Nevada Rules and Regulations Common to All Lines 14% Flashcards
What is Insurance?
the transfer of the possibility of a loss (risk) to an insurance company, which in turn spreads the costs of unexpected losses to many individuals
What is Transacting Insurance?
the general business of conduction insurance including, soliciting insurance contracts, inducing a person to purchase insurance, conduction preliminary negotiations such as sales presentations, effecting an insurance contract (completing application), and participating in any transactions relating to the insurance policy after it has been issued
What is an insurer?
any person or company engaged as the principal party in the business of entering into insurance contracts
What are the several classifications of insurers based on?
Type of ownership, locations of incorporation, and other characteristics
Insurance is available from what 2 types of parties?
Private companies and the government
What is the major difference between government and private insurance?
Government- funded with taxes and serve national and state social purposes
Private policies- funded by premiums
How can private insurances be classified by?
Ownership, Authority to transact business, Location (domicile), Marketing and distribution systems, or Rating (financial strength)
What is domicile?
refers to location where an insurer is incorporated, not necessarily where the insurer conducts business
Insurance companies are classified according to domicile, regardless, what must it obtain before transacting insurance within the state?
Certificate of Authority
What type of insurance company is domiciled in a specific state (this state since it’s Nevada)?
Domestic Insurer
What type of insurance company is incorporated (domiciled) in another state or territorial possession (such as Puerto Rico, Guam, or American Samoa).
Foreign Insurer
What type of insurance company is incorporated outside the United States.
Alien Insurer
Who owns stock companies?
Stockholders
What do stockholders provide and what do they share in?
They provide capital necessary to establish and operate the insurance company
They share in any profits or losses
Who elects officers and what do they do?
Stockholders elect officers
They manage stock insurance companies
What type of policy issued by stock companies, in which policy owners do not share in profits or losses?
Non-participating policies
In non-participating (stock policies), what is paid to stock holders and what isn’t paid to policy owners?
Policy owners- don’t receive dividends
Stockholders- get paid taxable dividends
Who owns mutual companies and what do they do?
Policy owners
and they issue participating policies
What are policy owners entitled to in participating policies?
Dividends
What are dividends and how are they generated?
they are return of excess premiums
and generated when the Premiums+Earnings exceed the actual cost of providing coverage creating surplus
What are dividends entitled and not entitled to in a mutual company?
Not taxable and not guaranteed
What is a Certificate of Authority?
given by the Division of Insurance that allows companies to transact insurance and write contracts in the state
What is an authorized insurer?
company that has qualified and received Certificate of Authority
What is a non-authorized insurer?
company that has not applied or has been denied a Certificate of Authority and may not transact insurance
What following acts constitutes the transaction of Insurance in the state of Nevada?
Making an insurance contract, Making a contract of guaranty or surety ship (provided action is not incidental to any other legitimate business), Taking any application for insurance, Receiving any monetary consideration for insurance (including premiums, commissions, membership fees, assessments or dues), and Acting as an agent
What must an insurer do before transacting business in a specific state?
Must apply for a license and obtain a Certifcate of Authority and meet any financial (capital and surplus) requirements set down by state?
When is an insurer not required to hold a certificate of authority?
Investigation, settlement of litigation of claims; liquidation of assets and liabilities of the insurer (other than collection of new premiums), Transactions written and delivered outside the state, covering subjects outside the state, Lawsuits, Surplus lines transactions, Actions related to the insurers rights, related to investments in the state; Reinsurance (with exception of most domestic reinsurers of a domestic insurer), The issuance of annuities by an authorized affiliate; Transactions (not related to workers comp or industrial service) that provide excess liability insurance or self-insured retention of at least $25,000,000
In order to transact insurance in Nevada, insurers must what?
Be in compliance with the Insurance code, and must also be incorporated stock, mutual or reciprocal insurers.
What are Premiums?
consideration or payment for insurance coverage
What are premiums also referred as?
an assessment, membership, policy, survey, inspection, or service
What are the general powers, duties, and responsibilities of the Commissioner, but not limited to?
1) Organize, manage, and supervise all of the activities of the Insurance Department
2) Enforce the provisions of the Insurance Code
3) Adopt regulations necessary to carry out the provisions of the Insurance Code
4) Conduct examinations and investigations of all insurance matters
If the Commissioner has right to believe that anyone is in violation of any provisions of the Code or applicable law of insurance operations, for which criminal prosecution would be in order, who would they give the information to?
Appropriate District Attorney or to the Attorney General
Who can the Commissioner invoke in the case of any existing or threatened violation of any provision of code?
The courts through injunction or other proper process
Who can the Commissioner delegate his powers to?
His deputy, examiner or an employee of the Division
What can the Commissioner examine when pertaining to the duties of the insurer to make sure everything in the business is running smoothly?
examine the affairs, transactions, accounts, records, and assests
What is the time period of which the Commissioner can examine an authorized insurer?
as deemed necessary, but at least once every 5 years
Who is responsible for the cost of examination from the Commissioner or examiner?
The person being examined
What happens if someone refuses examinations or interferes with examinations?
The person is guilty of a misdemeanor
What is the Commissioners main role?
to enforce insurance laws and to protect the public from unfair trade practices
What could the Commissioner do if it suspects a violation committed or unfair trade practice?
May issue a statement of charges and hold a hearing for any purpose deemed necessary
When can a Commissioner hold a hearing?
Upon written application from the person aggrieved by the act and
If Required by any other provision of the Code
When should an application for a hearing be filed after an offense?
with 60 days of the person being aware the act was committed
When must a hearing be held after an application for hearing is accepted?
within 30 days, unless postponed by mutual consent
What does the notice of hearing include?
the date, time and place of the hearing and specify the matters to be considered
When should the notice of hearing be given to the person aggravated?
not less than 20 days in advance
When can a notice of hearing be posted in the newspaper?
when it is to consider rules and regulations that require notice to more than 30 people
What time frame is the Commissioner to make a determination on the hearing?
30 days after the hearing
Who has the right to waive the 30-day requirement of a hearing?
the individual requesting the hearing
If the Commissioner finds that a business has committed a violation or failed to report the violation, the Commissioner can impose what consequences?
suspend, revoke, or refuse to renew a license, and may assess a fine between $25 and $500
The fines of a violation must be paid within what time frame after a date of order?
cannot be shorter than 15 days but no longer than 30 days
What is the administrative fine imposed if a person willfully engages in the unauthorized transactions of insurance?
And when must it be paid?
no more than $10,000 for each act
Paid within 5 years but no later after violation occurred
What happens when the administrative fine is not paid?
Must be recovered in a Civil Action brought by the Attorney General on behalf of the Commissioner
What is a Producer of Insurance?
a person required to be licensed under the laws of Nevada to sell, solicit, or negotiate insurance
What is the fee imposed if an individual transacts insurance without a license?
$1,000 for each violation
Who is exempt from the producers licensing requirement?
only the Insurers
What is an agent?
producer of insurance who is compensated by the insurer and sells, solicits, or negotiates insurance for the insurer
Who represents the insurance company?
The agent
What is and is not a broker?
A broker IS a producer of insurance who represents the client (applicant, insured, claimant) in an insurance transaction
a broker IS NOT an agent of an insurer
What is a Managing General Agent?
specialized type of insurance agent or broker that has been granted underwriting authority by an insurer and can administer programs and negotiate contracts for an insurer
What are the licensing and bonding requirements for managing general agents?
Hold a license issued by this state as an insurance producer in order to represent an insurer
Maintain a bond for $50,000 or a policy that covers any errors and ommissions of the MGA
Does a nonresident applicant for licensing in Nevada as a producer, currently licensed in good standing for the same type of insurance (line of authority) need to complete any tests or education requirement for the license?
No, they do not need to complete any education or examination requirements
Under what activities is a producer allowed without an examination?
Limited lines, credit, travel, baggage, fixed annuity, or covering vehicles leased for a short time
What circumstances will the Commissioner issue a producers license to nonresidents?
1) Currently licensed as resident producer in good standing at home state
2) Have made proper requests for licensure, paid licensing fee, and paid a fee for deposit in the Insurance recovery account
3) Sent Commissioner an application for licensure made in their home state or completed uniform application
4) Their home state issues nonresident licenses to residents of Nevada, following a similar procedure (known as reciprocity)
A non resident producer that moves from one state to another must file a change of address within what time frame?
30 days
Within what time frame must a person licensed in another state moving to Nevada who wants to become licensed as a Resident Producer with the benefit of the exemption provided?
within 90 days after establishing legal residence
What is a prearranged or prepaid funeral insurance?
Life insurance than can fund future funeral expenses
What does the Prepaid funeral contract agreement establish?
Insurer and applicant enter into agreement that details products and services to be delivered upon the insureds death
What are the ways the insured can pay for the funeral arrangements of the contract and what does the insurer promise?
Insured pays- in advance in lump sum, by installments, or solely from the proceeds of a life insurance policy
Insured promises- to furnish funeral services and merchandise
What would happen if someone who isn’t properly licensed by the Commissioner or holds a license solicits the sale of a prepaid contract?
it is unlawful and will incur a fine up to $1,000 for each violation
What is a limited lines producer allowed to sell?
Limited lines credit insurances, fixed annuities (including indexed annuities), travel and baggage insurance, rental car insurance, portable electronics as limited lines, and crop insurance
What is it called when someone, for a fee, offers advice to the public about the benefits and deficiencies of any insurance policy that can issued to Nevada?
An Insurance Consultant
Can licensed consultant employ or be employed by licensed producers, brokers, or insurers?
No
What is the fine if someone is caught acting as a consultant without a license?
up to $1,000 for each violation
When is an insurance consultants license not required?
1) acting on their professional capacity on:
a. attorney licensed to
practice law in Nevada
b. an actuary or certified
public accountant
2) licensed insurance producer or a surplus lines broker
3) a banks trust officer who acts in the normal course of employment
What type of license must a person acting as a broker or manager hold for reinsurance?
A producers license
What must the broker or manager be licensed in, if the reinsurance is placed in another state?
licensed in Nevada or in state with similar requirements
or at least hold a Nevada license with a nonresident intermediary
What is an administrator?
A person who: 1) Collects premiums and adjusts/settles claims to life/health insurance or annuity contracts 2) Administers: a. A trust b. a self-insurance program for an employer c. an employer-funded program that provides pension, annuities, health benefits, or death benefits for employees
What is the person acting as an administrator supposed to do before acting upon the role?
enter into a written agreement with an insurer
What is the time period a surety may cancel a bond?
90 days notice to both administrator and Commissioner
Insurance charges collected, premiums received and held by administrator on behalf of an insurer are held as what?
In a fiduciary capacity
What is the bond amount an administator is required to file with the Commissioner?
$100,000
What is required to function as an administrator?
A certificate of registration as administrator from the Commissioner
How long is a Certificate of Registration as an Administrator valid for?
3 years after issued
Who has the power to revoke or suspend an administrators certificate?
The Commissioner
What is the fine that can be incurred if a person is caught acting as an administrator without a certificate?
$300 to $2,000 for each violation
How is an administrator compensated?
Premiums or charges collected
Number of claims paid
Any other basis agreed upon by insurer and administrator
What is an Exchange Enrollment Facilitator? (EEF)
certified professional whose responsibilities include enrolling qualified individuals, employers, and their employees in a Qualified health plans on the Exchange
and provide support to consumers with appeals, complains, and services after enrollment
What is Nevada’s Exchange?
The Silver State Health Insurance Exchange
What is the requirement to obtain an Exchange Enrollment Facilitator license?
20 hours of training and pass a state exam
Who issues an EEF license?
Department of Insurance (DOI)
What is an appointment?
a person (producer) acting on behalf of an insurer to transact insurance
Does a producer or a broker need to be appointed to act on behalf of the insurer.
Producer needs to be appointed as an agent
A broker does not need to as they do not act as an agent
What is needed to appoint a producer?
file a notice of appointmet within 15 days after contract execution or submission
How many notices of appointments are needed for multiple people?
Only one single notice
Who is responsible for paying an appointment fee and recurring annual fees for each producer appointed as agent?
an insurer who appoints
What is the time period a Commissioner must determine whether someone is eligible for appointment?
30 days of receipt of notice
If within the time frame a decision isn’t made on appointment, what is the time period the Commissioner has once conclusion made?
within 5 days after determination is made
What time period is an insurer who terminates an appointment required to notify the Commissioner of termination?
within 30 days after effective date of termination
What time frame after notifying Commissioner is the insurer required to notify producer of termination?
15 days
Within what time frame is the producer terminated allowed to file written comments concerning termination to the Commissioner?
within 30 days of notice of termination
What must an individual who wants to obtain an insurance producer license do?
submit application form by the Commissioner
What happens if the information on an application of insurance license is wrong or misstated?
Can be grounds for suspension/revocation of license or refusal of issue
What is the requirement for an applicant who wants to be licensed as a producer?
1) 18 years of age
2) no violations committed on grounds of suspension of license
3) complete course of study specific to license applied
4) pass the examination
5) paid any fees prescribed and $15 into Insurance Recovery Account
Does a business entity need to be licensed to act as a producer?
Yes and meet all requirements needed by the Commissioner
What must a person do to renew a producer’s license before due date?
pay renewal fee, pay fee established by Commissioner to deposit into Insurance Recovery Account (no more than $15), and meet continuing education requirements
What happens if someone renews their producer’s license 30 day AFTER due date?
must pay a penalty of 50% of renewal fee
What happens after someone applies for renewal of producer’s license AFTER the 30 days?
license expires
What time frame and fee incurred does a person need to meet to reapply for a license without passing a written exam or complete any studies?
within 12 months
and pay twice the renewal fee
When must a licensee inform the Commissioner of any changes in location of business conducts?
within 30 days of change
What is continuing education (CE) rules?
established to protect public by maintaining high standards or professional competence in the insurance industry, and o maintain and improve the insurance skills and knowledge of licensed producers.
What are the conditions for license renewal?
successfully completed 30 hours of approved CE within 3 years period before date of renewal
education must include 3 hours of ethics training
What is the time frame a Commissioner may refuse to issue a license or revoke/suspend a license for any violations or fraud committed?
up to 12 months
What must an applicant for a license as a producer do if wanting to use a fictitious name other than their true name that displays on the license?
submit a request for approval of the name or file with the Commissioner a certified copy of the certificate
What is an unfair trade practice?
knowingly committing an unfair method of competition or to engage in such actions with enough frequency that the commission of unfair marketing practices indicates general business practice (unfair/ deceptive acts or practice in the business of insurance)
What is misrepresentation?
the illegal act of issuing, publishing, or circulating any illustration or sales materials that is false, misleading, or deceptive as to policy benefits or terms, payments of dividends, etc, and also refers to oral statements
What is rebating defined as?
any inducement offered to the insured in the sale of insurance products that is not specified in the policy and are illegal
What is twisting?
a misrepresentation or incomplete or fraudulent comparisons of insurance policies that persuades an insured/owner to his or her detriment to cancel, lapse, switch policies, or take out a policy with another insurer.
and is prohibited
No discrimination can be made on what?
on the basis of an individuals marital status, race, national origin, gender identity, sexual orientation, creed, or ancestry unless distinction made for a business purpose or required by law
Discrimination on what is illegal?
Rates, premiums, or policy benefits for person with same class or life expectancy
What is defamation?
oral or written statement made intended to injure a person engaged in the insurance business and also applies to statements that are maliciously critical of the financial condition of any person or a company
What is insurance fraud?
anyone who knowingly and willfully presents any false or fraudulent statement to an insurance company (or assists others in doing so)
What are all the possible consequences (charged) someone can incur if convicted of insurance fraud?
1) charged with Category D felony and imprionsement for 1 to 4 years
2) impose a fine of up to $5,000 unless a greater fine is required
3) may pay restitution
4) may also be required to pay court costs and cost of investigation
What is the time frame an insurer is to issue payments of claims of damage to motor vehicles before it is known as delayed?
Within 30 days
What is delay?
failure to issue a check or draft within the time period requested
If damaged vehicle is subject to security interest, or legal owner different than registered owner, what are the terms when the vehicle wouldn’t be repaired?
If insurer has declared vehicle a total loss
or
If total charge of repair is $300 or less
What is a fiduciary responsibility?
an insurance producer is obligated to exercise the same degree of care as would be expected from a reasonable, prudent, and competent professional in the field and legally obligated to perform in an ethical manner
What is a fiduciary?
A producer who handles insurer funds in a trust capacity
What is embezzlement?
any licensee or representative of an insurance company who diverts or appropriates policyowner funds for their own use
What is the time frame of which a producer must remit premiums to the insurer before failure?
within 30 days
What time frame, after receiving notice of a failure report, must an individual cure a deficit in their fiduciary account?
within 5 days
When can an individual who sells, solicits, or negotiates insurance receive payment?
If the individual is properly licensed in the type of insurance being sold/solicited/negotiated, or a licensed producer acting as a broker
How long must a person keep complete records of all insurance transactions after policy expires?
3 years
Where can records of insurance transactions be stored?
At place of business (can be home) or electronical
What must the records show for insurance policies placed or countersigned by licensee?
name of insurer and insured number and expiration date of policy premiums payable names of all other persons from whom business is accepted or to whom commissions are promised or paid premiums collected
All authorized insurers who transact life or health insurance or annuity contracts in Nevada must be members of what as a condition for their authority?
the Nevada Life and Health Insurance Guaranty Association
All authorized insurers transacting lines of insurance OTHER THAN life, health, annuity contracts, title, surety, mortgage guaranty, and ocean marine insurance must be members of what?
Nevada Insurance Guaranty Association (NIGA)
What is a covered claim?
unpaid claims, or judgement, including a claim for unearned premiums, which arises out of and is within coverage of an insurance policy
What is subrogation? In connection with NIGA
the associations legal right to seek damages from third parties, after having reimbursed the insured for a (the) loss
What is the time frame after cancelling resident license in another state to apply for a resident license in Nevada?
90 days
How long is a valid certificate of registration for administrator?
3 years
