State Laws Flashcards
If an individual wants to transact business as an insurance producer, they must meet all of the following requirements, except:
Apply for a license within 2 years of passing the licensing exam
Business Entity
A business entity is any corporation, association, partnership, Limited Liability Company, Limited Liability Partnership, or other legal entity, except an individual or sole proprietorship. Before approving the application of a
In order for a business entity to obtain a producer license, it must comply with which of the following requirements?
Ensure that all employees acting as producers are licensed as producers
Issuance of a License
Before granting a license, the Director may require the applicant to provide:
Documentation necessary to verify information in the application, including prior criminal records
A full set of fingerprints for the purpose of obtaining state and federal (FBI) criminal records
If a nonresident holding an insurance producer license in another state becomes a resident of Arizona, they must apply for a resident producer license within 90 days of cancelling the current resident license. The current resident license must be valid and in good standing. As long as all requirements are met, an Arizona examination for licensing is not required.
For an individual called into active military service after passing the examination, the 12-month period to apply for a license may be extended by the number of days the individual was in active military service. However, this extension may not exceed 18 months. The individuals must provide documentation certifying they had been in active military service
Within what time frame must a nonresident producer apply for a resident producer license upon moving to Arizona?
90 days
Before granting a license, the Director may ask for which of the following type of information?
In Arizona, a resident licensee:
Must have a residence or principal place of business in Arizona
All of the following statements about obtaining a nonresident license are correct, except:
The application fees are waived for nonresident licenses
Insurance Producer
An insurance producer is a person (individual or business entity) required to be licensed to sell, solicit, or negotiate insurance. A person meeting the requirements of licensure may qualify for an insurance producer’s license in one or more of the following lines of authority:
Life
Accident and health or sickness
Property
Casualty
Variable life and variable annuity products
Personal lines
Credit
Crop
Adjuster
An adjuster is any person who, for compensation, adjusts, investigates, or negotiates the settlement of claims on behalf of either the insurer or the insured. Adjuster does not include:
A licensed attorney who is qualified to practice law in Arizona
A salaried employee of an insurer or of a managing general agent
A licensed insurance producer who adjusts losses arising under policies they procure
An employee of a political subdivision who adjusts losses arising under policies covering the political subdivision
An independent contractor retained by a licensed adjuster for the sole purpose of providing assistance in connection with a claim. An independent contractor may include a photographer, estimator, engineer, private detective, or handwriting expert.
To be licensed as an adjuster, the individual must apply to the Director, be at least 18 years old, be a resident of Arizona or another reciprocal state, and pass a licensing examination. The examination requirement will be waived if the applicant holds a claims certificate issued by a national or state-based claims association with a program consisting of at least 40 hours of pre-examination course work, a proctored exam, and at least 24 hours of continuing education biennially.
An adjuster who is licensed in their home state is not required to be licensed in Arizona if they are sent to Arizona for the purpose of investigating or adjusting claims resulting from a catastrophic loss.
Life Settlement Broker
A producer that is licensed with a life line of authority is deemed to meet the licensing requirements to operate as a life settlement broker as long as they pay any applicable fee and, within the first 30 days of operating as a broker, they must notify the Director that they are acting as a broker. A broker may renew a license by paying the renewal fee. The expiration date of the broker authority coincides with the expiration of the life line of authority.
Surplus Lines Brokers
Surplus lines insurance is insurance written by unauthorized insurers when coverage may not be written by authorized insurers. Surplus lines insurance may be procured from an unauthorized insurer as long as it is written through a surplus lines broker licensed in Arizona and a diligent effort has been made to obtain coverage through an authorized insurer.
A resident or nonresident property and casualty insurance producer may obtain surplus lines coverage on behalf of a policyholder through a licensed surplus lines broker. The insurance producer may pay a fee or share commission with a surplus lines broker. A surplus lines broker may only receive a fee, commission, brokerage, or other valuable consideration from a licensed property and casualty producer, managing general agent, or another surplus lines broker.
A person may not act as a surplus lines broker in Arizona on behalf of an insured living in Arizona unless they have a current surplus lines broker license issued by the Director.
Mexican insurance surplus lines broker license may be issued to a resident or nonresident licensed insurance producer that maintains an office in Arizona. Mexican insurance surplus lines is a policy of insurance that is to be effective in Mexico and that is issued by an alien insurer not authorized to transact insurance in Arizona. These policies are not protected or regulated by the state of Arizona if the insurer becomes insolvent.
Temporary License
The Director of Insurance may issue a temporary insurance producer license for a period up to 180 days, without requiring an examination, if it is necessary to service insurance contracts in the following circumstances:
The surviving spouse or court-appointed personal representative of a licensed insurance producer who dies or becomes mentally or physically disabled to allow adequate time for the:
Sale of the insurance business owned by the producer
Recovery of the producer and their return to the business
Training and licensing of new personnel to operate the producer’s business
Any member or employee of a business entity licensed as an insurance producer, upon the death or disability of that individual, designated in the business entity’s application or the insurance producer’s license
The designee of an individual licensed as an insurance producer who is entering active service in the Armed Forces of the United States
The Director may impose limitations on the authority of any temporary licensee or revoke the license if deemed necessary to protect insureds and the public. The Director may require the temporary licensee to have a suitable sponsor who assumes responsibilities for all acts of the temporary licensee.
A temporary license may be issued to a designated individual for all of the following reasons, except:
Inactive License During Military Service
A licensee or applicant who is ordered into active military service may request that the license or application be placed on inactive status by sending the Department a written statement that includes all of the following:
The licensee’s name
The licensee’s license number or Social Security number
The date that the active military service begins
A request for inactive status
A licensee whose license is on inactive status may not sell, solicit, or negotiate insurance, but the licensee is allowed to receive renewal or other deferred commissions.
The time periods for submission of the license renewal fee and for completion of the applicable renewal and continuing education requirements are extended for a licensee whose license is on inactive status by the number of days that the licens
Change of Business/Contact Information
Licensees are required to inform the Director in writing of any change of address, designated producer, or name. Notification must be submitted within 30 days of the change. The Director may require a full set of fingerprints for each new member, director, officer, or designated producer to obtain a state and federal criminal records check, as required by law.
Assumed Business Name and Trade Name
An insurance producer must notify the Director in writing within 30 days after any material change to the information filed with the Director. The Director will not issue any license in a trade name, except to a business entity if the trade name is legally registered.
Which of the following statements regarding using an assumed business name is not correct?
An insurance producer must report to the Director within 30 days after the filing date of a criminal conviction in any jurisdiction. The report must include a copy of the initial indictment, information or complaint filed, the final judgment entered, and all other relevant legal documents.
Exceptions to CE Requirements
Licensees who instruct an approved course on behalf of an approved provider may receive 2 times the credit hours assigned to the approved course.
Nonresident licensees may submit proof of completing continuing education requirements in their home state to the Director, provided their home state recognized credits earned by Arizona residents. In the case that the nonresident’s home state is not reciprocal, the nonresident licensee may satisfy the continuing education requirements by earning credits from an approved provider. If their home state does not have continuing education requirements, the nonresident licensee must comply with Arizona’s requirements.
Continuing education requirements do not apply to individuals who have been continuously licensed as an insurance agent, broker, or producer in Arizona since January 1, 1995 and never committed any action that caused:
The suspension, revocation, denial, or nonrenewal of their license
The Director to issue a cease and desist order
The licensee to pay restitution or civil penalty
Disciplinary Actions
The Director may suspend up to 12 months, revoke, or refuse renewal of a producer or business entity license for:
Providing incorrect, incomplete, or materially untrue information in a license application
Violating any insurance law, or any regulation, subpoena, or order of the Director
Obtaining a license through fraud or misrepresentation
Improperly withholding, misappropriating, or converting any monies or properties received while conducting insurance business
Misrepresenting the terms of an insurance policy, whether issued or proposed
Being convicted of a felony
Any insurance unfair trade practice
Using fraudulent, coercive, or dishonest practices
Demonstrating incompetence, untrustworthiness, or financial irresponsibility
Having an insurance producer license denied, suspended, or revoked in any jurisdiction
Forging another’s name to any document related to an insurance transaction
Paying or receiving commissions, directly or indirectly, if not authorized, unlawfully charging interest on a premium finance agreement, or collecting a service charge exceeding $10 for arranging a premium finance agreement
Using the insurance producer’s license principally to provide insurance that covers the life, property or insurable interests of the licensee or the licensee’s family members, employer, or employees. This is known as controlled business.
Denial, Suspension, Revocation, or Refusal to Renew; Civil Penalties (continued)
When denying an application, or suspending, revoking, or refusing to renew a license, the Director must notify the applicant through personal delivery or certified mail and provide the applicant with the opportunity for a hearing. The Director will give at least 10 days’ notice of the time and place of the hearing and the matters to be considered. Any person affected by the hearing may appear in person to inspect all evidence, examine witnesses, present supporting evidence, and have subpoenas issued to compel the attendance of witnesses and the production of evidence.
Instead of, or in addition to, suspending, revoking, or refusing to renew a producer license, the Director may:
For each unintentional act, impose a civil penalty up to $250 with a maximum penalty of $2,500
For each intentional act, impose a civil penalty up to $2,500 with a maximum penalty of $15,000
Order restitution to any party injured by the licensee
Effect of Suspension or Revocation of License
If a license is revoked, the licensee must deliver the license to the Director and may not be issued another license for at least 1 year. The person must requalify for licensure when seeking another license.