Unit 1: General Insurance Terms and Related Concepts | Chapter 1-3: Producers Flashcards
If an insurance company provides an individual with forms or other materials, (e.g. business cards, letterhead, etc.), a court of law may hold that:
a) the company is acting as an insurance consultant.
b) the insurer is expected to issue the individual an insurance policy.
c) the individual must return the materials to the company.
d) a presumption of agency exists.
If an insurance company provides an individual with forms or other materials, (e.g. business cards, letterhead, etc.), a court of law may hold that:
a presumption of agency exists.
Presumption of Agency exists if an insurance company supplies an individual with forms and other materials (business cards, letterhead, signage, etc.) that make it appear that the individual is an agent of the insurer. In this situation, a court of law would generally hold that a presumption of agency exists, thereby binding the insurer to the acts of the individual, whether or not the specific authority has been granted.
An insurance producer is a/an __________ , representing the insurance company in the insurance transaction.
a) admitted consultant
b) independent solicitor
c) client broker
d) appointed agent
An insurance producer is a/an __________ , representing the insurance company in the insurance transaction.
appointed agent
An insurance company is authorized (admitted). Insurance producers are then appointed by the insurer to represent them (the insurer) in the insurance transaction.
A licensed insurance adjuster is authorized to adjust claims:
a) on behalf of or against the insurer
b) on behalf of a claimant and the insurer
c) on behalf of the insurer only
d) on behalf of a claimant only
A licensed insurance adjuster is authorized to adjust claims:
on behalf of or against the insurer
A licensed insurance adjuster is authorized to adjust claims on behalf of or against an insurer. An employee of an insurer is not required to be licensed as an insurance adjuster, but is only authorized to adjust claims on behalf of the insurer.
Licensed Insurance Consultants contract with clients and give them advice and/or make recommendations relative to insurance for __________ .
a) business referrals
b) a fee
c) free
d) producer license credit
Licensed Insurance Consultants contract with clients and give them advice and/or make recommendations relative to insurance for __________ .
a fee
- Licensed Insurance Consultants contract with clients and give advice and/or make recommendations relative to insurance for a fee.*
- NOTE: A licensed insurance producer cannot charge a fee for giving insurance advice unless they are also a licensed insurance consultant. An insurance producer may only be compensated by commission.*
A surplus lines producer is authorized to place insurance with:
a) an insurance consultant.
b) non-admitted insurers.
c) the state insurance Guaranty Association.
d) a Lloyds Association.
A surplus lines producer is authorized to place insurance with:
non-admitted insurers.
- Surplus lines insurers are not required to be admitted (authorized), but only a licensed surplus lines producer may place insurance with one of these companies, referred to as non-admitted insurers. Surplus lines companies specialize in certain types of insurance, e.g. aviation insurance, auto racing, etc.*
- To be eligible for a surplus lines license, the insurance producer must have and maintain the property and casualty license.*
To qualify as an insurance consultant, the applicant must meet each of the following EXCEPT:
a) Five years of experience and demonstrate maintenance of $750,000 of Errors and Omissions insurance.
b) Maintain a minimum of $500,000 of Error and Omission insurance.
c) Five years of experience or the equivalent educational background.
d) Develop a disclosure document discussing qualifications, nature of work, and fee schedule.
To qualify as an insurance consultant, the applicant must meet each of the following EXCEPT:
Five years of experience and demonstrate maintenance of $750,000 of Errors and Omissions insurance.
Watch out for these EXCEPT questions. The requirement is $500,000, not $750,000 of E&O insurance.
Which one of the following is an appointed agent of an insurance company NOT authorized to do?
a) Underwrite or approve an application on behalf of the insurer
b) Countersign policies to validate coverage
c) Solicit and sell insurance on behalf of the insurer
d) Service existing accounts
Which one of the following is an appointed agent of an insurance company NOT authorized to do?
Underwrite or approve an application on behalf of the insurer
An appointed agent submits an application to the insurer for review and approval by a staff underwriter. An appointed agent doesn’t approve applications on behalf of the insurer.
Under the “law of agency,” acts of the insurance producer (appointed agent) are considered:
a) Acts of the principal, but only if specifically authorized by the principal.
b) Independent actions of the producer.
c) Immaterial.
d) Acts of the principal (insurer).
Under the “law of agency,” acts of the insurance producer (appointed agent) are considered:
Acts of the principal (insurer).
Acts of the principal (insurer). An appointed agent is considered to be acting on behalf of the insurer.
What is the authority that gives the appearance of authority to act, but is not necessarily true?
a) Implied Authority
b) Express Authority
c) Absolute Authority
d) Apparent Authority
What is the authority that gives the appearance of authority to act, but is not necessarily true?
Apparent Authority
- Apparent Authority. Remember the binder. An appointed agent may issue a binder, which provides temporary coverage only, allowing the insurer the opportunity to evaluate (underwrite) the risk. The applicant, however, will generally view the binder as immediate and ongoing insurance*.
- Apparent Authority gives the appearance of authority, but is not necessarily the case.*
What is the authority granted by an agency agreement?
a) Absolute Authority
b) Implied Authority
c) Apparent Authority
d) Express Authority
What is the authority granted by an agency agreement?
Express Authority
Express Authority. This is the authority granted or expressed by the agreement between the insurance company and the appointed agent.
A __________ is someone who works for an agent or broker to obtain clients. This is a limited class license.
consultant
solicitor
sub-broker
transaction agent
A __________ is someone who works for an agent or broker to obtain clients. This is a limited class license.
solicitor
A solicitor works for an agent or broker in obtaining clients for the procurement of insurance products.
An insurance producer has a __________ responsibility to an applicant for insurance and to existing policyholders and beneficiaries.
absolute
legal
fiduciary
ethical
An insurance producer has a __________ responsibility to an applicant for insurance and to existing policyholders and beneficiaries.
fiduciary
As an insurance producer, you handle insurance company money, which involves a fiduciary responsibility. However, clients look to their agent to provide them with appropriate insurance recommendations, which is also fiduciary in nature.
What is the authority a producer is assumed to have for the conduct of business on behalf of the insurer, and may be referred to as that authority because of the inaction of the insurer?
a) Absolute Authority
b) Implied Authority
c) Apparent Authority
d) Express Authority
What is the authority a producer is assumed to have for the conduct of business on behalf of the insurer, and may be referred to as that authority because of the inaction of the insurer?
Implied Authority
Implied Authority is sometimes viewed as an extension of express authority. It is authority not expressed in the agreement, but considered good business and may in fact exist because of the insurer’s inaction; in other words, they don’t stop us from doing it, because it is good business.
To be eligible to become a surplus lines producer, the individual must have and maintain a/an:
a) nsurance adjuster license.
b) property and casualty license.
c) home office.
d) financial planner designation or title.
To be eligible to become a surplus lines producer, the individual must have and maintain a/an:
property and casualty license.
A prerequisite for a surplus lines license is a valid property and casualty (P&C) license. A P&C license is also referred to as a General Lines license.
All coverage placed in the surplus lines market must be placed through a licensed:
a) surplus lines producer.
b) commercial lines insurance agent.
c) insurance adjuster.
d) appointed principal.
All coverage placed in the surplus lines market must be placed through a licensed:
surplus lines producer.
All coverage obtained in the surplus lines market must be placed through a licensed surplus lines producer. A surplus lines producer is authorized to place insurance with non-admitted insurers but only if the coverage is not available in the regular market, where it could have been placed with an authorized insurer.
