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22 Cards in this Set
- Front
- Back
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1. The responsibility to regulate the insurance industry belongs to:
I. The state government. II. The federal government. III. The state insurance department.
A. I only. B. III only. C. I and II only. D. I, II, and III.
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C. Both the federal and state governments regulate insurance. In most cases the responsibility rests with the individual states to regulate insurance matters. The federal government regulates in the areas of fair labor standards and anti-trust matters as well as the Fair Credit Reporting Act. |
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The responsibility of the federal government in regulating the insurance industry is limited to:
A. Monitoring the ethical conduct of individual insurance adjusters. B. Fair labor standards and anti-trust matters. C. Monitoring the financial solvency of insurance companies. D. Reviewing and approving insurance rates, policies, and forms. |
B. As mentioned above, the federal government regulates in certain other areas as opposed to state regulation. |
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An insurance company that is formed and domiciled under the laws of a particular state is an example of a(n):
A. Domestic Insurer. B. Foreign Insurer. C. Domiciled Insurer. D. Alien Insurer. |
A. An insurance company domiciled in a state and who is licensed in that state under a certificate of authority is called a domestic insurer. |
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Which of the following is a requirement for obtaining an agent’s or adjuster’s license?
A. Must be 21 years of age. B. Must have completed at least two years of college coursework. C. Must have an insurance producer’s license in the state. D. Must satisfy the Insurance Commissioner of trustworthiness. |
D. The applicant for a license must be trustworthy. If that person has been found guilty of a felony, it would normally prevent the person from being licensed in most states. |
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The unethical act of persuading a policyowner to drop a policy solely for the purpose of selling another policy is known as:
A. Twisting. B. Rebating. C. Defamation. D. Misrepresentation. |
A. Twisting is a violation of insurance laws. Making unfair or inaccurate comparisons to induce a person to drop their current coverage is an unfair trade practice. |
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An insurer that refuses to pay claims without conducting a reasonable investigation based upon all available information is guilty of:
A. Twisting. B. Unfair Claim Settlement Practices. C. A felony. D. Misrepresentation. |
B. Conducting a prompt, reasonable and thorough investigation is a requirement. If not conducted in this manner it is considered a violation of the unfair claim practices. |
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An insurer that distributes a statement that misrepresents the benefits, advantages, conditions, or terms of any insurance policy would be guilty of:
A. Unfair Claim Settlement Practices. B. Misrepresentation and False Advertising. C. Defamation. D. Coercion. |
B. Obviously misrepresentation and false advertising is a violation and is considered an unfair trade practice act |
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Should an agent or adjuster have a change of address, the obligation to notify the Insurance Department lies with:
I. The company that employs the adjuster or company that appoints the agent. II. The licensee. III. The licensee’s supervisor.
A. I and II. B. I only. C. II only. D. I, II, and III. |
C. The person who holds the license is responsible to report the change of address to the Insurance Department. |
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An incorporated insurance company with its capital divided into shares is the definition of:
A. A Mutual Company. B. A Domestic Company. C. A Stock Company. D. A Foreign Company. |
C. A stock company is owned by its stockholders. |
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The Insurance Department has been advised that an agent is guilty of an insurance code violation. The Commissioner will:
A. Call for a hearing. B. Revoke the license pending a hearing. C. Revoke the license. D. Fine the agent’s insurance company. |
A. Usually the Insurance Commissioner will first call for a hearing to review all sides of the alleged infraction. |
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Which of the following would be considered an Unfair Trade Practice?
A. Twisting. B. Rebating. C. Coercion. D. All are Unfair Trade Practices. |
D. All of these are considered to be a violation of the unfair trade practices. |
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Which of the following is NOT considered to be an unfair claims practice?
A. Misrepresenting pertinent facts or uninsured policy provisions relating to coverages at issue. B. Refusing to pay claims without conducting a reasonable investigation based upon all available information. C. Attempting to settle claims on the basis of an application that was altered without notice to or the knowledge of the insured. D. Failing to honor an uncovered claim. |
D. Declining to pay a claim that is not covered is not considered to be an unfair claims practice act. However, not responding promptly in the claim investigation is a violation. |
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Although their liability is clear, B.B.S Insurance Company routinely delays all claim payments for 90 days, and in doing so:
A. Avoids a lot of little nuisance claims. B. Substantially eliminates fraudulent claims. C. Is guilty of an unfair claim settlement practice. D. Avoids any acts of illegal discrimination between claimants. |
C. This is an unfair claims practice. Most states have enacted laws or regulations that specify the time lines for the investigation and either payment or denial of claims. |
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Which of the following would be considered unfair or deceptive acts by an adjuster?
A. Requesting that a first party claimant signs a release that extends beyond the subject matter which gave rise to the claim payment. B. Advising the claimant that their rights may be impaired if a form of release is not completed within a specified period of time unless for the purpose of notification of statute of limitations. C. Issuing a check or draft, in partial settlement of a loss or claim under specific coverage that contains language that releases the insurer or insured from total liability. D. All of the above. |
D. All of these are considered to be unfair claim practices. |
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An act of terrorism must be “certified” to be such an act by:
A. The President of the United States. B. The Senate C. The House of Representatives. D. The Secretary of the Treasury. |
D. The Secretary of the Treasury in concurrence with the Secretary of State and the Attorney General of the United States certify an act of terrorism. |
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All of the following events are considered acts of terrorism, except:
A. Acts of riot and civil commotion B. Acts considered dangerous to human life, property or infrastructure. C. Acts resulting in damage within or outside the United States. D. Acts committed by an individual or individuals acting on behalf of any foreign person or foreign interest. |
A. Acts of riot and civil commotion are not covered under this Act. These perils are covered under most property insurance contracts. |
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In order to be certified as an act of terrorism under the Federal Terrorism Act, property and casualty losses must exceed ____ for any one event:
A. $500,000 B. $1,000,000 C. $3,000,000 D. $5,000,000 |
D. $5,000,000 in damages is the threshold for the Act to apply. |
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None of the following can be covered by the Federal Terrorism Act insurance program, except:
A. Most commercial property and casualty risks. B. Federal crop insurance. C. Personal insurance policies. D. Health and life insurance policies. |
A. The act does not apply to federal crop insurance, personal insurance policies or life and health policies. |
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No act will be certified by the Secretary as an act of terrorism under the Federal Terrorism Act if:
A. The act is not committed as part of the course of war declared by Congress. B. The act is one of terrorism as defined by the Act. C. The losses that occur relate to commercial property risks. D. The losses that occur relate to life insurance. |
D. Life insurance losses are not covered by the Act. |
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All of the following are considered acts of rebating, except: A. An agent provides an all-expenses paid cruise to a client and his wife in exchange for
writing the coverage on his national chain of restaurants. B. An agent sends holiday greeting cards to all the clients on his mailing list. C. An adjuster receives a monthly check from an auto body repair shop for recommending the repair shop to clients who have a claim. D. All of these situations are considered acts of rebating. |
B. Greeting cards do not constitute a form of rebating. They are not something of commercial value |
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Under the extension of the Terrorism Risk Insurance Act of 2007 the federal government will share in the losses for a certified act of terrorism if:
A. Total losses for all insurers exceed $100 million dollars B. An insurer is responsible for the first 20% of losses as a deductible, and then the government will pay 85% of remaining claim amounts. C. The total certified acts of terrorism for the program year have not exceeded $100 billion dollars D. All of the above |
D. The federal government shares in certified act of terrorism losses if the program trigger requirements are met. The total losses for all insurers for the event have exceeded $100 million; the insurer has met its 20% deductible for existing claims and the total certified act of terrorism losses for the program year have not exceeded $100 billion. |
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The federal law enacted to control the ways financial institutions and insurance companies deal with the private information of individuals is:
A. The FAIR Plan B. The Gramm-Leach-Bliley Act C. The CAN-Spam Act D. The Fair Credit Reporting Act |
B. The Gramm-Leach-Bliley Act (GLB Act), also known as the Financial Modernization Act of 1999, is a federal law enacted in the United States to control the ways that financial institutions (including insurance companies) deal with the private information of individuals. |
