Property & Casualty Insurance

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Property & Casualty Insurance
2013-12-15 02:24:12
Insurance Regulation

P & C Insurance Prep
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  1. To assure the public that only competent trustworthy individuals and other entities sell insurance and to protect and promote the public interest.
  2. a contract under which on party undertakes to pay another against loss of a specified contingency or peril
  3. the three people involved in insurance
    • insurer (company),
    • insured (client),
    • producer (me)
  4. any individual who is required to be licensed under Louisiana law to solicit, sell, negotiate, bind, procure or renew insurance
    individual producer
  5. any business entity required to be licensed under Louisiana law to solicit, sell,negotiate, bind, procure or renew insurance.
    business entity producer
  6. a  ______ includes a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity
    business entity producer
  7. one who resides in Louisiana or maintains a principal place of business in Louisiana.
    Resident Producer
  8. a _____ license will be void if licensee ceases to be a resident of Louisiana
  9. a resident producer must surrender license within _____ days by U.S.P.S or in person
  10. licenses are issued to an applicant if he/she maintains a similar license in the U.S., Canada or another country
    nonresident producer
  11. a person who is currently licensed as a resident in another state and in good standing in their home state can receive a _______ license.  their home state must also award this license to to producer in Louisiana
    nonresident producer
  12. The Commissioner of Insurance may issue a temporary license for a period not to exceed _____.
    180 days
  13. An Expiration license is issued for a period of ______.
    2 years
  14. _____ hours of continuing education are needed to renew a producers license.
  15. _____ carryover hours are allowed fro each licensing period.
  16. P&C and L&H are licensed for a _____ year period.
    two (2)
  17. L&H licenses are renewed every ____ numbered year.
    even (2012, 2014, 2016)
  18. P&C Licenses are renewed every _____ numbered years.
    odd (2011,2013,2015)
  19. A P&C License and L&H License is renewed at the end of the ______ for that specific year.
    birthday month
  20. The renewal fee and the penalty fee for P&C and L&H is _____.
  21. When a license has lapsed for more than _____, license will be renewed only by _____ for issuance of a _____.
    • 5 year
    • the fulfilling all the requirements
    • new license
  22. When a P&C and L&H license lapses within 5 years, fulfilling the _____ and paying a fee will renew the license.
    continuing education requirements
  23. The continuing education requirement for license renewal _____ to any person age _____ and older who has _____ years experience as a licensed producer.
    • does not
    • 65
    • 15
  24. Every insurance licensee must notify the Commissioner of any alteration in his or her residence or business address with _____ days  of the change.
    10 (ten)
  25. Failure to file a notification of change of address will result in a ____ penalty per violation.
  26. when a license has lapsed for _____, the license will be renewed by _____ for issuance of a new license.
    • more than five years
    • fullfilling all the requirements for a new license
  27. _____ hours of continuing education are needed to renew a producers license
  28. _____ hours are allowed to be carried over for each licensing period.
    10 (ten)
  29. the continuing education requirements for license renewal does ____ to any person(s) _____ and older AND has at least _____ years experience as a licensed producer
    • not apply
    • 65 years
    • 15

  30. every insurance licensee must notify the Commissioner of any alteration in his/her residence or business address within _____ of the change
    10 days
  31. failure to file a change of address will result in a _____ penalty per violation
  32. the use of non approved trade names will result in a fine not to exceed _____.
  33. if a nonapproved trade name is utilized for _____ or more days after being notified by the Commissioner to cease, the producer will be subject to an additional fine not to exceed _____.

  34. an insurance producer must report any administrative action or law enforcement conviction within _____ days of a final disposition or conviction.
  35. the commissioner of insurance is _____ statewide ever _____ years at the same time as the governor.
    • elected
    • 4 (fours)
  36. a _____ is appointed by the Commissioner as an assistant who may take over in the Commissioner's absence
    Chief Deputy commissioner
  37. the Louisiana Insurance Code
    Title 22
  38. in order to transact insurance business in Louisiana, a corporation must have a _____ issued by the Commissioner of Insurance.
    Certificate of Authority
  39. All insurers in Louisiana must be audited once every _____ years or as often as deemed necessary or requested by the Louisiana Insurance Guaranty Association.
    5 (five)
  40. -Administers and enforces the Louisiana Insurance Code
    -May conduct examinations, investigations, hearings, or other forms of inquiry necessary to properly administer the insurance laws.
    -Initiates legal actions to enforce the Code.
    -May revoke or suspend a license and levy fines.
    Commissioner's Duties and Powers
  41. -Misrepresentation of pertinent facts of a policy
    -Failure to promptly acknowledge, settle a claim, or provide a reasonable explanation for denial
    -delaying the investigation or payment of claims without just cause
    -attempting to settle a claim for less than the amount entitled in insured's policy
    Unfair Claims Settlement Practices
  42. An insurance agent must be _____ in order to act as an authorized producer of that insurer.
    appointed by an insurer
  43. This act requires companies to give consumers privacy notices that explain the institutions information sharing practices and policies.
    Gramm-Leach-Bliley Act (GLB Act)
  44. A method for consumers to limit some - but not all - sharing of their information
    Gramm-Leach-Bliley Act (GLB Act)
  45. Required to be given to consumers concerning the consumers' rights to opt out from a certain amount of sharing of their personal information
    Opt Out Notice
  46. This act states no persons convicted of a felony involving dishonesty or breach of trust can engage in the insurance business without the written consent of the Commissioner of Insurance.
    Federal Violent Crime Control Law Enforcement Act of 1994
  47. to protect the consumer in regard to his/her credit history.
    Federal Credit Reporting Act (FCRA)
  48. this ACT requires that an applicant be advised if a credit report may be requested and be told the scope of the possible investigation.
    Fair Credit Reporting Act (CRA)
  49. An act that allows a consumer access to their credit report and gives them the right to have incorrect information corrected within 6 months.
    the fair credit reporting act (fcra)
  50. -Fair Credit Reporting Act (FCRA)
    -Fraud & False Statements
    -Federal Violent Crimes Control Law Enforsement Act of 1994
    Federal Regulations
  51. Fraud and False Statements

    Under federal law, a person in the insurance business who makes a false material statement or report or who intentionally and materially overvalues land or other securities for insuring purposes will be fined and/or imprisoned up to  ?   years.  If insured's safety and soundness was put in jeopardy, imprisonment may be up to   ?   years.
    • 10 (ten)
    • 15
  52. Insurance written on the interest of the licensee, the licensee's immediate family or licensee's employer or a corporation, the association or partnership the licensee or members of licensee's immediate family is associated.
    controlled business
  53. Exceeds 25% of annual gross business from one account
    controlled business
  54. Insurance license will not be granted or renewed to any person for the sole person of writing _____.
    controlled business
  55. An insurer or insurance producer shall not pay, directly or indirectly, any commission, service fee, or any other valuable consideration to any person or entity for selling, soliciting, or negotiating insurance in this state unless such person or entity holds a valid license as required by law.
    shared commissions
  56. Convicted violators of shared commissions: grounds for immediate suspension or revocation of license and subject to a fine not less than _____ dollars nor more than _____ dollars, or imprisonment for up to _____years, or both.
    • $1,000
    • $5,000
    • 2 years (two)
  57. charging different rates to person in the same risk class; however, consideration may be given to the nature of the risk, the plan of insurance, and other relevant factors.
    unfair discrimination
  58. financial records with the intent to deceive
    false financial statements
  59. Offering or paying premium rebates or anything or value as an inducement to buy insurance
  60. the circulation of false or maliciously critical information about an insurer
  61. Insurance company deceivingly requires, as a condition to a sale, that an insured purchase another type of insurance policy
  62. -Misrepresentation
    -False information in advertising
    -Boycott, coercion & intimidation
    -False financial statements
    -Unfair Discrimination
    Unfair Trade Practices
  63. the Department of Insurance must give _____ days notice involving a hearing for a potentially bankrupt insurer
    5 (five)
  64. a _____ is when the consumer agency meets with the Department and makes them aware of a problem and requests a hearing
    hearing on demand
  65. once agreed to by the Department, a hearing on demand has to be held within _____ days.
  66. _____ must be held before a cease & desist order is issued.
  67. Anyone violating a cease and desist order (with or without suspension of a license) of the Commissioner may be subject to a penalty of up to _____ for each act, not to exceed _____ aggregate and/or the suspension or revocation or the person's license or Certificate of Authority.
    • $25,000
    • $250,000
  68. a device for spreading the chance of financial loss among a large people
  69. two types of risk:
    pure & speculative
  70. the loss or possibililty of loss to a risk because of its surroundings
  71. a situation where only the possibility of loss occurs
    pure risk
  72. a situation where there is a possibility of gain or loss
    speculative risk
  73. _____ risks are not insurable.
  74. Conditions or activities that may increase the chance for loss to occur.
  75. -Morale (attitude)
    -Moral (intentional, poor integrity)
    -Physical (tangible)
    -Legaland Legislative (mandate)
  76. Cause of loss
  77. decrease or loss of value of insured or insured's property
  78. avoid a risk; control a loss exposure
    Risk avoidance
  79. reducing the severity of the risk
    Risk Reduction
  80. transfer the risk to an insurance company
    Risk Transfer
  81. (self insurance)  ex: Exxon, Hurtz
    Risk Retention
  82. sharing the risk with a large group
    Risk Sharing
  83. -Avoidance
    Methods of Handling Risk
  84. -Accidental Loss
    -Ascertainable Loss
    -Economic Hardship
    -Exclusions of Catastrophic Perils
    Elements of Insurable Risks
  85. a loss which was unintentional, unforeseen. not on purpose.
    accidental loss
  86. setting a value on a future loss
    Ascertainable loss
  87. Causes economic hardship, covering the loss only.
    economic hardship
  88. terrorism, nuclear plant explosion, war, etc.
    Exclusions of Catastrophic Perils
  89. insuring the risk of a class that is more prone to losses than the average risk
    Adverse Selection
  90. An insurance company considering insuring theis type of risk may restrict coverage charge a higher rate or may not insure.
    Adverse Selection
  91. to restore to the same condition as before the loss
    Principle of Indemnity
  92. the larger the numbers of any given class of insureds, the more accurate the prediction of loss
    law of large numbers
  93. "this" helps to:

    -Calculate rates for groups or individuals within a group

    -Predict loss in large groups or individual within a group
    Law of Large Numbers
  94. insurance that insurance companys buy on insurance that they sell
  95. With _____, companies share in paying losses in proportion to their share of risk on quota share or excess of loss basis
  96. -owned by the stockholders
    -board of directors elected by stockholders to manage and set policies
    -stockholders share in profit
    -dividends are paid to stockholders
    Stock Companies
  97. -owned by the policyholders, have no stockholders

    -board of trustees or directors chosen by policyholders to manage company

    -nonassessable policies are issued

    -often called a participating company

    -policyholders sometimes receive profits in the form of non-taxable dividends; not gauranteed; considered to be an over payment of premium
    Mutual Companies
  98. Social or charitable nonprofit organizations. Normally sell to members only.
    Fraternal Benefit Societies
  99. Employers or individuals retain risks.
    Self Insurers
  100. -generally for highly specialized or unusual loss exposures

    -a special license is required

    -placed with insurers not admitted within the state but on the Commissioners approved list
    Surplus Lines
  101. _____ Companies receive a Certificate Certificate of Authority issued by the Dept. of Insurance when a licensed insurance has met all approval qualifications as an authorized or admitted carrier in that particular state.
    Authorized (admitted)
  102. _____ Companies may solicit only lines of insurance for which they have been approved; business can only be placed through surplus line brokers.
    Unauthorized (unadmitted)
  103. Usually, ____ Companies rates and forms have not been approved by the rating commission nor are they covered by the Louisiana Insurance Guaranty Act.
    Unauthorized (unadmitted)
  104. incorporated in Louisiana and selling coverage in Louisiana
  105. incorporated in another state and selling coverage in Louisiana
  106. Incorporated in another country and selling coverage in Louisiana
  107. -Federal Flood Insurance
    -Federal Crop Insurance
    -Federal Social Insurance Programs
    -Social Security
    -Federal Deposit Insurance Corporation (FDIC)
    Government Insurers
  108. _____ rates insurers according to soundness of financial status.
    • Financial Status (Independent Rating Service)
    •   ex: Dunn & Bradstreet
  109. -Independent Agency System/American Agency System

    -Exclusive or Captive Agency System

    -General Agency System

    -Managerial System

    -Direct Response Marketing System
    Marketing (Distribution) Systems
  110. - insurance is sold and serviced by an independent producer. 

    -producer may represent an unlimited number of insurers.

    -appointed on an non-exclusive basis.
    independent agency system/american agency system
  111. -represents only one insurer.

    -appointed on a exclusive basis.

    -business is owned insurer.

    -earns commissions on personal sales and overrides on other producers (statefarm)
    Exclusive or Captive Agency System
  112. -A general producer may have producers working for his/her agency.

    -A general producer contracts with an insurer to place business usually on an exclusive basis.

    -Earns commissions on personal sales and overrrides on other producers
    General Agency System
  113. -Producer is a branch manager of insurer.

    -Is a salaried employee of insurer; may also receive commissions.
    Managerial System
  114. -mail, radio, internet, tv and direct response marketing

    -clients mail applications directly to insurer

    -a producer may be hired or paid a commission for completing a transaction by phone
    Direct response marketing system
  115. The insurer in a contractual agreement (known as the principal) is represented by the producer within the authority of the contract when dealing with a third party.
    Insurer as Principal
  116. The acts of the producer represent the acts of the insurer.
    Insurer as Principal
  117. Knowledge of the producer is considered knowledge of the insurer.
    Producer/Insurer Relationship
  118. actions and statements of the producer are considered actions and statements of the insurer.
    producer/insurer relationship
  119. payment to the producer are payments to the insurer.
    producer/insurer relationship
  120. the authority expressed or written in the Agency Agreement between the Producer and the Company specifically granting the producer such authorities (ex: collecting the first premium)
    Expressed  powers or authority
  121. the authority granted to someone, such as a producer, that is not expressed written in a contract such as the implied authority necessary to do the day-to-day activities of an insurance producer.  (scheduling a medical exam for a new applicant when required for a life policy)
    Implied Authority
  122. The authority the general public assumes a producer has granted to him/her by the carrier they represent.  (ex: binding coverage on an insurance policy without home office approval. producers should always act within the contractual powers of the Agency Agreement)
  123. The producer's word is the company's word.
  124. 3 types of Authority and Powers of Producers
    • -Expressed
    • -Implied
    • -Apparent
  125. -Loyalty: Places principal's interest above own.

    -Obedience: Lawful Orders

    -Due Diligence: Expeditiously and with knowledge

    -Accounting: Account for all properties
    Responsibilities to Insurance Company
  126. a person must have legal capacity to enter into a contract. those considered not to have legal right are minors, mentally infirm and persons under the influence of drugs or alcohol
    competent parties
  127. written for a legal purpose, enforceable by law. Insurance contract will not be written for illegal or immoral purpose
    Legal Purpose
  128. _____ is completing an application and applying for insurance
  129. _____ when the contact is accepted without changes; policy or binder is issued
  130. exchange of value
  131. first premium is paid by the the insured. the insurer promises to indemnify the insured in the event of loss
  132. _____ must be in writing to be enforceable in court-Statute of Fraud
  133. a contract written by one party and the other party adheres to it as is
    contract of adhesion
  134. insured has no input in the writing of the contract, therefore any ambiguity in the contract will be decided in the insured's favor
    ambiguities in a contract of adhesion
  135. this insurance contract is based on chance or uncertain future or unforeseen contingency.
    aleatory contract
  136. premiums are not equal to benefits
    aleatory contract
  137. there is an unequal exchange or an unequal value between parties to the contract
    aleatory contract
  138. personal in nature, between the insurance company and an individual
    personal contract
  139. covers a financial interest in the person or object insured
    personal contract
  140. after the premium is paid, only one party is legally bound to the contract. In insurance, if a client foes not pay for a policy, the coverage lapses. An insurance company cannot sue someone to force payment of premium, thus an insurance contract is unilateral, meaning only one party has a right of legal action.
    Unilateral Contract
  141. Conditional in nature because certain future acts or conditions must occur before a contract is legally enforceable and before claims can be paid
    Conditional Contract
  142. If ambiguities exist in a insurance policy, they should be resolved with reasonable expectations of the insured
    Reasonable Expectections
  143. the greatest degree of good faith for accurate, valid information by both parties for the negotiations involving an insurance contract
    utmost good faith
  144. statements made on an application that are believed to be true to the best of their knowledge, but are not guaranteed to be true
  145. omission; omit information. intentionally hiding known facts when the disclosure of these factswould change the decision of an insurer.
  146. an intentional concealment or misrepresentation of a fact known to a person with the intent of causing damages to another party or reaping benefits from the insurance company. 
       (ex: a person knowingly lied to receive extra benefits)
  147. Voluntary abandonment of a known right, claim or privilege. Cannot cancel this.  Either party to an insurance contract can waive a right.
  148. EX: Waiver of Premium Rider - If totally and permanently disabled and under certain conditions, company waives right of premium collection.
  149. prevents the denying of a fact because of one's own previous actions or words to the contrary.
  150. A legal principle based on fairness; a right or privilege that has been waived in a contract may not be enforced