Wisconsin Insurance Law Flashcards
(102 cards)
1
Q
Who must respond to the Commissioner?
A
Anyone who works in insurance, or is applying for an insurance license, in WI
2
Q
Who appoints the Commissioner?
A
The Governor
3
Q
The Commissioner may examine…
A
Anyone w/ a license, applying for a license, transacting ins business
4
Q
Domestic Insurer
A
HQ’d in WI (examined every 2 years)
5
Q
Non-Domestic Insurer
A
Ex. State farm HQ’d in IL but does business in WI
6
Q
Failure to comply with the Commissioner is
A
Concealment of record and is grounds for liquidation of the business
7
Q
When are hearings not required?
A
Failure to pay fee when due
Intermediary and commissioner agree
Failure to meet continuing education requirements (goes into suspension)
8
Q
The Commissioner MUST
A
hold a hearing before adopting a substantive rule change (i.e. mandatory auto ins. in WI)
9
Q
The Commissioner MAY
A
hold a public hearing and informal hearing for the purpose of investigation, public opinion or to inform the public
10
Q
Application for a license denied, request a hearing within?
A
30 days
11
Q
Hearing must be held?
A
Not less than 10 days but no more than 60 days after delivery of request
12
Q
If application is still denied, a rehearing may be requested within
A
20 days
13
Q
If Commissioner doesn’t respond within
A
20 days, request = denied
14
Q
Any person who violates, a rule/ statute may be fined not more than:
A
$1000 for each violation
15
Q
Any person who violates an order may be fined not more than:
A
$1000 per violation, per day
16
Q
Any person who violates an order, statute or rule you may be fined:
A
2x the amount of the profit gained
17
Q
The firm (person who markets the insurance and does not included the insurer) may be fined up to:
A
$1000
18
Q
Pleading the 5th is allowed however:
A
the person must still testify but cannot be criminally prosecuted based on their testimony
19
Q
If Commissioner issues an order and a person fails to comply:
A
Commissioner may give notice of Compulsive Forfeiture
20
Q
If the person fails to respond to Commissioner within 2 weeks, legal action can begin:
A
$5000 for each day the violation continued between when the Commissioner starts the action and the time the court makes a decision
21
Q
Ciminal Penalities: not more than
A
$5000 or 3 years of jail time or both
22
Q
How much can a corporation be fined?
A
$10,000
23
Q
What is the Wisconsin Insurance Security Fund?
A
WISF - protects policyholders in the event of an insurer’s liquidation by paying claims through the end of the policy period
24
Q
Who is an Intermediary? (SNAP)
A
Solicits, Negotiates, Advises, Places Business on behalf
25
Who is not an Intermediary?
HR, Attorneys, teachers, loss control reps, claims adjusters, collections, ect.
26
What requirements must be met to be issues a license?
have the intent to do business as intermediary
be competent and trustworthy
know the products
18 or older
27
What is the purpose of the exam?
tests knowledge
| determination of competence to act as intermediary
28
Intermediary Broker
represents the customer (insured)
29
Surplus lines Company
generally writes "hard to place" types of risk (insuring body parts) with unauthorized insurers (no Certificate of Authority to do business in state) through a Surplus lines broker
30
The insured cannot work directly with
the surplus lines broker or company, must work through their agent
31
Reinsurance
insurance for the insurance company
32
Continuing Education
24 hours needed (3 hrs of Ethics and 3 of Flood)
Needs to be done every two years by the end of birth month
Failure to meet CE requirements = revoked license
33
What changes need to be reported to the Commissioner?
Name/residential/business address change
Change in residency
Membership/partnership/officers/management
Competency/trustworthiness (conviction of a crime)
34
How many days do you have to report a change to the Commissioner?
30 days
35
Temporary licenses are issued for:
not more than 1 year
36
Records needed to be maintened by an intermediary:
For 3 years, essentially all records of business (monetary transactions, policy info, claims/complaints, financial records)
37
Intermediary's must do what with medical info?
shred/destroy
38
Intermediary cannot engage in personal financial transactions with:
anyone they have done business with in the last 3 years, except family
39
An insurance company MUST list its intermediaries with the Commissioner....
prior to or w/in 15 days of receiving first piece of business
40
What is procedure when an intermediary no longer represents the company?
Insurer must notify the OCI within 30 days
| Insurer notifies intermediary within 15 days of notification of OCI
41
Fees to renew an Intermediary's license (every two years)
Resident - $35
| Nonresident - $70
42
Intermediary's license remains in effect until?
until it is revoked, suspended or limited by commissioner, until voluntarily surrendered by intermediary, until death of intermediary
43
An intermediary's license can be revoked/suspended/limited without a hearing:
failure to pay fee
failure to meet CE
OCI & Intermediary agree
44
An intermediary's license can be revoked/suspended/limited only after a hearing:
violate insurance code
improper business practices
financial difficulties
no longer of good character
45
For failure to pay fee or meet CE, license is:
revoked as of due date
46
If revoked, when can they reapply
immediately - failure to meet CE or pay fee
Commissioner specifies a time period of 5 years or less for all other reasons
no time limit specified - 5 years
47
Are there additional fees for revocation?
Yes, all fees that would have been paid had license not been suspended will need to be paid (missed renewal fees)
48
Misrepresentation
presenting oral or written communication that contains false or misleading info
49
unfair inducement
offering benefits not set out in the policy (rebating)
50
unfair discrimination
charging different premiums or offering different benefits to policyholders without a difference in risk
51
restraint of competition
bad mouthing the competition
52
unfair restriction of choice of insurer
business requiring coverage demands client takes insurance with a specific company/agent
53
extra charges
charging above the premiums and service charges
54
unfair use of official position
using position in government to force people to purchase insurance from a particular agent or company
55
attempt to influence employers
telling employers to hire or fire an employee based on how the employee will affect their insurance
56
twisting
misleading or persuading the insured to cancel one policy and replace it with another so the agent gets new business commission. there is no benefit to the consumer in this transaction
57
churning
convincing the insured to use funds from one policy to buy another by canceling, withdrawing fund from, or borrowing against an existing policy without any benefit to the insured
58
When can an intermediary receive compensation for insuring himself/his property? (Controlled Business)
during prior year
must be licensed in the line of business
sold other insurance with the same company
total premiums on others exceeded his own
59
Giving advice, can you collect $?
Yes, consulting fee (risk management fee)
60
Sharing commissions
payment of deferred commissions can be paid to formerly licensed agents
61
Proper exchange of business
exchanged between agents
no more than 5 w/ one company
no more than 25 within one year
62
Binder
written, temporary proof of insurance (good until replaced by contract or cancelled)
63
Oral Contract
verbal authorization of coverage (legal in WI and carry w/ them all the promises of the contract)
64
Certificate of Insurance
proof of insurance for a business
65
What is insurance interest?
stand to lose something of value. reasonable reason to suspect loss
66
In P&C insurable interest needs to be present when...
at the time of the loss
67
May a policy be issued to someone who does not have insurable interest?
Not knowingly
68
What happens when a policy is issued where there is no insurable interest?
court can order the proceeds paid to someone with insurable interest
69
Is an insurance company responsible for information known to its agents?
Yes, knowledge of the agent is knowledge of the company
70
What if the insured fails to perform a required act due to the acts of the agent?
It does not release the insurance company from its obligations to pay
71
What if the agent and the insured are in collusion with one another?
(Collusion - agent and insured act together to deceive insurer) Knowledge of the agent no longer applies
72
Representation by the applicant
a statement that is known to be true to the best of your knowledge
73
Misrepresentation by the applicant
error in statement of fact
74
Material misrepresentation by the applicant
had the company known the truth, they would have never issued the policy
75
Warranty
a statement made that is absolutely true
76
Affirmative Warranty
affirms the existence of a fact (confirming being diagnosed with cancer)
77
Promissory Warranty
makes a promise about the future (quit smoking in 60 days)
78
Concealment
intentionally withholding information from the insurance company
79
Fraud
intentional and material misrepresentation or conceal, done with the intent to deceive or cheat someone else to their detriment. Fraud releases the company's obligation to pay
80
Violent Crime Control and Law Enforcement Act 1994
makes insurance fraud a federal crime when it affects interstate commerce. States that those who knowingly make false statements with the intent to deceive can be fined or imprisoned for up to 15 years. Also punished agents for embezzling
81
Incorporation by reference
nothing can be made a part of the policy simply by referring to it, it must be written into the policy
Two exceptions: Rate tables and premium schedules
82
Gramm Leach Bliley Act (1999)
notify policyholders of their privacy practices once per year. personal and medical information must be shredded (dumpster diving law)
83
What is the policy for approving policy forms in WI?
File - (within 30 days prior to use) then use. "File and Use". (Worker's Compensation is "prior approval")
Forms = file and use
84
Rates
are considered approved if not disapproved w/in 30 days (60 day extension is requested by OCI) after filing.
Rate = Use and file
85
A Policy can be cancelled mid-term for the following reasons:
```
non-payment
material misrepresentation
substantial risk change
breach of contract
attainment of age specified in contract
```
86
When a policy is cancelled mid-term, the company must provide a:
10 day notice (does not need to contain reason for termination)
87
If a policy is cancelled on its anniversary (non-renewed) the company must provide a:
60 days notice ( must contain notice for termination and availability of risk sharing plan)
88
During the first 60 days of a policy's term if the company wishes to cancel the policy, it must provide
10 days notice (30 days for Workers comp)
89
If a policy is renewed, but at a less favorable terms or rate increase of more than:
25%, the company must provide 60 days notice
90
May an insurer non-renew a policy solely because the agency/insurer relationship is terminated?
No - notification must be sent that policy will be cancelled w/in 60 days and must advise that they can still renew
91
How promptly must claims be paid?
within 30 days
92
What is the penalty for paying a claim late?
7.5% annual simple interest (if 7.5% not listed on exam, pick 12%)
93
Unfair claims practices include:
```
not acknowledging claim communications
failing to provide forms/assistance
failing to settle the claim fairly
misrepresenting info to claimants
sex discrimination
```
94
Surplus Lines
placed with unauthorized insurer (one who does not have a Certificate of Authority" to do business in WI
95
A surplus lines intermediary needs the following:
1. additional license ($100 annually: surplus lines license)
2. Intermediary's license
3. May be required to post a $100,000 bond
96
A surplus lines intermediary may:
inspect risks
collect premiums and adjust losses
advertise availability of product
97
A surplus lines intermediary may not:
advertise the names of the companies they represent
98
How much does the policyholder pay for surplus lines?
3% policy tax which goes in a separate account
99
who is responsible for the actions of the surplus lines carrier in the state?
the surplus lines broker
100
The Terrorism Risk Insurance Program Reauthorization Act of 2007 (TRIA)
$100,000,000,000 cap
101
Who has to notify the insured of their right to file complaints with OCI?
OCI
The intermediary
The insurer, once per year
The insurer, once with each policy
102
Electronic delivery of notices
ALLOWED
