Marketing Practices Flashcards
Public interest
The business of insurance is one affected by the public interest, requiring that all persons be actuated by good faith, abstain from deception, and practice honesty and equity in all insurance matters. Upon the insurer, the insured, their providers, and their representatives rests the duty of preserving inviolate the integrity of insurance
Unfair claims methods and trade practices
Insurers and their representatives must act in good faith and in a timely manner during the claims process.
Insurers must respond to a claim, within 10 working days (15 for group).
Insurers must respond to an inquiry by the IC for a claim within 15 working days.
Insurers must complete an investigation of a claim within 30 days after notification of claim unless the investigation cannot reasonably be completed within such time.
Insurers must within 15 days of proof of loss, notify first-party claimants of denial or acceptance.
Producer’s compensation disclosure
The relationship of a producer appointed by an insurer shall be that of the insurer and agent.
A producer may receive a commission from the insurer and a fee paid by the insured.
If a combination of commission and fee is received, the producer may reimburse part of the fee.
If a fee is charged for each policy, then the fee, commission, offsets, or future bonus’ must be disclosed in writing, signed by the producer, and insured and kept on file for 5 years.
Rebating
It is a violation of the statutes for insurers or producers to offer, promise, discount premium, or give money or any form of money to induce a prospective insured to buy a policy (e.g.; splitting commissions, paying premiums, giving gift certificates, merchandise, or personal services of value, etc.). The same rule applies to title insurers (from realtors), as an inducement to use them.
Illegal inducements
An insurer, insurance producer, title insurance agent, or other people may NOT offer as an inducement to the purchase of insurance, or in connection with any insurance transaction, provide in a policy for, or offer, or sell, buy, or offer or promise to buy or give, or promise, or allow to, or on behalf of, the insured or prospective insured in any manner whatsoever:
(a) Any shares of stock or other securities or
(b) Any special advisory board contract, or other contracts, agreement, or understanding of any kind, offering, providing for, or promising any profits or special returns or dividends.
Illegal Dealing in Premiums
Commingling: Combining the customer’s money (premiums) with the producer’s funds. Violation constitutes a misdemeanor. See also “Separate account requirements”.
Charging too much and keeping the excess.
Charging premiums for coverage not in effect.
Twisting
No person shall by misrepresentations or by misleading comparisons, induce or tend to induce any insured to lapse, terminate, forfeit, surrender, retain, or convert any insurance policy
Misrepresentation
A person who knowingly makes a false or misleading statement or impersonation, or who willfully fails to reveal a material fact, in or relative to an application for insurance to an insurer, is guilty of a gross misdemeanor, and the license of any such person may be revoked
Defamation of insurer
This includes publishing or disseminating false or maliciously critical information designed to injure an insurer.
Failure to issue proper receipts
Any representative of an insurer who receives a payment or premium for personal insurance shall issue a receipt no later than the next business day.
Penalties
No person engaged in the business of insurance shall engage in unfair methods of competition or in unfair or deceptive practices. The IC may define other acts to be unfair and promulgate by regulation restrictions, effective no earlier than 30 days later. The IC may order a person to cease and desist and fine $1,000 per violation thereafter. Other actions by law may also be taken.
Advertising
No person shall knowingly make or publish any misleading statements or advertisements relative to the business of insurance or any person engaged therein.
An insurer must have its full name and home office location (domicile) in an advertisement.
No person who is not an insurer may infer it is.
Ads showing financial conditions of the insurer must correspond to the last filing with the state.
No ads may reference in any fashion the WA Insurance Guaranty Assn. Act.
Policy delivery
Policies must be delivered to the policyholder within a reasonable time after issuance. No producer may retain a client’s policy for safekeeping but may obtain a policy for analysis for a short time, giving a receipt in every instance. If a policy is to be delivered by a producer, the producer must make actual physical delivery for life and health contracts and obtain a policy delivery receipt. Interested parties of the insurance must also receive a copy of the policy.
Premium accountability
Producers must report the exact consideration charged as a premium to the insurer and that premium shall be shown in the contract. All funds received on behalf of another shall be remitted immediately to the entity entitled. Any such funds so diverted shall be a theft.
Separate account requirement
All funds for premiums received by a producer must be segregated and maintained in a separate account. No agency or personal funds may be combined with premiums in this account (commingled). However, producers may maintain funds in the account for bank charges and interest paid on the account.
