Washington State Overview Flashcards
1
Q
What is the title of the law the pertains to insurance in Washington State?
A
Title 48 of the Washington Insurance Code
2
Q
What is the purpose of Title 48?
A
To protect the public
3
Q
Is the Washington State insurance commissioner elected or appointed?
A
Washington State Insurance Commissioner is an elected position.
4
Q
What is the term of the Insurance Commissioner?
A
4 years
5
Q
The Insurance Commissioner must post a bond. What is the dollar amount of the bond?
A
$25000
6
Q
Can the Insurance Commissioner enact laws regarding insurance in Washington State?
A
No, the Insurance commission can issue orders and make rule, but not enact laws.
7
Q
Is violation of insurance law a misdemeanor or a felony?
A
Misdemeanor
8
Q
True/False
The Washington State Insurance commissioner can revoke an insurance company’s license for failure to make books and records available.
A
True
9
Q
True/False
The Insurance Commissioner writes policy forms.
A
False, the insurance commissioner does not write policy forms.
10
Q
Misusing a client’s money is considered to be:
A
Larceny by embezzlement
11
Q
True/False
A domestic insurer has their home office in Washington state.
A
True
12
Q
What is required for an insurer to do business in the state of Washington?
A
A Certificate of Authority in the state of Washington.
13
Q
True/False
Once an insurer has a Certificate of Authority, it is able to do business in Washington state.
A
False, an insurer must have a Certificate of Authority, PLUS be approved to do business.
14
Q
When must Certificates of Authority be renewed?
A
Each July 1st.
15
Q
When an insurer should be licensed but is not, that insurer is called:
A
An unauthorized insurer.
16
Q
What are the consequences of selling insurance as an unauthorized insure under Washington state insurance code?
A
Penalty of up to $25000 per violation
License suspension
Personal responsibility for performance of policy that was sold illegally.
17
Q
True/False
The Guaranty Association can be listed as part of an advertisement.
A
False
The Guaranty Association may not be used in advertisement.
18
Q
An insurance contract is between two people:
A
The insurer and the insured (the policy owner).
19
Q
True/False
An insurer is in the business of selling insurance contracts
A
True
20
Q
What is the type of organization is a:
Non-profit organization that does not issue stock.
Is only available to its members.
Operates a lodge system.
Has a representative form of government.
Provides for the payment of insurance benefits?
A
Fraternal benefit society — not considered an insurer
21
Q
What type of insurer is owned by stockholders?
A
A stock insurer
22
Q
Does a stock insurer pay dividends to policy owners?
A
No, stock insurers pay dividends to stocks owners.
23
Q
What type of insurer is owned by its policy holders?
A
A Mutual insurer
24
Q
What type of insurer may pay dividends to participating policy holders?
A
A mutual insurer
25
Are dividend from a mutual insurer guaranteed?
No dividends may never be guaranteed to a mutual insurer.
26
Are dividends paid to mutual insurers taxable?
No, dividends are viewed as a return of premium and are not taxable to the recipient.
27
True/False
Dividends may be projected on a participating policy?
True
28
What is the minimum age to be a producer in Washington state?
18 years of age
29
True/False
You must be registered with FINRA (formerly NASD) to sell variable products in Washington state.
True
30
To sell insurance in Washington with a nonresident license, you must have what?
A similar license in your state of residence
31
What may happen if you are found guilty of “twisting” in Washington state?
You may lose your license.
32
When must you file your CE hours in Washington State?
When your license renews.
33
An unfair method of competition is to:
Misrepresent pertinent facts or insurance policy provisions.
34
What is “twisting”?
Twisting is misrepresenting or misleading comparisons, to insure or tend to induce any insured to lapse, terminate, forfeit, retain or convert any insurance policy.
35
What is misrepresentation?
Issuing, circulating or making misrepresentations of:
Policies or the benefits or advantages promised,
Dividends or shares of surplus received
Name or title of any policies or classes of policy
36
Is it possible to guarantee a dividend?
No, this would be misrepresentation
37
What may happen to a person that makes false or misleading statement, willfully fails to reveal a material fact — in or relative to an application for insurance to an insurer?
He/She would be guilty of a gross misdemeanor and his/her license may be revoked.
38
True/False
Discrimination is not allowed, insurers do not have a right to refuse to issue a contract, cancel or decline a contract?
False
While it is illegal to discriminate on the basis of protected categories, state law does not prohibit fair discrimination when bona fide statistical differences in risk or exposure have been substantiated.
39
True/False
Failure to identify yourself as an insurance producer and the company you represent during a sales presentation held away fro your office is grounds for license suspension or revocation.
True
40
In Washington state, can producers hold policies in safekeeping for clients?
No, in Washington state, policies must be delivered to clients.
41
True/False
Producers may obtain policies from owners or insurance and hold policies for analysis, servicing, family or legal obligation or to give a receipt.
True
Producer may briefly obtain a policy but must be returned promptly to the insured.
42
When can a producer hold a policy?
When the insured is a minor child of the producer or when the producer is acting as a legal guardian or court appointed representative, and is properly licensed by the state.
43
As a producer, who has the responsibility of making sure that the insurer he/she (the producer) represents is properly licensed in the state?
The producer
44
What must a producer who is licensed in another sate do in order to transact business in Washington state?
He/She must obtain a WA non-resident license.
45
Who has the responsibility of checking that an insurer has a Certificate of Authority or that a Surplus Lines broker is licensed in Washington, prior to a producer selling coverage?
The producer.
46
What are the requirements to be a producer in Washington state?
Must be 18 years of age
Completed preliminary training
Paid non-refundable licensing fees.
(A producer must be appointed by at least 1 insurer in order to transact insurance in WA).
47
A producer’s appointment is effective until:
The producer’s license expires or is revoked, or
His/her appointment expires, or
The insurer files written notice of termination with the commissioner.
48
Prior to an insurer checking MIB (Medical Information Bureau) records, what must occur?
The insurer must notify the applicant at the time of application.
49
An insurer that is formed under the laws of the state of Washington is a:
Domestic insurer
50
An insurer that is formed under the laws of another state is:
Foreign Insurer
51
An insurer formed under the laws of another country is:
Alien insurer
52
What is required for domestic, foreign and alien insurers to transact insurance in Washington state?
Certificate of Authority from the Commissioner
53
The Insurance commissioner is elected to a term of how long by the voters of Washington state?
4 years
54
Giving a client any goods worth more than $25 is considered?
An illegal inducement
55
What may be a result of a producer being found in violation of the state insurance code by the Insurance Commissioner?
He/She have his/her license suspended or revoked, plus a fine of no less than $10 or no more than $1000 may be levied agains the producer.
56
What is rebating?
Giving illegal inducements.
57
Who can apportion dividends based upon their “divisible” surplus?
Mutual insurers
58
Can the Insurance Commissioner set insurance rates?
No, the Commissioner enforces insurance rules and regulations, collects fees and issues licenses.
59
Who may receive a temporary license as a producer without taking the licensing exam?
The surviving spouse of a producer.
60
What terms are temporary licenses issued for?
180 days
61
Depositing parts of a premium collected from a client into a personal account may make the producer guilty of?
Illegal dealing in premiums (also known as embezzlement)
62
After a producer receives a policy from an insurer, what should he/her do?
Deliver the policy to the client in person.
63
After receiving a delivery receipt from his client, what must happen to the policy?
The producer must provide the policy to the insured. He/she can’t retain the policy in his/her possession.
64
Upon receipt of a premium from the insured or applicant, what obligation does the producer have?
He/she must deliver or mail the receipt as soon as possible.
65
How many Guaranty Associations are in the state of Washington?
Two
66
What does the Washington Insurance Guaranty Association do?
It protects the customers of insolvent (bankrupt) property/casualty insurance companies.
67
What protects customers from insolvent (bankrupt) property/casualty insurance companies.
Washington Insurance Guaranty Association
68
What protects the customers of insolvent (bankrupt) life and disability insurance companies?
The Washington Life and Disability Insurance Guaranty Association
69
The Washington Life and Disability Insurance Guaranty Association does not cover claims from what organizations?
```
Fraternal benefit societies
HMOs
Health Care Service contractors
Non-bulk reinsurance
Group annuity contract issued to an employee benefit plan protected under the federal Pension Benefit Guaranty Corporation
Government lotteries
```
70
What is required for a claim to be covered by the Guaranty Association?
Claims must have existed prior to insolvency;
Occur within 30 days after the order of liquidation
Life or disability claims put $500,000 (can not exceed)
71
What association must all insurers become members of as a condition of their Certificate of Authority?
Guaranty Association
72
An insurer who lawfully transacts insurance with a Certificate of Authority is known as:
Surplus Lines insurer (non-admitted insurer)
73
What is the act of inducing a person to drop their existing insurance coverage in order to purchase a new policy by misrepresent the facts of making an unfair comparison?
Twisting
74
Can an insurer charge different rates for individuals of the same class?
No, this is considered unfair discrimination.
75
If a producer states or publishes information that is false or maliciously critical and is designed to insure the reputation of an insurer or raise questions about the character of another producer, it is known as:
Defamation
76
Producers must maintain what in order to remit premiums to an insurer, return premiums from an insure to a client?
A fiduciary account separate from all other business and personal funds of the producer.
77
Is it permissible to deposit funds from customers and insurers into a producers accounts?
No, producers may not commingle funds with their own.
78
Does the Insurance Commissioner write insurance laws?
No, insurance laws are passed by legislature.
79
Are insurance laws regulated by federal or state law?
State law
80
Can a producer by appointed to more than one insurer?
Yes
81
When a producer is handing long funds from customers or insurers, this is known as:
Fiduciary capacity
82
When are individual producer’s licenses renewable?
The next birthday, plus one year and every two years thereafter
83
How many hours of continuing education (CE) credits are required for producers in Washington?
24 hours of Continuing Education (CE) every 2 years, 3 of which must be related to ethics.
84
Do CE requirements apply to a person or his/her license — if a producer has more than one license, must he/she complete CE requirements for each license?
No CE requirements apply person, not per license. A producer may have multiple licenses and meet the requirements of 24 CE units per 2 years.
85
Guaranteeing future dividends is considered to be:
Misrepresentation
86
How many years are producers required to keep account records available for the inspection by the commission following the date of the transaction?
Five years
87
Does the Insurance Commissioner have the power to issue orders?
Yes, the commissioner can issue cease and desist orders.
88
Final actions of Commissioners may be subject to appeal by whom?
Judicial review
89
True/False
The producer represents the insured.
False
The proper represents the insurer, not the insured.
90
In addition to holding one (1) resident producer’s license, how many non-resident producer’s license may the producer hold?
49 Non-resident producer licenses.
91
True/False
Producers may modify insurance contacts (policies).
False, producer may modify applications, with the applicants written consent, but not the insurance contract (policies).
92
Who enforces and administers the state insurance code with the goal of protecting the insurance buying public.
The Insurance Commissioner
93
True/False
Rates cannot be too high, how low or unfairly discriminatory.
94
Is it lawful for an insurer to transact insurance in Washington state without a Certificate of Authority, with the exception of Surplus Lines?
No, insurers have to have a certificate of authority
95
Are agency and insurance company clerical staff required to have a license?
No, as long as the personnel are not soliciting, negotiating, binding or selling insurance.
96
How many hours of training are required for applicants to complete prior to pre-license training for each major line of insurance they sell?
20 hours
97
Are any producers able to receive a license without taking the exam?
Yes, applicants for limited lines, such as travel accident insurance, may obtain a license without exam.
98
If an individual is discussing policy coverage, must that person have a producer’s license?
Yes, discussing policy coverage is considered transacting insurance, and requires a producer’s license.
99
How long must a producer keep a record of CE completion certificates for possible inspection by the Insurance Commissioner?
3 years from completion date.
100
Can a producer obtain a license “principally” for the purpose of writing controlled business, such as for yourself or family members?
No, it is unlawful for a producer to obtain a license for the purpose of writing controlled business.
101
What event(s) allows the Insurance Commissioner to revoke, suspend or refuse to renew a producer’s license immediately and without a hearing.
Conviction of a geology, violation of a support order, or residential or visitation order.
102
How many days notice must the Insurance Commissioner provide when suspending a license for emergency action?
The Insurance Commissioner may suspend a license with 3 days prior notice when an emergency actions is required to protect the public. In other situations, the Commissioner must provide at least 15 days prior to revocation of a license.
103
If a license is suspended, may the producer sell, solicit or negotiate insurance?
No, he/she may not do so with a suspended license.
104
What is the maximum license suspension?
12 months
105
Selling, soliciting, or negotiation insurance for a line of authority without a license results in what type of violation and fine?
A class B felony and a $25000 fine for each violation.
106
Insurance producers are considered to be ________________, who must handle premiums in an honest and trustworthy manner.
Fiduciaries
107
Producers are required as part of their agent’s contract to remit monies due insurers ___________________.
Promptly
108
Who is responsible for paying claims?
The insurer not the producer.
109
Can producers share commissions?
Yes, if both are properly licensed at the time of the sale.
110
Is requiring proof of loss an unfair claims practice?
No, “proof of loss” is not an unfair claims practice.
111
What must insurers provide to claimants when issuing the payment or denial of a claim?
Insurers must advise claimants which sedition of the policy the payment or denial of a claim is based upon.
112
What is sharing of commission as an inducement to sale referred to?
Illegal inducement or rebating
113
What is Illegal dealing in premiums?
Over charging a customer and depositing the overcharge in your personal account.
114
Is it unfair to deny a claim after conducting a reasonable investigation if the results of the investigation indicate that no coverage applies?
No it is not unfair.
115
How often must the Insurance Commissioner examine (audit) every authorized insurer?
At least once every 5 years.
116
How often can the insurance commissioner examine every authorized insurer or insurance producer.
As often as he/she deems necessary.
117
Can the commissioner hold a hearing?
The Insurance Commissioner may hold a hearing whenever he deems it necessary.
118
Within how many days must an individual demand a hearing after receiving a written order from the Insurance commissioner.
Within 90 days of receipt of such order.
119
The Insurance Commissioner must hold a hearing if requested by a licensee whose license has been suspended within how many days?
30 days
120
Changing insurance rates requires the insurer to file with the Insurance Commissioner within how many dates of the proposed rate change?
30 days prior to use, for approval or disapproval
121
True/false
Life and disability (health) insurance rates must be filed with the Insurance Commissioner.
False, Life and disability (health) insurance rates do not need to be filed with the commissioner.
122
How often must an insurer renew producer appointments?
Every 2 years
123
True/False
Policy forms, riders, endorsements, and application forms must be filed, reviewed and approved by the commissioner prior to use.
True
Once filed, if the commissioner does not respond within 30 days to the filing of the forms, they are considered approved.
124
Can the Insurance Commissioner examine the financial affairs of the insured?
No the commissioner can examine the records of the insurer and producers, not insured.
125
How much may the commissioner fine producers fro each violation of the State Insurance Code?
Up to $1000 for each violation.
126
Producers are required to keep records related to insurance transactions for how many years?
5
127
True/False
The insurance commissioner can appoint deputies to help him carry out his duties.
True
128
Can an insurer make contributions to the campaign of a person running for election of Insurance Commissioner?
No
129
What is an “exclusive” or “captive” producer?
A producer who only represents one insurer.
130
Can an appointed producer represent more than the insurers that appointed him/her?
No, appointed producers may represent only the insurers who appoint them.
131
A producer who represents clients without an appointment to an insurer is considered to be what?
A broker, or engaged in brokerage.
132
What must a broker or individual working in a brokerage do to be able to represent clients in Washington?
He/she must post a surety bond in favor of the people of the state of Washington.
133
An independent producer engaged in brokerage must post how much as a surety bond?
The independent producer must post a minimum of $2500 or 5% of the premiums brokered by the producer in the pervious calendar year, whoever is greater, up to a maximum of $100,000 bond.
134
Who may compensate a producer?
A producer may be compensated by a client in the form of a fee, the insurer in the form of a commission, or by both?
135
How must a producer proceed if they receive an excess fee from a client in excess of the commission paid by the insurer?
They must have the client sign a compensation disclosure form.
136
True/False
If a producer receives both fees and commission, the producer may reimburse the client all or part of their fee by subtracting from the commissions received.
True
137
A producer must notify the Commission of a change of address within how many days?
30
138
Are the commissioner’s records open to the public?
Yes
139
Who does a public adjuster represent?
The insured
140
Who does an independent adjust represent?
The insurer
141
Under the Insurance Code, who must deliver new policies to the insured?
Producers
142
Transacting insurance includes what type of activities?
Solicitation of insurance, executing and insurance contract and providing insurance coverage.
143
Does the Insurance Commissioner approve rates?
Yes, the Insurance Commissioner approves rates but does not make them.
144
Is it necessary to have separate trust accounts for insured and insurers?
Yes, the producer must keep separate trust account.
145
For what reason can the Commissioner decline a license of an applicant?
Conviction of a felony.
