Texas Examination For Life, Accident & Health Insurance / Series 14-54

Front 1

The three major channels of regulation of the insurance industry are;

Back 1

1) Federal Regulation
2) State Regulation
3) Self Regulation

Front 2

PreText Interview

Back 2

An interview whereby a person, in an attempt to obtain information about another person, pretends to be someone else, misrepresents the true purpose of the interview, or refuses to properly identify himself.

Front 3

Insurance Code

Back 3

The body of laws governing insurance at the state level.

Front 4

Statutes

Back 4

The body of law developed by the legislative branch of government. They outline, in general terms, the duties of the Commissioner and the activities of the Department of Insurance.

Front 5

Rules and Regulations

Back 5

Developed by the Department of Insurance to expand upon statutory requirements and legislative intent.

Front 6

Guaranty Associations

Back 6

organized to protect claimants, policyholders, annuitants, and creditors of financially impaired or insolvent insurers by providing funds for the payment of claims and other related policy benefits. Associations are composed of insurers authorized to transact insurance business within the state. Association membership exceptions include fraternal organizations and nonprofit companies. Member insurers are assessed certain sums of money to cover the association’s operating expenses. If insurer insolvency occurs, each member insurer will be assessed additional fees to cover the insolvency.

Front 7

Twisting

Back 7

Occurs when a producer convinces a policyowner to lapse or surrender a present policy in order to sell him another one, usually from a different company. Any attempt by the producer to misrepresent another insurer by falsely making statements about the financial condition of the company or by giving an incomplete comparison of policies is an unfair trade practice.

Front 8

Churning

Back 8

The practice of using misrepresentation to induce replacement of a policy issued by the insurer the producer is representing, rather than the policy of a competitor. The impetus behind churning is to allow the producer to collect a large first-year commission on a new policy. Churning is the result of a producer putting his interests above those of the client.

Front 9

Rebating

Back 9

Any inducement in the sale of insurance that is not specified in the insurance contract. An offer to share commissions with the insurance applicant is an inducement in the sale of insurance that is not part of the insurance policy, and thus, constitutes rebating. Rebates include not only cash but also personal services and items of value.