Unit 23 Flashcards
Fraternal Benefit Societies
any not-for-profit society with capital stock and conducted solely for the benefit of its members.
Can provide: death benefits, endowment benefits, annuity benefits, disability benefits, hospital/medical/nursing benefits.
Commissioner’s Duties
- overseeing law execution
- furnishing necessary reporting forms
- reviewing annual statements
- conducting investigations of all domestic insurers
at least once every 5 years - reporting any violations of insurance laws to the
attorney general
Commissioner: Examinations/Investigations
- can conduct hearings/investigations
- can arrest people he believes are violating
insurance laws - must give 10 days written notice of all hearings
- insurers must be examined at least once every 5
years - examinee must pay charges for
exam - commissioner can bring civil action if they
don’t
Injunctions
- can apply to the courts to give a restraining order
and injunction. - conviction = adjudication of guilt, a plea of guilty,
or a plea of nolo contendere. - a conviction automatically suspends the insurer’s
license.
It is expected that the following will be accurately recorded for every policy and renewal…
- policy number
- date of business
- term
- amount insured
- premium
- owner
Violations result in licenses suspended or revoked for 1-6 months.
Second offense results in 1 year.
Books and papers
books must be exhibited to the commissioner upon demand. refusal to do so can result in license suspension or revocation. the person would also be guilty of a class 1 misdemeanor.
Fraudulent claims and embezzlement
- anyone who does makes fraudulent claims is
guilty of a felony. - any producer who embezzles any money received
as a producer is guilty of a felony. - anyone who knows of this happening has to tell
the commissioner.
Penalty for false statements
- if done = guilty of perjury.
- the entity involved is subject to a fine between $2k
and $10k.
Notification requirements
- if licensee changes address or email, has 10
business days to notify. - if they don’t they could owe a $50 administrative
fee. - if licensee is convicted of anything other than a
vehicle infraction, they have 10 days to notify.
Penalties and restitution
- if commissioner finds a violation, he can do a
couple things including petitioning the superior
court for an order directing payment of
restitution. - each day a violation occurs constitutes a separate
violation. - if commissioner orders monetary penalty, will be
between $100 and $1,000.
Complaint records must contain…
- nature of complaint
- insured’s policy or claim number
- disposition of the complaint
the log of complaint must be retained for 5 years.
Can’t discriminate by…
- refusing to issue or renew, limit the amount,
extent, or kind of coverage; or - charging an individual a different rate for the
same coverage.
acting without a proper insurance license =
class 1 misdemeanor
Binders as evidence of insurance
binder = a temporary written insurance contract
- is limited to 60 days;
- includes all standard provisions and
endorsements of the insurance contract; and
- includes a provision that it may not be cancelled
within the terms of the binder without 10 days’
notice to the mortgagor.
Proof of loss forms
if an insurer does not furnish a form within 15 days, then the claimant is considered to be in full compliance regarding proof of loss
an insurer or producer may accept payment of an insurance premium by credit card if the insurer…
- complies with the prohibition against unfair
discrimination; and - pays the fees charged by the credit card company
for the payment of premiums by credit or debit
card.
a producer may be licensed for the following lines of insurance:
- accident and health or sickness
- casualty
- limited lines
- life
- personal lines (property and casualty coverage
sold for noncommercial purposes) - property
- variable life and annuity
Restricted licenses
ie commissioner may grant restricted licenses to rental car companies to provide insurance on rental vehicles.
Only:
- excess liability
- accident and health
- personal effects insurance may be offered
coverage for 30 days or less
to appoint an individual as its agent, the appointing issuer should…
file a notice of appointment within 15 days after the first insurance application is submitted
a nonresident may receive a NC nonresident producer license if…
- they are currently listed as a resident in state.
- submitted a request for license.
- submitted a copy of the license application to the
home state or completed Uniform Application
form; and - their home state awards nonresident producer
licenses to NC residents on a reciprocal basis.
an individual who applies for an insurance producer license in NC who was previously licensed for same kind of insurance in their home state is not required to complete any pre-licensing education or exam if…
- applicant is currently licensed in the applicant’s
home state. - the application is received within 90 days after the
cancellation of the applicant’s previous license
and the applicant’s home state certifies the
applicant was in good standing; or - the home state’s data base confirms their good
standing.
a person licensed as an insurance provider that moves to NC who wants to be licensed must apply within…
90 days of establishing legal residence
License surrender
must return the license back to the commissioner within 30 days after terminating residency
Notice of cancellation
an insurer that terminated the appointment, employment, or contract of a producer must notify the commissioned within 30 days after the effective date of termination.
Within 15 days after notifying the commissioner, the insurer must mail a copy of the notification to the producer.
Within 30 after receiving the notification, producer may file written comments with the commissioner.
Temporary licenses
- for up to 180 days without requiring an
examination
Restricted licenses are reviewed
annually
Limited licensee
commissioner may issue a limiited license to a rental car company or agency enabling it to sell certain coverages related to the rental of motor vehicles
No agent can adjust a loss when…
the agent’s compensation depends on the adjustment of the loss
Twisting
a licensee may not make any statement willfully misrepresenting any insurance policy for the purpose of inducing a policyholder to terminate or surrender any policy.
Unauthorized insurers
licensed producers or limited representatives may not solicit insurance in NC for companies not authorized to do business in the state.
an insurer may not pay and a producer may not accept any commission if unlicensed or improperly appointed.
Producers for insurers who write credit insurance in connection with loans may not…
keep any funds received for the payment of losses incurred under the policy
Producer liability
a person who unlawfully solicits, negotiates, or sells insurance for an unauthorized insurer is guilt of a Class 1 misdemeanor if the person did not know that the insurer was unauthorized.
a violation is a Class H felony if the person knew or should have known that the insurer was unauthorized.
a producer who knowingly obtains a premium by fraudulent representations is guilty of…
a Class 1 misdemeanor
False representations in insurance applications are a…
Class 1 misdemeanor
a producer who signs any blank policy is guilty of…
an misdemeanor and, upon conviction, may be punished by a fine of between $1k and $5k
a producer or limited representative who solicits an insurance application is regarded as..
representing the insurer and not the insured or the insured’s beneficiary.
Penalties for violations
Class 1 misdemeanor
the purpose of the Insurance Information and Privacy Protection Act is
to establish standards for the collection and use of information gathered by insurers and producers
consumer report
any written, oral, or other communication of information bearing on a person’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living that is used in connection with an insurance transaction.
a consumer reporting agency is any person who
- regularly engages in the practice of assembling or
preparing consumer reports for a monetary fee. - obtains information primarily from sources other
than insurance institutions; and
furnished consumer reports to others.
declination of insurance coverage
a denial, in whole or in part, by an insurance institution or producer of requested insurance coverage.
an individual is…
any natural person who is past, present, or proposed named insured or certificate holder, or past or present applicant or claimant.
an investigative consumer report is…
a consumer report or portion thereof in which information about a natural person’s character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with the people that the person knows.
termination of insurance coverage or insurance policy is either…
cancellation or nonrenewal of an insurance policy, in whole or in part, for any reason other than the failure to pay a premium as required by the policy.
in the case of an insurance application, notice must be provided no later than
- the policy delivery date when personal
information is only collected fro the applicant or
public records; or - the date when personal information is collected
from a source other than the applicant or public
records.
in the case of a policy renewal, a notice must be provided no later than…
the policy renewal date
(however, no notice is required in connection with a policy renewal if personal information is collected only from the policyholder or public records, or if a notice has been given within the previous 24 months)
in the case of a policy reinstatement or change in insurance benefits…
a notice must be provided no later than the time a request for a policy reinstatement or change in insurance benefits is received by the insurer.
(however, no notice is required if personal information is collected only from the policyholder or from public records)
policy renewal/reinstatement notice must state…
- permission for personal information gathering.
- the types of personal information that may be
collected. - the circumstances under which certain disclosures
may be made without prior authorization; and - a description of the person’s rights.
an insurer or producer must correct, amend, or delete personal information about the individual within…
30 business days from the date of request or notify the individual of its refusal to make the correction/amendment/deletion and the reasons for the refusal.
an insurer or producer must not disclose…
- any personal or privileged information about an
individual unless the disclosure is with the dated
and signed written authorization of the individual
and is within the year; or - credit card account numbers to any institution,
other than to a consumer reporting agency, for
use in telemarketing, direct mail, or electronic
marketing programs.
a person who violates a cease and desist order may be subject to…
- a fine of no more than $10k for each violation
- a fine of no more than $50k if the violations
constitute a general business practice; or - license suspension or revocation.
unfair methods of competition and unfair or deceptive acts or practices in NC include:
- misrepresentation
- defamation
- actions that could lead to monopoly
- false financial statements
- issuing securities as an inducement to buy
insurance - unfair discrimination
- rebates
- soliciting unauthorized insurance contracts in
other states - twisting
- unfair claim settlement practices
a person who willfully engages in an unfair claims practice or unfair method of competition must pay the commissioner…
between $1k and $5k for each violation
a person who attempts to obtain anything of value from another by false pretenses with the intent to cheat or defraud is guilty of:
a felony
