Unit 9 Agent Licensing & Marketing Practices

Question 1

is to approve the issuance of licenses to agents, customer representatives, and claims adjusters, after having satisfied itself that the applicant is, in good faith, qualified to write and service or adjust claims on property and casualty insurance.

Answer 1

Department of Financial Services (DFS) Division of Agent and Agency Services

Question 2

paying a rebate of premium in the form of money or other compensation associated with the sale or solicitation of insurance.

Answer 2

Unlawful Rebating

Question 3

the objective of the license is not for the issuance of controlled business, that is to say, for the sale specifically to the license holder, the holder’s friends, family, or any entity associated with the license holder. The license is issued for the holder to engage the insuring public in general for solicitation, sales, and service.

Answer 3

Controlled Business

Question 4

– an agent license enables the holder to solicit, sale, and service insurance as prescribed by license type (e.g. 20-44 License is specifically for solicitation, sales, and servicing of Personal Lines of Property and Casualty Insurance).

Answer 4

Agent License

Question 5

– an adjuster license enables the holder to work on behalf of an insurance company or adjusting firm to adjust a claim per the requirements of the insurance policy (e.g. 6-20 Licensee would determine that amount of loss, reason for loss, review policy coverage and conditions and make a claim’s negotiation, offer, payment and/or settlement based upon the nature and amount of the loss and the insurance contract coverages and conditions).

Answer 5

Adjuster License

Question 6

– an agency license is required by the department for the operation at any location that an agent engages in the business of insurance (branch locations are allowed to operate under the main agency license).

Answer 6

Agency License

Question 7

As regards “REFERRAL FEES”, which if any of the following are true?

Answer 7

the statute explicitly prohibits payment to any unlicensed person any fee or compensation for a referral and no referral fee or commission can be paid to a licensed entity if the offer of referral is conditioned upon a sale.

Question 8

• at lease 18 yrs old
• US citizen/ legal alien lawfully permitted to work
• Florida resident
• not for “controlled business”
• has met pre-licensing education / eperience req
• has passed any required exam for license
• must pass a background check undertaken by
  dept

Answer 8

Licensing Requirements

Question 9

• continuing Education
• communicating with the dept
• record keeping
• criminal & Administrative Actions
• Appointments

Answer 9

maontaining a License

Question 10

The department requires a “5-Hour update” course every two (2) years.
The department requires an additional nineteen (19) hours in elective subject matter every two years for a total of twenty-four (24) hours every two (2) years.

Answer 10

Continuing Education

Question 11

The department requires a notice of change within ____ days of any of the following –

• Name Change
• Residence Address
• Principal Business Address
• Mailing Address
• Phone Numbers
• Email Address

Fines for failure to notify the department –

• $250 for the first offense
• $500 for a subsequent offense

Answer 11

30 days

Question 12

are individuals or organizations that are required to operate under the duties of good faith and fair dealing

Answer 12

Fiduciaries

Question 13

Fiduciary responsibilities are both _____ (as required by law) and _____ (implied from the relationship).

Answer 13

legal & ethical

Question 14

_______________ penalties:

(1) Licensees are precluded from any/all unfair methods of competition and/or unfair or deceptive act or practice involving the business of insurance.
(2) Any licensee who violates the law shall be subject to a fine in an amount not greater than $2,500 for each non-willful violation and not greater than $20,000 for each willful violation.

Answer 14

Unfair trade practices

Question 15

is the unlawful boycott, coercion, and intimidation in the business of insurance.

Answer 15

Coercion

Question 16

_________ includes –
- unfair methods of competition
- unfair or deceptive acts or practices
- misrepresentations and false advertising of
insurance policies
- misrepresentations of the benefits, advantages,
conditions, or terms of any insurance policy
- misrepresentations of the dividends or share of
the surplus to be received on any insurance policy
- knowingly making a false statement or
representation on an application or negotiation for
an insurance policy
- knowingly making a material omission in the
comparison of a life, health, or Medicare
supplement insurance replacement

Answer 16

Misrepresentation

Question 17

Misrepresentations and ___________ of insurance policies is evidenced if any of the following are misrepresented or falsely advertised: (this is a small sub-list from the statutes) –

• benefits, advantages, conditions, or terms of any
  insurance policy
• dividends or share of the surplus to be received
  on any insurance policy
• dividends or share of surplus previously paid on
  any insurance policy
• misrepresents any insurance policy as being
  shares of stock
• false information and advertising generally which
  is untrue, deceptive, or misleading

Answer 17

false advertising

Question 18

A false statement intended to deceive the insurer and induce it to part with something of value or surrender a legal right.

EX:
- knowingly making, publishing, disseminating,
circulating any false material statement
- knowingly making any false entry of a material fact
in any book, report, or statement of any person
- any agent, physician, claimant, or other person
who causes to be presented to any insurer a false
claim for payment
- any agent who represents any insurer without the
authority of the insurer

Answer 18

Fraud

Question 19

transactions are those for which the agent has a business, family, or pecuniary interest in or for which the agent is associated or bears an interest in.

Florida law precludes an agent from obtaining an insurance license if more than 50% of the agent’s income is anticipated to come from controlled business.

Answer 19

Controlled Business

Question 20

is characterized by the usage of policy values in an existing life insurance policy to purchase another insurance policy with that same insurer for the purpose of earning additional premiums, fees, commissions, or other compensation for the insurance agent.

• Where no benefit to the policyholder is evident
• Agent is held to be responsible of misleading the
  insured
• No disclosure to insured of the reduction in cash
  value in original policy
• No disclosure of future unanticipated cost or the
  elimination of a future benefit

Answer 20

Churning

Question 21

is the misrepresentation by a licensee as to the advantages and disadvantages among two policies for the sole purpose of making a sale of the one over other.

• when an agent is attempting to displace a currently held policy from another agent with one the agent is selling.
• agent or customer representative misrepresenting a “new option” to a current customer most often for the purposes of increased sales commission.

Answer 21

Twisting

Question 22

Twisting normally involves a policy replacement from a different insurance company with increased commission as the motive.
Churning normally involves a policy replacement that is from the same insurance company; again the motive is increased sales commission.

Answer 22

Twisting versus churning –

Question 23

Twisting normally involves a policy replacement from a different insurance company with increased commission as the motive.
Churning normally involves a policy replacement that is from the same insurance company; again the motive is increased sales commission.

Answer 23

Twisting versus churning –

Question 24

_______ requirements –

• Misrepresentation of policy features, benefits, true cost.
• Detriment to the insured when relying on the misrepresentations by the agent or customer representative.

Answer 24

Twisting

Question 25

is an informal way to settle a claim between the insured and the insurance company

• involves the use of a neutral third party to encourage and assist in the settlement of the claim
• In Florida mediation is a policyholder right which can be exercised if the policyholder has a property claims dispute which exceed $500.

Answer 25

Mediation

Question 26

is used to resolve differences between the insured and insurance company when there is a dispute as to the amount of loss in a claim.

• provides for the insured and insurance company to each select an appraiser
• for the two appraisers that were selected to then select a third appraiser with agreement by any two of the three appraisers considered binding

NOTE: The Appraisal Clause/Condition only applies to the amount of loss in a claim, and does not address questions to whether a loss has occurred or if the loss is covered by a given policy.

Answer 26

The Appraisal Clause

Question 27

Agents are not permitted to pay, allow, give, or offer to pay to an insured directly or indirectly any ___________________ to purchase any policy of insurance.

Answer 27

inducement

Question 28

Florida statutes preclude _______________ acts, competition, and practices.

Answer 28

deceptive

Question 29

What is a Personal Lines Agent guilty of who pays a portion of their commission to an insured so the insured will buy insurance from the agent?

Answer 29

rebating

Question 30

A written false statement that is damaging to another person’s reputation.

Answer 30

Libel

Question 31

A spoken false statement that is damaging to another person’s reputation.

Answer 31

Slander

Question 32

The misrepresentation by an agent as to the advantages and disadvantages among two policies for the sole purpose of making a sale of the one over other.

Answer 32

Twisting

Question 33

The sales practice of replacing one insurance policy for another with no apparent benefit to the insured and most notably done for the sole benefit to the insurance agent making the sale (e.g. agent’s commission).

Answer 33

Churning

Question 34

Solicitation or inducement, preliminary negotiations, or effectuation of a contract of insurance.

Answer 34

Transacting Insurance

Question 35

Customer representatives ____ share in commissions with a licensed insurance agent.

Answer 35

may

Question 36

Licensees ______ share commission with a corporation if it is a licensed insurance agency.

Answer 36

may
NOTE:
- Licensees may share commission with a corporation if it is a licensed insurance agency.
- Licensees may not share commission with a corporation if it is not a licensed insurance agency.