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Title Insurance Producer Independent Contractor Exam > State Regulations > Flashcards

State Regulations Flashcards

1
Q

General Powers of the Commissioner

A

Appointed by the governor, serves a four year term, and is responsible for the administration and enforcement of the Maryland Code and COMAR through licensing process

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2
Q

Commissioners powers

A

approve licensing applications, certificates of qualifications and certificates of authority

renew, non-renew, suspend and revoke licenses

investigate complaints related to violation of the Code or COMAR conducting hearings and making requests to the Attorney Generals Office for prosecution

assess fines against violators of the insurance code and regulations

regulate and monitor rates, rating plans and forms to ensure fairness

collect fees

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3
Q

The Commissioner of Insurance enforces regulations to protect consumers in the following ways

A

regulating title insurance companies, insurers and producers

investigating consumer complaints related to insurance

conducting audits of insurance companies to ensure solvency

conducting examinations to ensure compliance with Maryland’s insurance laws

investigating acts of insurance fraud

reviewing and approving rates and contracts forms

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4
Q

An insurer may not

A

appoint, employ or receive business from an individual unless that person is licensed

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5
Q

To appoint a producer as an agent

A

the appointing insured must notify the Commission of the appointment

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6
Q

All insurers authorized to transact insurance must maintain

A

a producer register of appointed producers

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7
Q

A licensed insurance producer who has been appointed by an insurer must

A

maintain documentation of the insurers that have been appointed to the producer

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8
Q

The producer registry must be

A

updated within 30 dats of an appointment

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9
Q

Law firms that have been appointed as a principal agent must

A

be included in the producer registered maintained by the insurers

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10
Q

Title insurance producers must report

A

any final adverse administrative action or felony convictions within 30 days of final disposition to the Commissioner

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11
Q

Insurers are required every 31 days to check on

A

whether any disciplinary actions has been taken against their agents

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12
Q

How many days of notice is required to the producer of an anticipated termination

A

15 day notice

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13
Q

The regulation of trade practices in insurance in Maryland are

A

in accordance with McCarran-Ferguson Act

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14
Q

What is misrepresentation

A

leading someone to believe that there is a benefit to an insurance contract that doesn’t exist

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15
Q

Misrepresentation - false advertising

A

a deceptive practice to publish false information when advertising insurance services

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16
Q

Misrepresentation - twisting

A

when an insured misrepresents the benefits, terms, and conditions of one policy to induce the consumer to forfeit, surrender, drop or allow existing coverage to lapse in order to purchase new coverage

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17
Q

Misrepresentation - Premium Rebating

A

when an insurer producer pays or gives something of value as an inducement to enter into an insurance contract or after the insurance has become effective

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18
Q

An insurance producer may not knowingly pay or give as an inducement:

A

a premium rebate
a special favor or advantage in benefits of a policy
paid employment or a contract for services
anything of value

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19
Q

Promotional items and marketing materials valued at less than

A

$50 may be offered

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20
Q

Gift cards, prizes, raffle tickets and any other items of value

A

may not be offered as an incentive to entice consumers to enroll in an insurance plan

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21
Q

What are kickbacks

A

an unauthorized payment or fee given to someone for a favor for the referral of settlement business

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22
Q

Examples of kickbacks

A

payments, commissions, gifts, tangible item, special privileges

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23
Q

Defamation

A

when an insurance producer makes an oral or written statement that is false and malicious about a person engaged in the insurance business

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24
Q

Unfair discrimination occurs when

A

an insurer limits coverage to an insurance applicant because of race, sex, color, creed or national origin, age, handicap, residence or occupation

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25
Q

Unfair discrimination may include:

A

failure to issue a policy

failure to set a rate

failure to charge a fair fee, rate or premium

26
Q

Unfair Claims Settlement Practices Statute

A

provides assurance that consumers are treated fairly when making insurance claims

27
Q

Rate must be

A

be adequate, not excessive and not unfairly discriminatory

28
Q

Rate filings must be

A

filed with the Commissioner for approval

29
Q

Escrow

A

a system of document transfer in which a deed, funds, or other property is delivered to a third person to hold until all conditions to a contract are fulfilled

30
Q

Escrow agent or title agent are charged with

A

the obligation of safeguarding funds and documents received from a lender

31
Q

Escrow agent duties

A

follow instructions given by the lender, contract or parties to the transaction in a timely manner

handling funds and/or documents in accordance with the instructions

paying bills as instructed and authorized

responding to requests from the principals

preparing the closing or settlement statement

disbursing funds when all terms are satisfied in accordance with instructions and providing accounting for same

conduct settlements in according with lenders instructions and underwriter’s guidelines

should not disburse funds until all escrow conditions are met

32
Q

What is a trust account

A

an escrow account is a trust account

33
Q

Each controlling person and each trust money controller shall

A

hold a license to act as a title insurance producer

34
Q

Penalty for misappropriating trust money is

A

$50k penalty, imprisonment for up to one year or both

A title insurance producer that willfully or knowingly misappropriates trust money is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $50k or imprisonment, not exceeding one year or both

35
Q

Attorneys are required to

A

maintain an attorney trust account for all trust money deposits. trust money may be deposited into an IOLTA account

36
Q

When an escrow agent agrees to hold trust money in escrow for a residential real estate transaction the escrow agent must

A

enter into a written agreement with the purchaser and seller of the residential real estate. This requirement applies to:

real property improved by four or fewer single-family dwelling units that are intended for human habitation and unimproved real property zoned for residential use by local zoning authority

37
Q

Escrow agreement must contain

A

amount of the trust money entrusted to the escrow agent

the date the trust money was entrusted to the escrow agent

the responsibility of the escrow agent to notify the purchaser and seller of trust money returned due to dishonored funds

the conditions under which the escrow agent may release the trust money

the process to address disputes over the release of the trust money

38
Q

Settlement Requirements/ Wet Settlement Act

A

Maryland law requires lenders to provide funding/proceeds for purchase money loans on or before the closing date and in accordance with the loan documents, to the agent responsible for settlement

39
Q

An insurer or insurance producer is prohibited from

A

paying a commission or other valuable consideration to a person for selling, soliciting or negotiating insurance if that person is not licensed

Individuals are prohibited from accepting a commission, fee or other valuable consideration for selling, soliciting or negotiating insurance if that person is not licensed.

40
Q

Commissions must be

A

paid to insurance producers for procuring business

41
Q

MAHT (Maryland Affordable Housing Trust)

A

promotes affordable housing for households with income less than 50% of the median income

42
Q

In cases of MAHT, Maryland law authorizes

A

a title insurer or its agent must pool and commingle trust money received from clients or beneficial owners in connection with escrows, settlements, closings, or title indemnifications if interest received on deposits is not greater than $50

43
Q

Escheatment

A

When title companies attempt to locate the owner of a property, including funds held in escrow, and the owner cannot be found during a three period (dormancy period), the funds will be considered abandoned and must be transferred to the state an unclaimed property

44
Q

What is the dormancy period for escheatment

A

three years

45
Q

Retained premiums are negotiated between

A

title insurance underwriters and settlement agents

46
Q

Premium calculations are

A

tiered basis. calculations are based on purchase price and/or loan amount

47
Q

title insurance premium is

A

the compensation collected by the title agent on behalf of the underwriter

48
Q

A simultaneous issue rate is

A

a discount given when an owner’s policy and lender’s policy are purchased at the same time and issued from the same title commitment. This allows a borrower to pay a reduced premium on the second policy

49
Q

Re-issue rate is

A

a discount or credit given to a purchaser of a policy. It occurs mostly in refinance transactions as opposed to purchase transactions. If an owner’s policy or prior owner’s policy is presented to the title company, a discount is given because of the prior coverage

50
Q

In Maryland, the discount rate for a reissue rate is

A

usually 40%

51
Q

Title companies must retain copies of

A

the statutory notice regarding title insurance executed by buyers for at least three years

52
Q

Title agents are required to

A

notify buyers of their right to obtain simultaneously with a loan a title insurance policy designed to insure the status of title. The notice provides the mortgagor with the amount of the policy, the premium amount and the name of the title insurance company issuing the coverage. The mortgagor has the option to purchase or decline the title insurance. The person receiving the premium (title insurer or agent) must retain the original signed statement of receipt of the notice and copy of the notice for three years

53
Q

Delivery of insurance policy

A

a title insure is required to deliver a policy to a consumer once the premium is paid

54
Q

On annual basis a title insurer must

A

conduct an on-site or remote review of the underwriting , claims and escrow practices of each agent

55
Q

If an examination of books and records reveals that

A

the title agent has not been maintaining separate bank or trust accounts for each insurer that it represents, it is responsibility of the insurer to verify that the funds held on its behalf are reasonably ascertainable from the books of account and records of the agent

56
Q

A title insurer shall

A

notify the Commissioner in writing within 2 calendar days if a title insurer has reason to believe that a principal agent has converted or misappropriated money received or held in trust in addition to filing any required report

57
Q

Notification of Prohibited Conduct

A

a title insurer has reason to believe that the principal agent has engaged in or is engaging in conduct that is prohibited by insurance article insurer shall notify the Commissioner in writing within 10 calendar days after obtaining such knowledge or belief

58
Q

If a title insurer has reasonable cause to believe that the title insurance producer or agency engaged in activities prohibited by Section 10-126 of insurance article the

A

title insurer must file the report with the Commissioner within 45 days after the completion of the reivew

59
Q

Commissioner or their designee may

A

examine the accounts, records, documents and transactions that relate to the insurer or producer to verify financial status and ensure compliance with the law

60
Q

Title insurance agents are required to

A

maintain sufficient records of its affairs including escrow operations and escrow trust accounts so that the Commissioner may ensure that the title insurance agent is complying with the law

61
Q

Underwriters may impose

A

file retention requirements, especially when the agent is acting in the capacity of a closer

62
Q

Privacy policy must be disclosed to

A

consumers at least once a year

Title Insurance Producer Independent Contractor Exam (11 decks)

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