Insurance regulations

When can the Commissioner or Director examine insurers?

Whenever deemed necessary, but at least once every few years (please check your state regulations for specific time requirement)

Who is an insurance agent?

A person authorized to sell, solicit and negotiate insurance contracts

If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?

Cease and desist order

Who must be notified of a producer's change of address?

Department of Insurance (Commissioner/Director/Superintendent)

Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Discrimination

To whom may a certificate of authority be issued

To an insurer authorized to transact business in this state

Who can usually be granted a temporary license?

Producer's spouse or designee in case the licensed producer dies or becomes disabled

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer

Authorized or admitted

What type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

Twisting

When is controlled business legal

When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state)

Who is considered a nonresident agent

An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state

If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?

Defamation

What are agents/producers required to do in order to renew their license?

Complete continuing education hours and pay a renewal fee

Who may share in the commission from the sale of a life insurance policy?

Only producers properly licensed for the type of insurance transaction

What is controlled business?

Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates

What is the purpose of a cease and desist order

To prevent a producer or insurer from further violating laws for transacting insurance

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

Misrepresentation

In general, who can be excluded from producer licensing and examination requirements?

Insurance company officers, directors, or any other employees who do not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive or clerical).

What are the most common penalties for violations of insurance statutes?

A cease and desist order, a fine, and license suspension or revocation

Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?

No, advertising of the existence of the guaranty association for the purposes of solicitation and sale of insurance policies by insurers is an illegal business practice.

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?

Misrepresentation

An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?

Rebating

For what reason can a temporary license be issued

For continuation of business in case the licensed producer dies or becomes disabled

If an insurer holds a Certificate of Authority, it is known as what type of insurer?

Authorized or admitted

Who must be a member of insurance guaranty associations?

Any authorized insurer within a state

What is the purpose of insurance guaranty associations?

To protect policyowners, insureds and beneficiaries from financial losses caused by insolvent insurers

Who is responsible for the costs associated with the examination of insurers?

The insurer who is being examined

The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?

Fiduciary

What type of licensee represents the insured?

Broker

What type of licensee represents the insurance company?

The agent