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CA L&H Chap 3
The Insurance Marketplace
| Question | Answer |
|---|---|
| Producer | The agent |
| Principal | Insurance Provider (Insurer) |
| Independent Agent | Has contracts with more than one insurance provider. They provide clients with a wide range of product options |
| What is an ethical challenge facing the independent agent? | Moving clients to earn new or higher commissions |
| Exclusive or captive, or career agent | Has a contract with one insurance company |
| Direct Response | The necessity of the potential client to take the initiative and respond to the advertisement through a telephone or mail contact with the insurer as directed in the ad. |
| Agent(s) | A person licensed to solicit, negotiate, or sell insurance contracts on behalf of the principal |
| Law of Agency | The acts of the agent or producer within the scope of authority deemed to be the acts of the insurer |
| Does the agent represent the provider or the insured? | Insurance Provider |
| Fiduciary | An individual in a position of trust |
| What are the three agent authority types? | Express, Implied, and Apparent |
| Express Authority | The authority that is written into the contract |
| Implied Authority | Authority that is not expressed or written into the contract but which the producer is assumed to have to conduct business for the principal |
| Apparent Authority or Perceived Authority | The assumption or appearance of authority based on the principal's words, actions, or deeds or due to circumstances the principal created |
| Example of Implied Authority | Collecting and remitting premium payments |
| Example of Apparent Authority | The use of the insurance provider's stationery when soliciting coverage |
| Consequence of "transacting insurance" without a license | Misdemeanor that carries a max fine of $50k or imprisonment in a county jail for one year or both |
| 1033 Waiver | |
| Section 1034: Civil Penalties and Injunctions | Attorney General can bring civil action in the appropriate US district court against any individual who engages in conduct constituting an offense under Section 1033 |
| Types of Licensees | Property and casualty broker-agent; Life-only agent; Accident and health or sickness agent; Life and accident and health or sickness agent; Personal lines agent; Surplus lines broker |
| Agents vs Brokers | Agents legally represent the insurer. Brokers legally represent their clients |
| Insurance Agents | A person authorized to transact all classes of insurance on behalf of an admitted insurance provider other than life, health, or disability insurance |
| Insurance Brokers | Licensees who, for compensation and on behalf of an individual other than an insurance company, transact insurance other than life, accident and health or sickness, or disability |
| What can life-only agents transact in CA? | Insurance on human lives, including: Annuities; endowments; Death or dismemberment by accident; and Disability income |
| Life Settlement Contract | Establishes the terms under which the life settlement provider will compensate the policy owner in return for the absolute assignment, transfer, sale, or release of any portion of the policy |
| Errors and Omissions | Coverage to protect against financial losses that could happen because of the agent's negligent acts or actions |
| Losses not covered by E&O insurance | liabilities caused by a person's criminal acts (unfair trade practices, fiduciary crimes, or material misrepresentations) |
| Continuing Education Requirements | 24 hrs of CE, 3 hrs of ethics, per each 2-yr license renewal term |
| CA Insurance Code (CIC) | The main body of laws set up by the state legislature, which regulates the insurance industry in CA |
| CA Code of Regulations (CCR) | The set of regulations issued by the Dept of Insurance that identifies the standards for the Insurance Code, and how it is to be administered |
| Rebating | Any inducement offered to the insured during the sale of insurance products not specified in the policy. The offer and the acceptance of a rebate are illegal. |
| Twisting | A misrepresentation |
| Authorized or Admitted | Insurers who meet the state's financial requirements and are approved to do business in the state |
| Domestic vs Foreign vs Alien | home office is charter or incorporated in = Domestic - same state / Foreign - different state / Alien - different country |
| Gramm-Leach Bliley Act (GLBA) | |
| CA Financial Information Privacy Act | |
| Insurance Information and Privacy Protection Act | |
| Cal-GLBA | |
| CA Life and Health Insurance Guarantee Association (CLHIGA) | pays the claims of insureds or beneficiaries when an insurer is impaired of insolvent |
| Examples of Unfair Trade Practices | false advertising, misrepresentation, rebating, twisting, unfair discrimination, defamation, boycott/coercion/intimidation, and fraud |
| Fair Claims Settlement | Upon receiving a claim, insurers must accept or deny w/in 40 calendar days, cannot try to settle a claim by making a low settlement offer |
Created by:
jo710al
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