QUIZ - section 4

Question 1

Which of the following describes prior approval as a type of rating law?

The insurer files policy rate information with the Department of Insurance. After filing, the insurer delivers evidence that the rates proposed are reasonable and fair. Then the insurer waits (30-60 days) for approval.

An insurance company must file the rates with the commission, but can then use those rates until they hear back from the commission.

Insurers compete with one another by quickly changing rates without review by the state regulators.

An insurance company uses the rate they determine appropriate first and then file that rate with the commission.

Answer 1

The insurer files policy rate information with the Department of Insurance. After filing, the insurer delivers evidence that the rates proposed are reasonable and fair. Then the insurer waits (30-60 days) for approval.

Question 2

Which is not a violation of Unfair Practice?

Defamation of an insurer
Delaying an investigation
Misrepresentation
Age discrimination

Answer 2

Age discrimination

Question 3

CIGA pertains to:

insurer’s insolvency
insurer’s forms
insurer’s fraud unit
insurer’s rating

Answer 3

insurer’s insolvency

Question 4

When the Commissioner takes over a company that is insolvent, his/her first responsibility is to:

sell all the company assets and pay any open claims.

liquidate the company and appoint new officers.

attempt to restore the company if possible.

shut down the company`s operations and start a full investigation.

Answer 4

attempt to restore the company if possible.

Question 5

Which of the following is a penalty for violating the Insurance Information and Privacy Protection Act?

$5,000 fine for violations committed with regularity showing they are a general business practice

$20,000 fine for violations committed with regularity showing they are a general business practice

$50,000 fine for violations committed with regularity showing they are a general business practice

$100,000 fine for violations committed with regularity showing they are a general business practice

Answer 5

$50,000 fine for violations committed with regularity showing they are a general business practice

Question 6

A subsequent violation of a cease and desist would result in:

imprisonment up to 5 yrs
a minimum fine of $5000
a fine up to $55,000
license suspension

Answer 6

license suspension

Question 7

Which of the following describes use and file as a type of rating law?

An insurance company must file rates with the commission, but can then use those rates until they hear back from the commission.

An insurance company uses the rate they determine appropriate first and then file that rate with the commission.

The insurer files policy rate information with the Department of Insurance. After filing, the insurer delivers evidence that the rates proposed are reasonable and fair. Then the insurer waits (30-60 days) for approval.

Insurers compete with one another by quickly changing rates without review by the state regulators.

Answer 7

An insurance company uses the rate they determine appropriate first and then file that rate with the commission.

Question 8

The State of California requires that all admitted insurers be a member of the:

Privacy Protection Committee
California Code and Ethics Board
Insurance Board Council
California Insurance Guaranty Association

Answer 8

California Insurance Guaranty Association

Question 9

Insurer has up to how many days to accept or deny a claim?

30 days
15 days
21 days
40 days

Answer 9

40 days

Question 10

What is the significance of the SEUA case of 1944?

The court decided the federal government should regulate insurance.

The court gave authority to the federal government to apply antitrust laws to the insurance business that was not being regulated by the state level.

The court established the right of the states, instead of the federal government, to regulate insurance.

The court exempted the insurance industry from the federal regulation required for most interstate commerce industries.

Answer 10

The court decided the federal government should regulate insurance.

Question 11

If convicted of insurance fraud:

the fine can be up to $150,000 and up to 5 years in state prison.
the fine can be up to $10,000.
the fine can be up to $50,000.
the fine can be up to $10,000 and up to 5 years in state prison.

Answer 11

the fine can be up to $150,000 and up to 5 years in state prison.

Question 12

All of the following are penalties for unfair discrimination EXCEPT:

$15,000-$100,000 for frequent violations
$2,500 for first violation
prison
Incorrect Answer$5,000 for subsequent violations

Answer 12

prison

Question 13

Which of the following is NOT a purpose of the Unfair Practices Article?

To protect the public from agents who practice bad methods of selling insurance.

To regulate trade practices in the insurance business.

To keep agents honest when selling insurance.

To determine the punishment for an agent found guilty of unfair practices in insurance.

Answer 13

To determine the punishment for an agent found guilty of unfair practices in insurance.

Question 14

Who administers the California Administrative Code of Regulations?

State Senate
Commissioner
Governor
Congress

Answer 14

Commissioner

Question 15

Which of the following is a responsibility of the Commissioner?

To change the law of insurance.
To write the law of insurance.
To enforce the law of insurance.
To form and appoint a council that will regulate the code.

Answer 15

To enforce the law of insurance.

Question 16

To change the California Insurance Code a bill is brought before the Assembly and the Senate. After both parties vote on the bill and it is approved, it moves on to the:

State Senate
Governor
Congress
Commissioner

Answer 16

Governor

Question 17

Solvency requires the insurer to have enough assets to cover:

reinsurance
paid-in-capital
all of these
liabilities

Answer 17

all of these

Question 18

An example of a self-regulatory authority of the insurance industry is:

the State legislature
the NAIC
the ISO
the Commissioner

Answer 18

the NAIC

Question 19

How is the Insurance Commissioner put into office?

Elected by the citizens
Elected by the council
Appointed by the governor
Appointed by the previous commissioner

Answer 19

Elected by the citizens

Question 20

Once insured an insurer are in agreement payment must be made within:
15 business days
15 calendar days
30 calendar days
30 business days

Answer 20

30 calendar days

Question 21

Which of the following statements about insolvency is TRUE?

An insurer cannot escape the condition of insolvency except by permission from the Commissioner.

An insurer can escape the condition of insolvency by meeting its financial obligations when they are due.

An insurer cannot escape the condition of insolvency by being able to provide for its liabilities and reinsurance of all outstanding risks.

An insurer can escape the condition of insolvency by being able to provide for its liabilities and reinsurance of all outstanding risks.

Answer 21

An insurer cannot escape the condition of insolvency by being able to provide for its liabilities and reinsurance of all outstanding risks.

Question 22

According to the Code a “Notice of Claim” is a(n):

oral notification
either qualify
neither qualify
written notification

Answer 22

either qualify

Question 23

What is the role of the Commissioner and the Department of Insurance in relation to consumers?

Commissioner and the DOI are responsible for making sure companies bring in more income than claims being paid out.

The Commissioner and the DOI are responsible for regulating the conduct of agents and insurers.

The Commissioner and the DOI are responsible for advertising to the public the roles and responsibilities of insurance.

The Commissioner and the DOI are responsible for making sure the public is given the opportunity to purchase insurance.

Answer 23

The Commissioner and the DOI are responsible for regulating the conduct of agents and insurers.

Question 24

Which of the following is NOT considered an unfair practice?

Filing false financial documents.

Unfairly discriminating against classes of insured`s.

Making false statements that mislead the public.

Failing to display the license in a clearly visible place for the public to see.

Answer 24

Failing to display the license in a clearly visible place for the public to see.

Question 25

Penalty for violation of a summary seizure would be:

any and/or all of these
1 yr imprisonment
$1,000
misdemeanor

Answer 25

any and/or all of these

Question 26

According to the Code, the word “person” means:

the insurer in an insurance contract.

any person, association, organization, partnership, business trust, limited liability company, or corporation.

the client seeking insurance.

any person capable of binding an insurance contract.

Answer 26

any person, association, organization, partnership, business trust, limited liability company, or corporation.

Question 27

Which of the following is NOT a type of rating law?

Use and file
Legal Competition
Prior approval
File and use

Answer 27

Legal Competition

Question 28

Which one of the following is not one of the three principal parts to the privacy requirement of the Gramm-Leach-Bliley Act?

Financial Privacy Rule
Pretext Provisions
Credit Reporting
Safeguards Rule

Answer 28

Credit Reporting

Question 29

Rates shall remain in effect if they are:

all of the following
adequate
not discriminatory
reasonable

Answer 29

all of the following

Question 30

Upon receiving any written or oral inquiry from the Department of Insurance concerning a claim, every licensee shall immediately, but in no event more than _______ calendar days of receipt of that inquiry, furnish the Department of Insurance with a complete written response based on the facts as then known by the licensee.

7
30
21
14

Answer 30

21

Question 31

All of the following are efforts the Department of Insurance takes to combat insurance fraud EXCEPT:

Each company is required to have a fraud detection unit.

Every insurer pays an annual fee to fund the fraud detection units

Each company is required to submit a complete record of fraudulent claims made to the business each year.

Every automobile insured is assessed about $1 per year to fund automobile insurance fraud task force activities

Answer 31

Each company is required to submit a complete record of fraudulent claims made to the business each year.

Question 32

All of the following are incorrect penalties for violating the Unfair Practices article EXCEPT:

$5,000 fine for each act in violation; $10,000 fine for willful violation

$15,000 fine for the first offense; Minimum of 3 years in prison

$10,000 fine for each act in violation; $15,000 fine for willful violation

$5,000 fine for each act in violation; $15,000 fine for willful violation

Answer 32

$5,000 fine for each act in violation; $10,000 fine for willful violation

Question 33

Which court case reversed the Paul vs. Virginia case of 1868?

Houghton-Mifflin case of 1938
Public Law 15
McCarren-Ferguson Act of 1945
SEUA case of 1944

Answer 33

SEUA case of 1944

Question 34

Unless expressly otherwise provided, any personal notice required by any provision of the insurance code may be given by any of the following EXCEPT:

mailing notice
a third party
notification at his residence or principal place of business
postage prepaid

Answer 34

a third party