant’s qualifications
3. After receiving an application, commissioner has 60 days to make a decision
   about the applicant
4. If the applicant is approved, the commissioner issues him a license

Question 11

Lines of Authority

Answer 11

The following lines of authority are available in Michigan:
● Fire and other hazards
● Workers’ compensation
● Crop(including multi-peril crop insurance

Question 12

Public adjuster

Answer 12

A licensed adjuster who represents the insured who has suffered losses

Question 13

Independent adjuster

Answer 13

A licensed adjuster who adjusts losses on behalf of an insurance company

Question 14

Requirements for being licensed as an adjuster in Michigan:

Answer 14

● Beat least 18 years old
● Apply online
● Pay an application fee and a transaction fee
● Pass the state exam
● Be of good moral character
● Have a reasonable understanding of insurance and the laws governing it in MI
● Intend to act in good faith
● Possess a good business reputation

Question 15

The following are 14 claim settlement practices that are prohibited by Michigan law:

Answer 15

1. Misrepresentation
2. Failing to acknowledge communication about claims
3. Failing to implement standards for claims investigation
4. Denying claims without having conducted a reasonable investigation
5. Failing to affirm or deny coverage of a claim within a reasonable time
6. Failing to make prompt, fair, and equitable settlements for claims in
   which liability has become reasonably clear
7. Offering substantially lower settlements than is fair, forcing claimants to
   take the insurer to court
8. Attempting to settle claims for less than what a reasonable person would
   expect based on advertisements made in applications
9. Trying to settle a claim using an application that was altered without
   insured’s knowledge or consent
10. Making claims payments without explaining which coverage provided for
    them
11. Attempting to compel a claimant to accept a settlement that is less than
    the amount awarded in arbitration, by telling them that the insurer has a
    policy of appealing arbitration awards that favor the insured
12. Delaying the settlement process by demanding both a preliminary claim
    report and formal proof of loss forms
13. Refusing to settle claims promptly under one part of the policy in order to
    influence settlement under another
14. Failing to explain promptly and thoroughly why a claim was denied or a
    compromise settlement offered

Question 16

1. Misrepresentation

Answer 16

This refers to when an insurer or adjuster makes a material misrepresentation to the insured (or any other person who has an interest in the results of a settlement) in order to reduce the dollar amount of a claim settlement.

Question 17

2. Failing to acknowledge communication about claims

Answer 17

Insurers may not fail to acknowledge any communication about insurance
claims, and they are required to respond promptly to these communications.

Question 18

3. Failing to implement standards for claims investigation

Answer 18

An insurer must enforce standards so that every claim gets a proper
investigation: the insurer must acknowledge the claim within the required time
frame, investigate it thoroughly, taking all of the policy provisions into account, and then approve or deny it as promptly as possible.

Question 19

4. Denying claims without having conducted a reasonable investigation

Answer 19

The insurer is responsible for completing a thorough investigation before
deciding to deny a claim.

Question 20

5. Failing to affirm or deny coverage of a claim within a reasonable time

Answer 20

After receiving all the information necessary for an investigation, including
proof of loss forms, the insurer must make a decision within a reasonable
amount of time.

Question 21

6. Failing to make prompt, fair, and equitable settlements for claims in
   which liability has become reasonably clear

Answer 21

If a claim is legitimate, the settlement amount has become clear, and the
claimant has provided proof of the loss, the insurer must pay that settlement
promptly.

Question 22

7. Offering substantially lower settlements than is fair, forcing claimants to
   take the insurer to court

Answer 22

The insurer is not allowed to offer a policyholder substantially less than the
proper amount of damages. Not only is this type of behavior unfair, it also clogs
the legal system with unnecessary lawsuits simply because the insurer is not
willing to indemnify policyholders according to contract

Question 23

8. Attempting to settle claims for less than what a reasonable person would
   expect based on advertisements made in applications

Answer 23

An insurer is obliged to honor the terms of any written or printed advertising
material that accompanied or was a part of the policyholder’s application.

Question 24

9. Trying to settle a claim using an application that was altered without
   insured’s knowledge or consent

Answer 24

An insurer may not attempt to settle claims on the basis of an application that
was altered without the insured’s knowledge or consent. This includes binders
or any other document that would change the insured’s coverage in any way.

Question 25

10. Making claims payments without explaining which coverage provided for them

Answer 25

When making a claim payment, the insurer should include a statement that explains the amounts provided by each coverage, so the policyholder understands clearly what is being covered under which provision of the policy.

Question 26

11. Attempting to compel a claimant to accept a settlement that is less than the amount awarded in arbitration, by telling them that the insurer has a policy of appealing arbitration awards that favor the insured

Answer 26

The insurer must not try to convince the insured to settle for less than the amount awarded him at the arbitration by threatening to appeal the arbitration award.

Question 27

12. Delaying the settlement process by demanding both a preliminary claim report and formal proof of loss forms

Answer 27

If an insurer requires an insured, a claimant, or the physician of either to submit a preliminary claim report, the insurer may not then delay the settlement process by demanding formal proof of loss forms. These forms contain substantially the same information, so requiring both before proceeding is simply a way of delaying settlement

Question 28

13. Refusing to settle claims promptly under one part of the policy in order to influence settlement under another

Answer 28

If settlement is undisputed under one policy coverage, the insurer must pay it. The insurer may not “hold-out” on undisputed coverage in order to get the claimant to settle for a lower indemnity under another coverage.

Question 29

14. Failing to explain promptly and thoroughly why a claim was denied or a compromise settlement offered

Answer 29

The insurer must provide the exact reason for the denial or compromise offer, based on the facts of the claim and the insurance coverage. When offering a compromise settlement, the insurer must explain how the new amount was calculated.

Question 30

Unfair methods of competition in Michigan:

Answer 30

1. Failing to make payments to an insured on a timely basis 2. Failing to complete a payroll audit annually or within 120 days of either receiving a request from the insured or terminating the policy 3. Refusing to offer insurance to a healthcare provider because the provider has entered into an arbitration agreement with a patient 4. Issuing a disability policy to someone who is eligible for medicare 5. Failing to provide information about a rate upon request 6. Failing to keep record of complaints 7. Maintaining a business under a false name

Question 31

the commissioner can place a licensee on probation, fine him, or suspend or revoke his license if he commits any of the following violations

Answer 31

● Providing incorrect, misleading, incomplete, or materially untrue information on a license application ● Violating any insurance laws or an order of a commissioner of insurance ● Obtaining a license through misrepresentation or fraud ● Improperly withholding, misappropriating, or converting any money or property received in the course of doing insurance business ● Being convicted of a felony ● Using fraudulent, coercive, or dishonest practices or demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of business in Michigan or elsewhere ● Having an insurance producer license or its equivalent denied, suspended, or revoked in any other state, province, district, or territory ● Forging someone else’s name on an insurance application or any document related to an insurance transaction ● Improperly using notes or any other reference material to complete an exam for an insurance license ● Knowingly accepting insurance business from an unlicensed individual ● Failing to pay child support ● Failing to pay the single business tax or the Michigan business tax or to comply with any administrative or court order directing payment of the single business tax or the Michigan business tax

Question 32

● Making false comparisons of insurance policies ● Misrepresenting the terms of an insurance policy ● Misrepresenting an insurer’s financial condition ● Concealing an insurer’s identity Is Called...

Answer 32

Misrepresentation

Question 33

Deception

Answer 33

It is unlawful to: ● Publish false, deceptive, or misleading advertisements condition ● Makefalse, maliciously critical, or derogatory statements of the financial ● Circulate libelous or slanderous material

Question 34

Boycott, Coercion, and Intimidation

Answer 34

In Michigan, it is unlawful to commit any act of boycott, coercion, or intimidation in order to restrain the business of insurance.

Question 35

Unfair Discrimination

Answer 35

● Refusing or limiting a person’s insurance coverage because of race, color, age, etc. Penalty: ○ $500 fine per violation for an insurer ○ $50-$500 fine per violation for adjuster

Question 36

Insurance Fraud Regulation - Fraudulent insurance act

Answer 36

An act or omission committed with the intent to injure, defraud, or deceive Penalty: $1,000 fine or up to 3 months imprisonment

Question 37

Other fraudulent insurance acts in Michigan include:

Answer 37

● Knowingly preparing or presenting false written statements to an insurer regarding an insurance policy application or claim payment ● Soliciting or accepting new insurance risks for an insolvent insurer ● Removing records of assets or transactions from an insurer’s place of business in order to conceal them ● Diverting an insurer’s funds ● Falsely obtaining benefits under an insurance policy ● Knowingly helping someone else commit a fraudulent act

Question 38

Consumer Privacy Regulation - Consumer Privacy Protection:

Answer 38

ensures that insurers and their agents do not misuse sensitive personal information

Question 39

In order to protect consumer privacy, a licensee may not disclose a person’s policy or credit card account numbers to a marketing company, unless:

Answer 39

● The information is encrypted and the licensee doesn’t give the marketing company a way to decode it market his own products or services ● The licensee provides the information to his own service provider in order to ● The licensee gives the information to a participant of a program that the consumer has knowingly entered into

Question 40

Insurers must have a written information security program to:

Answer 40

1. Ensure the safety and confidentiality of nonpublic customer information 2. Protect against any threats or hazards to the safety or integrity of that information 3. Protect against the unauthorized access to or use of the information that could harm a customer or cause inconvenience 4. Establish procedures for the periodic, secure disposal of any information that is no longer necessary for business operations

Question 41

Here are the requirements for being licensed as an adjuster in Michigan:

Answer 41

● Beat least 18 years old ● Apply online ● Pay an application fee and a transaction fee ● Pass the state exam ● Be of good moral character ● Have a reasonable understanding of insurance and the laws governing it in MI ● Intend to act in good faith ● Possess a good business reputation

Question 42

Annual Fee

Answer 42

There is an annual fee to maintain an adjuster license.