Insurance Regulation

Question 1

What type of licensee represents the insurance company?

Answer 1

The agent

Question 2

For what reason can a temporary license be issued?

Answer 2

For continuation of business in case the licensed producer dies or becomes disabled

Question 3

What is the purpose of a cease and desist order?

Answer 3

To prevent a producer or insurer from further violating laws for transacting insurance

Question 4

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?

Answer 4

Rebating

Question 5

Who is responsible for the costs associated with the examination of insurers?

Answer 5

The insurer who is being examined

Question 6

Two individuals who are in the same risk an age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Answer 6

Discrimination

Question 7

When can the Commissioner or Director examine insurers?

Answer 7

Whenever deemed necessary, but at least once every few years

Question 8

What type of licensee represents the insured?

Answer 8

Broker

Question 9

Who is an insurance agent?

Answer 9

A person authorized to sell, solicit and negotiate insurance contracts

Question 10

Who may share in the commission from the sale of a life insurance policy?

Answer 10

Only producers properly licensed for the type of insurance transaction

Question 11

What are the most common penalties for violations of insurance statutes?4

Answer 11

1 cease and desist order
2 fine
3 license suspension
4 revocation

Question 12

Who can usually be granted a temporary license?

Answer 12

Producer’s spouse or designee in cash the licensed producer dies or becomes disabled

Question 13

Who must be notified of a producer’s change of address?

Answer 13

The department of insurance (commissioner, director, superintendent)

Question 14

If the commissioner/superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?

Answer 14

Cease and desist order

Question 15

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?

Answer 15

Misrepresentation

Question 16

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?

Answer 16

Authorized or admitted

Question 17

What are producers required to do in order to renew their license?

Answer 17

Complete continuing education hours and pay a renewal fee

Question 18

If an insurer holds a Certificate of Authority, it is known as what type of insurer?

Answer 18

Authorized or admitted

Question 19

What type of misrepresentation persuades an insured to his or her detriment to cancel, lapse or switch policies from one to another?

Answer 19

Twisting

Question 20

To whom may a certificate of authority be issued?

Answer 20

To an insurer authorized to transact business in this state

Question 21

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

Answer 21

Misrepresentation

Question 22

In general, who can be excluded from producer licensing and examination requirements?

Answer 22

Insurance company officers, directors or other employees who don’t transact insurance or receive commissions for their services

Question 23

If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?

Answer 23

Defamation

Question 24

Who is considered a nonresident agent?

Answer 24

An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state