IL Insurance Law (General) Flashcards by Adam Faircloth

McCarran-Ferguson Act

Federal law that allows most insurance regulation to be done at state level

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IL Department of Insurance

Overseen by governor-appointed director

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Director has the power to make reasonable rules and…

Regulations to enforce insurance laws

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Director has the power to conduct reasonable investigations to determine…

Violations of state insurance requirements

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Director has the power to issue immediate cease-and-desist orders to…

Halt illegal insurance practices

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Director has the power to issue subpoenas in order to obtain…

Insurance documents

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Director has the power to require individuals to…

Testify under oath about insurance matters

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Director has the power to issue, deny, suspend, or revoke insurance licenses for…

Individuals and businesses

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Failure to comply with director orders can result in…

$2000-$20000 in additional fines

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Guilty party can be forced to…

Pay for independent investigations

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Cease-and-desist orders generally include…

Right to a hearing within 30 days

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Investigated parties must receive…

Copies of disciplinary reports before the public

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Producer license generally required when doing the following for compensation…

Selling insurance; encouraging someone to buy insurance; negotiating terms of insurance; giving insurance advice; providing insurance quotes

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Penalty of acting without a license

Class A misdemeanor, $2500 fine and 1 year in jail

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An insurer.producer cannot compensate an unlicensed person for…

Selling or negotiating insurance

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Possible exception for a formerly licensed person who is receiving…

Deferred compensation and was licensed at time of transaction

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License Qualifications

18+, pre-license education, state exam, licensing fee, good moral character

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Someone might not be eligible for a license if…

Committed a felony, fail to pay child support, have license revoked in another state

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Each line of authority generally requires…

20 hours of pre-license education and a state exam

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Lines of Authority

Life, accident and health, property (fire), casualty

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Other lines of authority may have slightly different requirements

Personal lines, motor vehicle, variable contracts, limited lines

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Limited Lines Producer

Allows someone to sell a limited set of insurance products that represent a narrow portion of the market

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Pre-License exemptions required state exam but no pre-license education for…

College grads with a degree in insurance

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No state exam and no pre-license education for…

Limited line producers; producers moving to IL who already licensed in same line of authority; non-residents of IL who are already licensed in the same line of authority in their home state

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Producers moving to IL who area already licensed in same line of authority must...

Be in good standing and complete paperwork within 90 days of residency

Non-residents of IL who are already licensed in their home state must...

Be in good standing and obtain non-resident IL license before insuring to anyone in IL

Temp License: Upon Death and Disability

Allows for limited time to settle disabled or deceased producer's business affairs

Temp License: Upon Death and Disability requires state exam?

Temp License: Upon Death and Disability issued for...

180 days and can get one extension for another 180 day period

Temp License: Upon Death and Disability can require supervision from...

Licensed producer

Temp License: Upon Death and Disability license terminates if...

Business is sold or dissolved

Temp License: Not Death or Disability

Allows licensing candidates to begin work while completing the licensing process

Temp License: Not Death or Disability is valid for...

90 days with no extension

Temp License: Not Death or Disability must be affiliated with...

Insurer

Temp License: Not Death or Disability insurers whose candidates don't complete the licensing process can no longer...

Sponsor temporary licenses

Fees: Resident Producer License

$215 every 2 years

Fees: Non-Resident Producer License

$380 every 2 years

Fees: Temporary Producer License

$50

Fees: Insurance Business License

$150 every 2 years

Fees: Limited Lines Producer License

$50 every year

Fees: Licensing Exam

$50, plus other fees charged by the testing vendor

Fees: Operating as a pre-license or continuing education provider

$1,000 every year

Fees: Approval of a pre-license or continuing education course

$50 initial fee, then $20 every year

Brokers must have a surety bond equal to at least...

$2500 or 5% of brokered premiums from previous year, whichever is more

Broker Surety Bond max

$50,000

Producer license is generally valid for...

2 years

License renewal requires...

Fees and continuing education

License renewal possible exemption

Actively serving in military

License Reinstatement

1 year to reinstate by paying double the licensing fee and completing remaining CE hours

Continuing Education Requirements

24 hours every 2 years before license renewal date; at least 3 hours must be ethics

CE hours must be reported...

Prior to renewal deadline

CE generally not applicable to...

Non-resident producers who complete CE in their home state

Changes to physical and email addresses must be reported within...

30 days

Assumed Names

Need to report to DOI if doing business under another name

Insurance agencies and brokerages must be licensed as...

Producers

Agencies and brokerages must have one...

Designated producer in charge of compliance

There are separate producer licenses for...

Partnership, LLC, or corporation

Felony convictions must be reported within...

30 days to the DOI

Actions that can result in license suspension, revocation, or refusal and fines of $10,000 per occurrence (up to $100k max), Part 1

Felony conviction; Demonstrating incompetence or untrustworthiness in business; Having insurance license disciplined in another state; Forging an insurance document

Actions that can result in license suspension, revocation, or refusal and fines of $10,000 per occurrence (up to $100k max), Part 2

Cheating on insurance exam; Knowingly doing business with an unlicensed producer; Failing to play child support; Failing to pay state income taxes; Making false statements on a licensing application; Violating laws, rules, or orders from DOI

Actions that can result in license suspension, revocation, or refusal and fines of $10,000 per occurrence (up to $100k max), Part 3

Improper handling of funds obtained as part of an insurance transaction; Misrepresenting facts about insurance product; Committing fraud

Suspensions might be...

Temporary

Revocations are expected to be...

Permanent

Producers who've been denied or revoked can reapply after...

3 years but can still be refused

Disciplinary action requires written notice and right to request a hearing within...

30 days

If an insurer or insurance business terminates a relationship with a producer because of legal violation...

Must inform DOI within 30 days

Failure to report to the DOI or take preventative action after learning of a producer's violations can lead to...

Business license revocation/suspension

Can't misrepresent...

Type or benefits of an insurance product

Can't disparage...

Competition to make a sale

Can't act as if...

Products are affiliated with the state or federal government

Can't engage in...

Boycott or intimidation to force a sale

Misrepresentation can result in...

Fines of $200-$10,000 per occurrence

Fees are not...

Commission

Fees must be disclosed...

Before coverage is obtained, with records kept for 7 years

No fee for...

Cancelling someone's insurance

Rebating

Sharing commission in order to induce a sale

Things of value must be disclosed in...

Insurance Contract

Rebating is a...

Class B misdemeanor, $1,500 fine and 6 months in jail

Dividends are not...

Rebates

Controlled Business

No more than half of business can be from insurance for yourself, your spouse your business, or your employer

Money provided by consumer is generally held in...

Fiduciary capacity by producers

Fiduciary money cannot be...

Commingled, misappropriated, or used for other purposes

Insurers must continue to cover people when a producer misappropriates their funds but...

Producer can face legal consequences

Premium Fund Trust Accounts (PFTA)

Can't put principal dollars at risk

Generally cannot withdraw from PFTA unless...

Transfer of premium to an insurer or transfer of earned commissions to producers

PFTA: Must be from...

Federal or state bank or savings and loan

Bank records and checks must indicate...

PFTA

PFTA records must be maintained for...

7 years

PFTA can be interest-bearing but...

Can only be kept if authorized by carrier

PFTA Penalties: Misappropriating less than $150 in first offense

Class A misdemeanor, 1 year in prison and $2,500 fine

PFTA Penalties: Misappropriating less than $150 in multiple offenses

Class 4 felony, 3 years in prison and $25,000 fine

PFTA Penalties: Misappropriating more than $150

Class 3 felony, 5 years in prison and $25,000 fine

IL Insurance Privacy Rules

Information obtained as part of an insurance transaction generally cannot be disclosed without written consent

State privacy law applies to...

Nearly all types of insurance

No discrimination based on...

Race, religion, color, national origin

Can't refuse to offer or renew insurance based on...

Gender, marital status, sexual orientation

Price differences must be based on...

Sound actuarial data

Unfair Claims Practice: Insurers can be fined for not responding to communication from a claimant within...

Reasonable amount of time

Unfair Claims Practice: Insurers can be fined for not offering fair and prompt settlements when...

Insurer's liability is reasonably clear

Unfair Claims Practice: Insurers can be fined for frequently prompting claimants to sue in order to...

Receive the full amount owed to them

Unfair Claims Practice: Insurers can be fined for being named in...

Disproportionately high number of consumer complaints

Unfair Claims Practice: Insurers can be fined for denying claims without...

Conducting a reasonable investigation

Unfair Claims Practice: Insurers can be fined for refusing to make a decision about...

Claim within a reasonable time

Unfair Claims Practice: Insurers can be fined for requiring additional proof of a loss in order to...

Delay payment

Unfair Claims Practice: Insurers can be fined for failing to explain why...

Claim was denied

IL Insurance Law (General) Flashcards

(105 cards)