Section 1.2 - 1.3

Question 1

Who is the Superintendent of Financial Services?

Answer 1

the chief officer of the NY Financial Services Department, who is appointed by the governor.

Question 2

What is the Superintendent’s authority?

Answer 2

create and implement administrative regulations and rules in order to supervise,
they enforce the state insurance and banking laws.

Question 3

If a person does not provide a good faith response to a request from the Superintendent, what is the penalty?

Answer 3

after 15 days, the person may be fined up to $500 per day not exceeding $10,000.

Question 4

After _____ penalties, the Superintendent may levy an additional _______ civil penalty.

Answer 4

after 5 separate penalties, the Superintendent may levy an additional $50,000 penalty.

Question 5

What gives an insurer the right to transact insurance business in the state?

Answer 5

a certificate of authority

Question 6

What are the requirements for a certificate of authority?

Answer 6

• adequate capital and surplus
• fully complied with the required provisions of the insurance code

Question 7

Define Solvency

Answer 7

Each insurer and fraternal benefit society authorized to do business must file a statement of its financial condition and affairs.

Question 8

When must solvency be filed?

Answer 8

By March 1st of each year.

Question 9

How much is the fine for failure to file solvency?

Answer 9

$250 per day without exceeding $25,000 total.

Question 10

Name at least 3 Unfair Claim Settlement Practices

Answer 10

• knowingly misrepresenting facts or policy provisions
• denying any element of a claim on the basis of a provision without providing written reference to said provision
• failing to acknowledge or act promptly regarding policy claims
• not attempting to bring fair and equitable settlements of claims
• compelling policy holders to bring lawsuits to a substantially less amount

Question 11

How long does an insurance agent have to act on an insurance claim?

Answer 11

15 days

Question 12

What does the appointment of agent do?

Answer 12

“places” an insurance agent’s license

Question 13

How long does a party have to make an appointment of agent?

Answer 13

15 days

Question 14

When will a misrepresentation void an insurance contract?

Answer 14

when it is a material misrepresentation

Question 15

When is advertising considered false advertising?

Answer 15

when the insurer is advertising using any illustration or statement that includes lines of authority they are not licensed to transact

Question 16

Define Defamation of an Insurer

Answer 16

making false written or oral statements that is derogatory to the financial condition or solvency of an insurer.

Question 17

What is the punishment for Defamation of an Insurer?

Answer 17

a class A misdemeanor

Question 18

Define Rebating

Answer 18

Offering an inducement to a person to encourage the purchase of insurance.

Question 19

True or False: Rebating is legal.

Answer 19

False, offering an inducement to a person to encourage the purchase of insurance is illegal.

Question 20

Controlled Business: a licensee may get their license suspended or revoked if they receive more than ____% of the aggregate net commissions during a ____-month period.

Answer 20

a licensee may get their license suspended or revoked if they receive more than 10% of the aggregate net commission during a 12-month period.

Question 21

What is the process called that prevents unfair benefit or advantage to a producer, to a licensee’s spouse, their corporations or shareholders, or business associates?

Answer 21

controlled business

Question 22

What is a fiduciary relationship characterized by?

Answer 22

special trust and confidence

Question 23

What is a premium account?

Answer 23

Where premiums collected by agents and brokers that are not remitted immediately to insurers are deposited.

Question 24

True or False: Fiduciary funds cannot be commingled with personal funds.

Answer 24

true

Question 25

When will agents or brokers make voluntary deposits to a premium account?

Answer 25

when they are maintaining a minimum balance or paying a premium due but not yet collected.

Question 26

True or False: A person that is not licensed may receive commission on an insurance transaction.

Answer 26

False, in order to receive any commission, the party must be licensed, and must have rendered insurance coverages or actually placed the insurance.

Question 27

True or False: an agent or broker must segregate compensation from fiduciary funds.

Answer 27

true

Question 28

Define Compensation

Answer 28

anything of value, including money, credits, loans, interest on premiums, forgiveness of principal or interest, trips, prizes, or gifts

Question 29

True or False: Compensation can include tangible goods with the insurers name, logo, or other advertisement on it.

Answer 29

False, insurers are only allowed to gift advertising products that are valued less than $25

Question 30

How long must an insurer retain a written copy of any disclosure provider to the purchaser?

Answer 30

3 years.

Question 31

When does the Superintendent have the authority to examine books and records?

Answer 31

whenever they have reason to believe that a person engaged in the insurance business has committed any unfair methods of compensation or deceptive acts.

Question 32

How lung must an insurer maintain a durable policy record for each issued contract?

Answer 32

six years after the date the policy ended.

Question 33

What is the Insurance Frauds Prevention Act?

Answer 33

its main purpose is to root out fraud and criminal financial activity, this act is particularly concerned with arson for insurance fraud.

Question 34

How long does a licensee have to report a fraudulent act?

Answer 34

30 days from first knowledge of the act

Question 35

What is applicable for a licensed broker to place with an unauthorised insurer?

Answer 35

- contracts of reinsurance - insurance against loss of or damage to property having permanent situs outside of NY

Question 36

Who may act on behalf of an insurer not licensed to do business in NYS?

Answer 36

an excess line broker.

Question 37

How often do insurers have to provide a Consumer Privacy Regulation?

Answer 37

after initial purchase, and at least once every year

Question 38

What is a covered entity's cyber security program based on?

Answer 38

the risk assessment

Question 39

What is a covered entity?

Answer 39

any person operating under or required to operate under a license, registration, charter, certificate, permit, accreditation, or similar authorization under the Banking, Insurance, and Financial Services Laws.