Insurance Laws and Rules Flashcards
(128 cards)
1
Q
Define the Insurance Code
A
They are laws or statues enacted by the Oregon Legislature relating to the insurance business
2
Q
Can the director make a law
A
No, only the Oregon Legislature can
3
Q
What is the difference between a law and a rule
A
A law is created by the legislature and a rule is created by the department
4
Q
Who authorizes insurers and producers
A
The Director
5
Q
What are 3 examples of producers that may do business without a license
A
- Surplus lines
- Reinsurance
- Adjuster or attorney
6
Q
Who is liable for a claim or loss when an unauthorized insurer does not pay a claim or cover a loss
A
The agent who assisted with the policy, knowing that they were not authorized
7
Q
How often will the director audit the finances of the insurer
A
At least every 5 years
8
Q
When the director is performing their audit, what are the 4 things that they are looking for
A
- The nature of the insurer’s operations
- Their financial condition
- Their ability to fulfill obligations (pay claims)
- Make sure that they’re in compliance
9
Q
How does the director examine a foreign and alien insurer
A
The director can accept the findings of the insurer’s home state director as long as they are accredited by the NAIC and that the NAIC conducted or supervised the examination
10
Q
How do you exam an alien insurer
A
You generally base it off of their transactions and affairs in the US
11
Q
Who pays for the audit and any costs associated with the audit (ie transportation)
A
The insurance company being examined pays for the cost
12
Q
When can the director do any audit
A
Whenever they want
13
Q
Who can the director do an audit on
A
Anyone who does or advertises that they do business in Oregon
14
Q
Can the director examine people directly
A
yes, they may examine anyone under oath who may have material information
15
Q
After the chief examiner has completed their audit, within how many days must they get the report to the director
A
Within 60 days
16
Q
After the director receives the audit from the examiner, what will they do
A
- Allow the insurance company to review and comment on the report
- Meet with the insurance company to resolve any questions or obtain further information
- Have the examiner include the additional information in the report
17
Q
Who is authorized to give orders
A
The director
18
Q
Define a final order
A
It is an order issued by the Director in writing and it must be signed by the director (or someone under their authority), filed in the department, State the effective date, the intent or purpose and the grounds for which the order is on (what insurance code may have been broken)
19
Q
When is a mailed notice considered given
A
When it is deposited in a mailbox
20
Q
What is the cease and desist order for
A
When a person is engaging or is about to engage in a violation of the code
21
Q
What does the cease and desist order state
A
That the person can still do business, but they have to stop the violation
22
Q
When a person receives a cease and desist order, within how many days can they request a hearing from the date of the mailing
A
Within 20 days
23
Q
What if a person who received a cease and desist order does not request a hearing
A
Then the order becomes final
24
Q
If a person requests a cease and desist order hearing, within how many days should the hearing take place
A
Within 30 days after the receipt of the request
25
If a hearing is requested for a cease and desist when must the person be given notice as to the time and place
At least 7 days prior
26
What are the 3 options that the director can take against a licensee
They can
- Refuse to issue or renew a license
- Place a licensee on probation
- Suspend a license (temporarily can't do business)
- Revoke a license or not allow the licensee to do a certain type of business
27
Define clean sheeting
Hiding an applicant's medical conditions from the insurance company
28
For each violation, what is the maximum fine for a company
$10,000
29
For each violation, what is the maximum fine amount for the individual agent
$1,000
30
If there is a second penalty, how much can that fine be
It may be up to the amount by which the violator profited from
31
Where do the fines go
General Fund of the State Treasury
32
What does a civil penalty stand for
A fine
33
If a person receives a civil penalty, how many days do they have to request a hearing
20 Days
34
How many days does a person have to pay a final order (for a fine)
10 days
35
What if the person does not pay their fine in 10 days
Then the county clerk will record their name and the penalty, and put a lien on any property that they own
36
What is the criminal penalty for an individual for filing with the Director any information that is known to be materially false or misleading
It can lead to an imprisonment in jail for up to 1 year or a fine of up to $1,000
37
What is the criminal penalty for a corporation for filing with the Director any information that is known to be materially false or misleading
It can lead to a fine of up to $10,000
38
Define guaranty associations
They help to detect and prevent insurer insolvencies and help pay claims when insurers cannot
39
What does the Oregon Life and Health Insurance Guaranty Association do
It pays claims from individual or group life or health insurance policies and annuities for impaired and insolvent insurers
40
Who has to be apart of Oregon's Guaranty Association
All authorized life and health insurers
41
Define an impaired insurer
An insurer that is unable to fulfill their obligations or is insolvent
42
Define an insolvent insurer
Insurer that is under a liquidation, conservation or rehab order
43
How much will the Association pay (regardless of the number of the number of policies/contracts) per life for life insurance death benefits, disability insurance and LTC
$300,000
44
How much will the Association pay (regardless of the number of the number of policies/contracts) per life for cash surrender value
$100,000
45
How much will the Association pay (regardless of the number of the number of policies/contracts) per life for health insurance
$500,000
46
How much will the Association pay (regardless of the number of the number of policies/contracts) per life for present value annuity benefits
$250,000
47
For guaranty associations, what is the total amount payable for any one individual for all policies
$300,000 (except for health)
48
For guaranty associations, what is the total amount payable for any one policyowner
$5,000,000
49
Once an insurer is deemed insolvent, within how many days after that point will a guaranty pay for claims
They will cover claims arising within 30 days after an insurer is deemed insolvent
50
How much will the guaranty pay for a worker's compensation claim
They will cover the full amount
51
How much is each insurer charged to pay for the guaranty
Up to 2% of premiums (they can deduct 20% of this from their taxes)
52
What must a resident consultant have
- Policy with at lest $500,000 in coverage
| - 5 years of experience
53
When is an adjuster license not required
When that adjuster is only adjusting claims for an insurer and is employed by that insurer
54
If a person is not a resident of Oregon, but they want to sell insurance in Oregon, then what do they need
They can get their nonresident insurance producer license as long as they are licensed in their home state
55
Define an attorney in fact
The director of the nonresident licensing state (you live in washington, but you want to sell insurance in oregon)
56
Within how many days should a nonresident producer who moves states, notify the director of a change in address
Within 30 days
57
What is the point of a temporary producer license
Give it to a surviving spouse or court appointed personal representative when a licensed producer dies or becomes mentally or physically disabled, that way they can either sell the business or give them time to have someone else run it
58
How long is a temporary license good for
180 days
59
How long does a producer have to keep records
Three years following the expiration of the policy
60
When must a producer notify a director (3)
- Before doing business under a different name
- Before changing, deleting or adding another business (a consultant or adjuster can do it after 30 days)
- Within 30 days of changing address, location, residence, etc.
61
When does a license expire
Every 2 years on the last day of the licensee's birth month
62
Within how many months can you reinstate your license
Within 12 months
63
What do you have to do to reinstate your license (without taking the exam)
- Pay twice or 200% of the unpaid renewal fees
| - Satisfy any CEs
64
How many CE does someone need to complete to renew
24 hours
65
What CE must you always take
- 3 hours in Oregon statutes and admin rules
| - 3 hours in professional ethics for insurance prodcuers
66
Within how many days does a CE provider have to produce a certificate of completion
Within 15 days
67
How many years does a CE provider have to keep records of attendance and exam results
3 years
68
Can the premiums that a producer receive commingle with other funds
No they have to be placed in trust accounts that are separate from all other business and personal funds (accounts have to be in Oregon)
69
When does a producer have to deposit funds received
Within 7 days
70
When does the producer have to pay any premium funds owed to an insured
Within 30 days
71
Is a producer regarded as an agent of the insured
No, they are the agent of the insurer
72
In order to be an agent of an insurer, the producer must either be:
- An appointed agent
| - Affiliated with the producer (if a producer is terminated, the insurer must notify the state within 30 days)
73
Within how many days must the insurer give notice that the producer's appointment is going to be terminated
At least 90 days prior to the effective date of the termination (you also have to give a reason)
74
Within how many days can a producer terminate their appoint
Within 30 days after the effective date (have to give notice to the Director and the insurer)
75
A person would be guilty of unfair claim settlement practices if they failed to do what
- Represent facts or policy provisions truthfully
| - Acknowledge and act promptly on communications relating to claims
76
Within how many days should you respond to the director in regards to a claim inquiry
Within 21 days
77
Within how many days should you investigate a claim
Within 45 days
78
Within how many days from receiving a claim should you notify the claimant that you need more time
30 days
79
Within how many days from receiving a claim should you give a reason as to why more time is needed
Within 45 days (and then every 45 days after)
80
How much capital should most insurers have
$2,500,00
81
How much capital should workers' comp insurers have
$5,000,000
82
When applying for an original certificate of authority, how much funds should a domestic insurer have
An additional $500,000
83
What is a charge made by a producer, with respect to an insurance transaction to a party other than the insurer, which is not a part of the insurer's rate filing
Service fee
84
If the director believes that an insurer is being unfairly discriminating, then what happens
The director will give them 10 days to correct the situation
85
What should the insurer provide the customer with when doing an insurance transaction
They should provide them with a notice of personal information practices
86
When does the insurer have to provide the privacy policies and practices notice
At least every year
87
What two sources should you use to make sure your privacy notice is in compliance
- Gramm Leach Bliley Act
| - Privacy of consumer financial and health information regulation
88
Define a rebate
Kickback to a purchaser of insurance by the producer or insurer
89
Is a rebate legal
No, it is illegal
90
Are commissions received by the producer on excessive personal or controlled insurance legal
No, these are illegal and considered rebates
91
For life and health, when are premiums on personal or controlled insurance in excessive
If in one calendar year, they are more than two times the amount of the premiums on noncontrolled life or health insurance (noncontrolled premiums $50,000, then controlled can't be more than $100,000)
92
For all types other types of insurance (not life or health) what are the limits on premiums for controlled and noncontrolled
They have to be the same amount (noncontrolled premiums are at $50,000, then controlled premiums can't be more than $50,000)
93
What is personal/controlled insurance
If it is insurance that covers the producer or his spouse (or any of his relatives), covers a group of employees under a group policy issued to the producer's employer, etc. (basically anything personal)
94
The restrictions on personal/controlled insurance do not apply to who
- Property to cover property with installment
- Person is an individual producer
- Has an individual business
- Has been a broker for at least 25 years and is 65 years old
95
Define twisting
Make a misrepresentation to a person with ownership rights in life insurance, in order to have their policy lapse, forfeit, surrender, etc. (illegal)
96
You can only receive commissions if you are what
Licensed
97
If a person is licensed as both a producer and a consultant, then what may they accept
Commissions and/or a fee
98
What does every insurer have to do
File their premiums with the director, who will then approve them
99
Define a service fee
It is a charge from an insurance transaction made by a producer to someone other than the insurer, which is not part of the insurer's rate filing
100
When would a producer charge a service fee
If they provide service beyond what is usual and customary in commercial lines insurance
101
When can a producer not charge someone a combination of commissions and service fees (3)
- Insurance covers an individual's person, property or liability
- Life or health insurance for groups of fewer than 51 lives
- Commercial or public entity paying $100,000 in premiums
102
When can you not charge a service fee
When it is for an individual's person, property or liability
103
When must the insurer provide their notice of personal information practices
Date of the application (when you give them the policy)
104
When must a licensee provide clear and conspicuous notice of personal information practices
When he provides insurance products or services to be used primarily for personal, family or household purposes
105
What lines of coverage can a producer charge service fees on
Commercial lines
106
An insurer cannot retain risk on any one subject line of insurance in excess of what percentage of its surplus to policyholders unless it reinsurers the excess
10%
107
Define the retention limit
The maximum amount of insurance an insurer can have at risk on one subject of insurance
108
In order to insure risk, what does the risk have to be
The risk has to have limited catastrophic potential and cannot be speculative
109
In the event of a claim and the insurer has reinsurance who pays
The ceding insurer will pay (original insurer) and then the assuming insurer will reimburse the insurer
110
What are two types of reinsurance
- Treaty (the insurer automatically accepts all exposures)
| - Facultative (The reinsurance requires an individual reinsurance agreement for each risk reinsured)
111
Define mutual companies
They do not have capital stock and they are owned by the policyholders (called members). Any profit goes back to the policyholders
112
Define reciprocal insurer
Unincorporated group of persons that insure each other by exchanging indemnity agreements through an attorney in fact
113
Define a fraternal benefit society
Not for profit without capital stock
114
Define Lloyd's Association
Voluntary association of individuals or groups that agree to insure a particular risk. Each member is responsible for an agreed portion of the insurance.
115
What are the 5 rating agencies
```
AM Best
Fitch
Moody
S&P
Weiss Research
```
116
Define direct writing
Insurance companies use employees to deal directly with applicants and policyholders
117
Define direct response
Advertise or use telemarketing
118
Define vending machines
Used to market travel policies
119
Define franchise (wholesale) policies
Individual policies sold through employers or associations
120
How does the general producer system work
They are independent contractors that can appoint other producers to operate there, they are responsible for paying expenses, receiving selling commissions and overrides, perform admin functions
121
What are two forms that producers can be
- Independent - Receive commissions only, can work for several insurers and own their own policy expirations
- Exclusive (captive) - us at Moda
122
What does the law of agency do
It lists the rights and duties of principals, agents and third parties in business transactions
123
How does a law of agency work
The insurer is the principal, who is represented by the an agent, who is a producer (when dealing with third parties)
124
What are a producer's three authorities
- Express (stated by the agency)
- Implied (not stated, but assumed)
- Apparent (authority the public believes the producer has)
125
To be enforceable, what must a contract have
The four elements (CLOC)
126
What is the punishment if someone breaks a law that relates to fraud and false statements
- Prison up to 15 years
| - Fine up to $50,000/violation or the amount of compensation that they received (whichever is greater)
127
Define a prohibited person
An individual who has been convicted of a felony involving dishonesty, a breach of trust or a violation of the Act
128
If a prohibited person engages in insurance business, what is their punishment
Prison for up to 5 years
