Texas Statutes and Rules Common to All Lines

Question 1

What are the most common PENALTIES for VIOLATIONS OF INSURANCE STATUTES?

Answer 1

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

Question 2

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?

Answer 2

Misrepresentation

Question 3

What illegal act does a producer commit when the producer represents a policy IN A MORE FAVORABLE LIGHT than the policy really is?

Answer 3

Misrepresentation

Question 4

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?

Answer 4

AUTHORIZED or ADMITTED

Question 5

What DOCUMENT is required for an insurance company to transact insurance?

Answer 5

Certificate of Authority

Question 6

WHO is responsible for the COSTS associated with the EXAMINATION OF INSURERS?

Answer 6

The INSURER who is being examined

Question 7

What type of insurer is formed under the LAWS OF ANOTHER STATE?

Answer 7

Foreign

Question 8

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?

Answer 8

Rebating

Question 9

Who is an INSURANCE AGENT?

Answer 9

A person authorized to sell, solicit and negotiate insurance contracts

Question 10

What is the PURPOSE of a CEASE AND DESIST ORDER?

Answer 10

To prevent a producer or insurer from FURTHER VIOLATING LAWS for transacting insurance

Question 11

To WHOM may a CERTIFICATE OF AUTHORITY be issued?

Answer 11

To an INSURER authorized to transact business in THIS STATE

Question 12

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

Answer 12

Cease and desist order

Question 13

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

Answer 13

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).

Question 14

Who must be notified of a PRODUCER’S CHANGE OF ADDRESS?

Answer 14

The Department of Insurance (Commissioner/Director/Superintendent)

Question 15

When is CONTROLLED BUSINESS LEGAL?

Answer 15

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)

Question 16

Who may SHARE IN THE COMMISSION from the sale of an insurance policy?

Answer 16

Only PRODUCERS PROPERLY LICENSED for the type of insurance transaction

Question 17

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

Answer 17

Fiduciary

Question 18

When would a MISREPRESENTATION ON AN INSURANCE APPLICATION be considered FRAUD?

Answer 18

When it is INTENTIONAL AND MATERIAL

Question 19

If an insurer holds a CERTIFICATE OF AUTHORITY, it is known as WHAT TYPE OF INSURER?

Answer 19

AUTHORIZED or ADMITTED

Question 20

What is CONTROLED BUSINESS?

Answer 20

Insurance on the PRODUCER’S OWN LIFE OR PROPERTY, or the LIVES OR PROPERTY of the PRODUCER’S FAMILY OR BUSINESS ASSOCIATES

Question 21

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

Answer 21

Twisting

Question 22

A state-issued document empowering an insurance company to become an admitted insurer is called what?

Answer 22

Certificate of Authority

Question 23

Who is considered a nonresident agent?

Answer 23

An agent who RESIDES and is LICENSED IN ANOTHER STATE, but who is AUTHORIZED TO TRANSACT INSURANCE in THIS STATE

Question 24

If a producer makes MALICIOUSLY CRITICAL STATEMENTS about ANOTHER INSURER, what is this ILLEGAL PRACTICE called?

Answer 24

Defamation

Question 25

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?

Answer 25

Discrimination

Question 26

Who owns stock companies?

Answer 26

Stockholders

Question 27

Insurers are classified according to their DOMICILE. What are the THREE TYPES OF INSURERS?

Answer 27

Domestic, foreign, and alien

Question 28

What TYPE OF LICENSEE represents the INSURANCE COMPANY?

Answer 28

The agent

Question 29

WHEN can the Commissioner or Director EXAMINE INSURERS?

Answer 29

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

Question 30

What are PRODUCERS required to do in order to RENEW THEIR LICENSE?

Answer 30

Complete CONTINUING EDUCATION HOURS and PAY A RENEWAL FEE