Property & Casualty Test (Indiana Section) Questions with Complete Solutions

Property & Casualty Test (Indiana Section) Questions with Complete Solutions Insurance commissioner has the authority to..? enforce state insurance laws Department of Insurance has the power to..? Supervise the organization, regulation, examination, rehabilitation, liquidation and conservation of all insurance companies doing business in the state Insurance laws have been written to protect the insuring public The commissioner has 3 main authorities 1. Executive Authority 2. Legislative Authority 3. Judicial Authority Executive Authority to enforce state laws Legislative Authority to create Rules that explain or clarify laws Judicial Authority to hold Administrative Hearings Who appoints the State Insurance Commissioner state governor; can appoint and also fire How is commissioner selected? Solely based off knowledge and skill in insurance; no regard to his/her political beliefs Commissioner must post bond, what amount? $50,000; this is to insure that they will perform faithfully in his/her duties Commissioner authorized to join what group? National Association of Insurance Commissioners (NAIC) Commissioner has 3 major responsibilities? 1. Assuring that insurance Companies meet basic standards 2. Assuring applicants meet requirements to be licensed, and maintain there licenses 3. Assuring/Applicants, Producers and Companies adhere to both the producer Licensing Law/Unfair Competition Law Assuring that Companies Meet Basic Standards When customers purchase insurance, they are purchasing a promise that their Insurance Company will pay for claims in future. Meaning they need to have strict financial standards in order to pay claims Companies classified in 3 different ways based off of origin 1. Domestic (formed in Indiana ex. Indiana Farmers) 2. Foreign (Formed in another state/territory ex. New York Life) 3. Alien (formed in another country ex. Lloyds of London) Company must be Admitted/Authorized to conduct business in a state Domestic- Granted once they meet state minimum requirements. Foreign/Alien must demonstrate that they already meet the requirements Once granted to conduct business in a certain state, company will receive? Company-Certificate of Authority; Producer-insurance licenses Commissioners when it comes to finances? They may examine any Company doing business in state, to ensure financial soundness; also must examine company at least every 5 years Company Notice Given by commissioner to serve as a warning for company that has a problem Commissioner has to conduct a hearing to determining/discuss the problem, this is known as? Due Process After notice hearing, if things do not improve, Commissioner will file for? Rehabilitation Rehabilitation Court-appointed Rehabilitators take over operation of company to save it. This renders stockholders, directors and officers lose all their powers/rights. Goal is to get the company back on feet What happens after Rehabilitation? If company cannot be restored to a financially healthy state, Commissioner has the authority to liquidate the Company for the benefit of the Policyholders Life and Health and Property & Casualty Guarantee Associations All admitted insurers must belong to the appropriate association; to pay policyowner claims of an insolvent insurance company Life and Health (L&H insurance company) Covers policy for insured if company went bankrupt; $100,000 cash value for Life Insurance policy/Annuity; $300,000 death benefits and health claim benefits Property & Casualty (P&C insurance company) $100,000 per claim; $300,000 per occurrence; any claim for return of unearned premium, the Association will pay 80% of the unearned premiums paid/$650 per month for up to 12 months (7,800), whichever is less 2nd major responsibility of commissioner Tasks with protecting the consumers of the State by making certain that those individuals selling insurance Seven types of licenses 1. Resident Producer 2. Non-Resident Producer 3. Temporary 4. Consultant 5. Limited Lines 6. Surplus Lines (P&C only) 7. Independent Adjuster When you let you license lapse you must be..? Reinstated Violations of Exam 1. Cheating --COMMON SENSE Unfair Competition Law Golden Rule of Insurance; everybody involved in the transaction shall be given a fair shake; if you wouldn't want it done to you...don't do it to someone else Violations Under the Law Reference book